Owning a slice of the American dream is harder than ever, even if you already own a home.

According to Creditnews Research, 30.8% of American homeowners are “house poor”—meaning they spend at least 30% of their monthly income on housing expenses like mortgage payments, utilities, and property tax.

Housing costs are particularly burdensome for mortgage holders. Nearly four out of ten (37.2%) homeowners in this category are considered to be house poor.

Perhaps shockingly, one in five (20.8%) homeowners without a mortgage are still spending above their means on housing. That's despite not having any mortgage payments.

Creditnews Research broke down America’s house poor rankings by state and found that California (43%), Hawaii (42.4%), New York (39.3%), New Jersey (37.7%), and Massachusetts (37.1%) have the highest percentage of house poor residents in the country.

It’s no surprise that real estate prices in these states are among the highest in the country.

On the opposite end of the spectrum, states with the lowest percentage of house-poor residents are West Virginia at 19.5%, North Dakota at 22.1%, Indiana at 22.7%, Iowa at 22.8%, and South Dakota at 23.6%.

Interestingly, average household incomes in these states are below the national average.

While housing prices and mortgage rates fell from their peaks, housing affordability remains a chronic issue for many Americans.

The pandemic changed everything

Although mortgage rates often take the blame for rising housing costs, they don't explain why so many Americans who locked in rock-bottom low rates during Covid are still struggling to make ends meet.

According to the U.S. Chamber of Commerce, the percentage of house-poor homeowners declined every year between 2015 and 2019—from 29.4% to 26.5%.

Then the trend reversed. As post-Covid Inflation spiked to 40-year highs, most house-related bills went through the roof.

According to Bloomberg data, electricity bills have increased by 25% since January 2020, just before the pandemic was declared. Over that same period, natural gas prices spiked 29%.

But Covid wasn't just bad news for homeowners. For those who could afford it, Covid presented a once-in-a-lifetime opportunity to take out or refinance mortgages at the lowest rates on record.

The catch? Most of them did so-called cash-out refinancing—when a borrower replaces their current loan with a larger one and pockets the difference in cash.

According to JPMorgan, borrowers who used cash-out refinancing “consumed 33% of the equity received within a year.”

In the end, these mortgages will end up being costlier due to higher closing costs, a lengthier lending term, and other associated costs.

New homebuyers hoping for a better 2024

With existing homeowners struggling to keep roofs under their heads, would-be buyers are in no better position.

As Creditnews Research reported, those who didn't take the plunge during the pandemic, particularly younger generations, have been effectively locked out of homeownership.

Experts say conditions should improve this year as more properties go up for sale. Unfortunately, housing costs remain out of reach for the average household.

According to Redfin data, the average household earning less than $75,000 a year can only afford the cheapest 16% of listed homes.