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You Need to Earn More Than $100K to Afford Rent in These States, Study Finds

GOBankingRates logo GOBankingRates 18/03/2019 Andrew DePietro

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Households that spend more than 30 percent of their income on housing are cost-burdened, according to the U.S. Department of Housing and Urban Development. Unfortunately, nowadays, most Americans spend well beyond 30 percent of their income on rent — and there are few signs indicating this will change for the better anytime soon.

GOBankingRates conducted a study that determined the salary required in every state to maintain the “30 percent of income” rule of thumb, based on 2018 rent data from Zillow and mean annual wages from the Bureau of Labor Statistics. The results of this study paint a gloomy picture of affordability in the U.S.

a person sitting on a chair: Young happy couple relaxing in deck chairs at their back yard and holding their arms together. © skynesher / iStock.com Young happy couple relaxing in deck chairs at their back yard and holding their arms together.

See the Full Study: The Salary You Need to Afford Rent in Every State

Where You Need to Make at Least $100K to Afford Rent: California and Washington, D.C.

If you’re asking yourself, “How much can I afford?” be prepared for some disheartening news. One of the study’s most distressing discoveries is how inadequate incomes across the country are to cover rents. In fact, there are only 11 states where median rent costs consume 30 percent or less of income.

a close up of a map: If you are earning the average salary in your state, chances are you can’t afford to pay rent. Only 11 states have an average annual wage that is enough to cover the cost of rent for a year, assuming that rent takes up 30 percent of your paycheck. Of course, rental costs are much higher in some states than in others. Find out the cost of renting versus buying a home in every state. The states where you’ll need the most income to afford rent are Washington, D.C., California, Hawaii, Massachusetts and New Jersey. The states where you’ll need the least income to afford rent are West Virginia, Oklahoma, Arkansas, Alabama and Missouri. Click through to read more about how much you’ll spend on rent in 25 major cities in your lifetime. More on the Economy and Making Money  Richest and Poorest Area Codes in the US Cities Where You Can Realistically Live on Minimum Wage 12 Essential Money Tips for Every Phase of Life  Methodology: GOBankingRates calculated the salary needed to afford rent in every state by using the budget rule of thumb that says to keep housing costs at 30 percent or less of your income. GOBankingRates found the median rent for single-family residences in each state, sourced from Zillow, and worked backward to find the monthly income needed to have monthly and yearly rent consume 30 percent or less of income. Average annual wages were sourced from the Bureau of Labor Statistics. © ©© GOBankingRates

If you are earning the average salary in your state, chances are you can’t afford to pay rent. Only 11 states have an average annual wage that is enough to cover the cost of rent for a year, assuming that rent takes up 30 percent of your paycheck.

Of course, rental costs are much higher in some states than in others. Find out the cost of renting versus buying a home in every state. The states where you’ll need the most income to afford rent are Washington, D.C., California, Hawaii, Massachusetts and New Jersey.

The states where you’ll need the least income to afford rent are West Virginia, Oklahoma, Arkansas, Alabama and Missouri.

Click through to read more about how much you’ll spend on rent in 25 major cities in your lifetime.

More on the Economy and Making Money

Methodology: GOBankingRates calculated the salary needed to afford rent in every state by using the budget rule of thumb that says to keep housing costs at 30 percent or less of your income. GOBankingRates found the median rent for single-family residences in each state, sourced from Zillow, and worked backward to find the monthly income needed to have monthly and yearly rent consume 30 percent or less of income. Average annual wages were sourced from the Bureau of Labor Statistics.

There are two places — California and Washington, D.C. — where you need to earn at least $100,000 a year to afford the median rent. Based on median rents of $2,518 in California and $2,711 in Washington, you’d need to earn nearly $8,400 a month to afford the former and over $9,000 a month to afford the latter. California and Washington are the only two places in the country that require six-figure incomes.

Affordability, however, is all relative.

Click to See: These Are the 50 Best Cities for Renters

States With the Most Affordable Rent

Although the salary you need to afford rent in some states is much lower than in others, that doesn’t necessarily mean it’s more affordable. Take Colorado, for example. The wage you need to afford the median rent — $77,080 — is much less than Washington’s $108,440 a year. But in Colorado, the $23,030 gap between the salary you need and the state’s actual annual wage is larger than Washington’s gap of $16,040, which undermines its affordability.

Colorado is just one of 40 states where the average annual incomes fall below the required threshold to afford rent. That means there are 11 states where the average income exceeds the amount you need to afford rent.

Here are the 11 states with the most affordable rent:

StateMedian RentAnnual Salary NeededAverage Annual WageDifference Between Needed vs. Actual Salary
West Virginia$888$35,520$41,400$5,880
Oklahoma$950$38,000$43,340$5,340
Michigan$1,110$44,400$48,300$3,900
Missouri$1,047$41,880$45,520$3,640
Alabama$998$39,920$43,170$3,250
Kansas$1,051$42,040$44,570$2,530
Iowa$1,057$42,280$44,730$2,450
Ohio$1,113$44,520$46,950$2,430
Arkansas$953$38,120$40,530$2,410
Wyoming$1,149$45,960$47,650$1,690
Wisconsin$1,141$45,640$46,270$630

The study highlights a continuing issue in recent years of wages not keeping up with rising living costs. On top of this, across the U.S., the supply of available houses to buy is low, pushing up home prices.

See the complete results of the study below, and find out where your state falls:

StateMedian RentAnnual Salary NeededAverage Annual Wage
Alabama$998$39,920$43,170
Alaska$1,748$69,920$57,750
Arizona$1,356$54,240$48,160
Arkansas$953$38,120$40,530
California$2,518$100,720$57,190
Colorado$1,927$77,080$54,050
Connecticut$1,803$72,120$59,410
Delaware$1,435$57,400$52,200
District of Columbia$2,711$108,440$85,720
Florida$1,590$63,600$44,790
Georgia$1,262$50,480$47,200
Hawaii$2,481$99,240$52,050
Idaho$1,238$49,520$42,240
Illinois$1,463$58,520$52,410
Indiana$1,113$44,520$43,950
Iowa$1,057$42,280$44,730
Kansas$1,051$42,040$44,570
Kentucky$1,084$43,360$42,410
Louisiana$1,245$49,800$41,590
Maine$1,466$58,640$45,300
Maryland$1,807$72,280$57,270
Massachusetts$2,252$90,080$62,110
Michigan$1,110$44,400$48,300
Minnesota$1,449$57,960$52,730
Mississippi$1,055$42,200$38,910
Missouri$1,047$41,880$45,520
Montana$1,234$49,360$42,400
Nebraska$1,253$50,120$45,530
Nevada$1,423$56,920$45,040
New Hampshire$1,748$69,920$51,040
New Jersey$2,062$82,480$56,970
New Mexico$1,200$48,000$44,840
New York$2,050$82,000$60,100
North Carolina$1,208$48,320$46,080
North Dakota$1,290$51,600$48,130
Ohio$1,113$44,520$46,950
Oklahoma$950$38,000$43,340
Oregon$1,707$68,280$51,010
Pennsylvania$1,242$49,680$48,760
Rhode Island$1,725$69,000$53,110
South Carolina$1,209$48,360$42,240
South Dakota$1,213$48,520$40,770
Tennessee$1,153$46,120$43,550
Texas$1,455$58,200$48,700
Utah$1,526$61,040$46,460
Vermont$1,599$63,960$48,840
Virginia$1,452$58,080$53,980
Washington$1,838$73,520$57,480
West Virginia$888$35,520$41,400
Wisconsin$1,141$45,640$46,270
Wyoming$1,149$45,960$47,650

With nearly four-fifths of U.S. states rent-burdened, HUD’s definition might be up for revision. The good news is you can always find pockets of affordability, though it requires persistence and knowing what you want.

One of the first choices you need to make is whether you’re looking to rent or own your home. Click through to find out if it’s more affordable to rent or own a home in your state.

More on Rent

Methodology: GOBankingRates calculated the salary needed to afford rent in every state by using the budget rule of thumb that says to keep housing costs at 30 percent or less of your income. GOBankingRates found the median rent for single-family residences in each state, sourced from Zillow, and worked backward to find the monthly income needed to have monthly and yearly rent consume 30 percent or less of income. Average annual wages were sourced from the Bureau of Labor Statistics.

All information is accurate at the time this study was conducted in July 2018.

This article originally appeared on GOBankingRates.com: You Need to Earn More Than $100K to Afford Rent in These States, Study Finds

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