Defining Expensive States
The United States has the world's 26th most expensive cost of living. However, the cost of everyday expenses varies widely from state to state.
The cost of living includes all expenses that cover a person's needs, including food, housing, healthcare, and transportation. Costs of living can vary widely from state to state, with the highest found in major metropolitan areas. The most expensive states to live in are located in the Northeast, on the Pacific Coast, and in non-contiguous states.
Housing costs drive the cost of living expenses since this is where Americans spend the largest portion of their income. Thus, areas where competition for housing is high will be the most expensive. Other factors that impact the cost of living include transportation costs, proximity to resources, childcare costs, and local taxes.
The cost of living index compares prices across states to better understand where they are the most expensive. The index uses the average cost of living in the U.S. as a baseline of 100. Expenses can be compared to this baseline to understand relative costs in different parts of the country. Any index above 100 represents a cost of living higher than the national average. The higher the index, the less a dollar will stretch.
The Cost of Living in the United States
To better understand the relative cost of living in the most expensive states, it's helpful to have a better picture of the average costs in the nation. The average American household spends $61,334 a year to cover their expenses. Americans spend an average of $1,784 a month, nearly 35% of their income, on housing. The median price of a single-family dwelling in the United States is $273,992. The average cost of renting a two-bedroom apartment is $1,164 a month.
The average American household spends another 16%, or $9,826, on transportation. Annual healthcare costs are an average of $5,177 a year. Groceries and eating out cost the average American household $7,317 a year or $609.75 a month. Utilities cost an average American family $370.16 each month.
The average family of four in the United States requires $68,808 a year to cover their basic necessities like shelter, food, healthcare, and childcare. The median household income in the United States is $67,521 a year.
When determining the most expensive states in the United States, a cost of living index is used to compare prices to the national average. However, costs alone do not tell the whole story. While the most expensive states to live in may have the highest dollar cost, local wages may be adequate for a high quality of life despite a high cost of living.
The Most Expensive States to Live
State | COLI Index |
|---|---|
| Hawaii | 179 |
| District of Columbia | 148.7 |
| Massachusetts | 148.4 |
| California | 134.5 |
| New York | 125.1 |
| Alaska | 124.4 |
| Maryland | 119.5 |
| Oregon | 115.1 |
| Washington | 115.1 |
| New Hampshire | 115 |
Hawaii
- Cost of Living Index: 193.3
- Groceries: 152.9
- Housing: 315
- Utilities: 164.2
- Transportation: 133.7
- Health: 115.3
- Miscellaneous: 126.7
Hawaii is the most expensive state to live in in the United States. With a cost of living index of 193.3, the cost of living in Hawaii is almost twice the national average. Hawaii has the highest costs across all indexes, except healthcare. Housing costs three times the national average, with a typical single-family home averaging $730,511. Only 29% of residents can afford to buy a home in the state, one of the lowest levels in the country. The median cost of a two-bedroom apartment in Hawaii is $2,399. In Honolulu, a two-bedroom costs $3,500 a month. Groceries also cost 50% more than the national average, as most goods have to be shipped to the island.
However, despite the high cost of living, Hawaii has the fourth-lowest poverty rate. The median income in Hawaii is $118,223 a year for a family of four, significantly higher than the living wage of $107,702 a year.
New York
- Cost of Living Index: 148.2
- Groceries: 118.4
- Housing: 230.1
- Utilities: 99.8
- Transportation: 108.7
- Health: 102.5
- Miscellaneous: 113.7
New York is the second-most expensive state in the United States and home to New York City, the country's most expensive city. The cost of living index for New York is 148.2. Housing in New York is the second most expensive in the U.S., costing 2.3 times the national average. While the cost for a two-bedroom apartment in New York average $1,659, a similar unit in New York City averages $5,874.
The typical price for a single-family home in New York is $373,880. New York has the seventh-lowest housing affordability rate, with only a quarter of residents able to afford a new home based on their income. New York is the state with the lowest rate of homeownership in the nation.
The median income for a family of four is $111,054 annually. The living wage for a family of four in New York is $110,255.
California
- Cost of Living Index: 142.2
- Groceries: 113.7
- Housing: 201.9
- Utilities: 124.3
- Transportation: 131.7
- Health: 110.7
- Miscellaneous: 110.3
California is the third-most expensive state in the United States. It has a cost of living index of 142.2. Because California has the highest gas prices, transportation costs are the country's second-highest. Housing costs are twice the national average, with a typical single-family home priced at $683,996. Homeownership in California is the second-lowest in the nation. The average two-bedroom apartment in California rents for $1,884. However, costs run much higher in major metropolitan areas like Los Angeles and San Francisco, both of which have some of the highest rents in the country.
The median family income in California is $105,232 for a family of four, insufficient to make it a living wage in California, which requires $110,255 a year. California also has the highest rate of homelessness in the United States.
Massachusetts
- Cost of Living Index: 135
- Groceries: 119.3
- Housing: 177.6
- Utilities: 111.1
- Transportation: 111.3
- Health: 118.8
- Miscellaneous: 116.5
With a cost of living index of 135, Massachusetts is the fourth-most expensive state in the United States. Housing in Massachusetts costs 77% more than the national average, with the highest prices concentrated in Boston. The typical, single-family home in Massachusetts costs $518,203. An average two-bedroom apartment rents for $1,645 a month. Rents in Boston are nearly triple the state average. Costs in all other categories are among the most expensive in the nation. Groceries cost an average of 19% more than the rest of the country, while health insurance costs 18% more. However, despite the high costs, Massachusetts has a relatively low poverty level, with 9% of residents living at or below the poverty level.
The median income in Massachusetts is $140,309 for a family of four, the highest in the nation. The living wage in Massachusetts for a family of four is $121,414. The minimum wage in the state is $14.25, nearly twice the federal minimum. Massachusetts also ranks among the states with the best quality of life due to its robust education and healthcare systems.
Oregon
- Cost of Living Index: 130.1
- Groceries: 107.8
- Housing: 172.6
- Utilities: 90.2
- Transportation: 125.9
- Health: 115.7
- Miscellaneous: 115.6
Oregon is the fifth-most expensive country in the nation, with costs slightly above the national average. While utilities are among the cheapest in the country, Oregon has one of the highest housing costs. A typical single-family home in Oregon costs $447,968. Home affordability is one of the lowest in the nation, with less than a quarter of the population able to afford a new home. Two-bedroom apartments cost, on average, $1,343 a month. Utilities cost an average household $333.27 a month.
While prices are higher than the national average, so are incomes. The state’s median income for a family of four is $100,533. The living wage for a similar family is $96,003 annually.
Alaska
- Cost of Living Index: 127.1
- Groceries: 134.5
- Housing: 126.9
- Utilities: 154.8
- Transportation: 109.9
- Health: 154.2
- Miscellaneous: 114
Alaska is the sixth-most expensive state in the United States. The cost of living index for the state is 127.1. Healthcare in Alaska is the most expensive in the country. Housing costs are 26.9% higher than the national average, with the average single-family home costing $300,592. Two-bedroom apartments in Alaska cost $1,234 a month on average. Due to the remote nature of the state, goods are also expensive. Groceries are the second most costly in the nation, costing 35% more than the national average.
The median income for a family of four in Alaska is $101,965. A living wage for a family of four would only require $90,080. Alaskans also receive oil dividends that boost their incomes. However, despite the high levels of income, Alaska consistently ranks among the worst states to live in, mainly due to poor educational outcomes, high levels of violent crime, and low levels of opportunity.
Maryland
- Cost of Living Index: 124
- Groceries: 110.4
- Housing: 165.9
- Utilities: 105.1
- Transportation: 107.6
- Health: 82.8
- Miscellaneous: 105.2
Maryland is the seventh-most expensive state in the United States. Overall, prices are 24% higher than the national average, while housing prices are 66% higher. The typical single-family home in the state costs $366,581. However, despite the high cost of housing, Maryland has the second-highest house affordability, with 57.16% of residents having incomes that would support owning a home. A two-bedroom apartment rents for $1,647 a month. Healthcare costs are the second-lowest in the nation.
The median income for a family of four is $130,252 annually, substantially more than the $100,959 needed to make ends meet for a household with two working adults. Maryland has the fifth-lowest poverty level in the nation, with 9.1% of residents living at or below the poverty line.
Connecticut
- Cost of Living Index: 121.6
- Groceries: 106.4
- Housing: 134.6
- Utilities: 132.4
- Transportation: 111.1
- Health: 111.3
- Miscellaneous: 117.5
Connecticut’s cost of living index is 121.6, making it the eighth-most expensive state in the United States. The average single-family dwelling in the state costs $318,096, while rent for a two-bedroom apartment is $1,485 a month. Utilities are among the highest in the nation, costing an average of $438.21 a month.
Despite the high costs, incomes are also higher than average. The median income for a family of four is $120,379 annually, well above the $99,955 required for a living wage. However, the state's unemployment rate is one of the nation's highest, at 4.9%.
Rhode Island
- Cost of Living Index: 117.2
- Groceries: 107.7
- Housing: 121.7
- Utilities: 127.6
- Transportation: 107.6
- Health: 105.8
- Miscellaneous: 118.6
Rhode Island has a cost of living index of 117.2, making it the ninth most expensive in the United States. Housing costs are 21% higher than the national average, with a typical single-family dwelling costing $372,809. The average rent for a two-bedroom apartment in Rhode Island is $1,406 a month. Utility costs are high in the state, costing $404.21 a month.
Incomes in Rhode Island are also high. The median income for a family of four is $108,105 a year, while the living wage is $95,005.
Vermont
- Cost of Living Index: 117
- Groceries: 109.2
- Housing: 136.2
- Utilities: 119
- Transportation: 114.2
- Health: 99.3
- Miscellaneous: 104.3
Vermont is the tenth-most expensive state in the United States. Overall, costs are 17% higher than the national average. Vermont has the nation’s eighth-highest housing costs, with a single-family dwelling costing $299,998. However, housing affordability in the state is the lowest in the country, with only 15% of residents making a wage that could support purchasing a new home. A typical, two-bedroom apartment costs $980 a month.
The median income in Vermont is $111,095 for a family of four, while the living wage is $96,665.
