In this article, we will be navigating through the debt situation across the US while covering the 15 US states with the most debt per capita. If you wish to skip our detailed analysis, you can move directly to the 5 US States with the Most Debt Per Capita.
Fiscal Burden Penetrating the US
Household debt continues to rise across the US in the form of automotive loans, credit card debt, and mortgages. This brings financial insecurity to many US residents. As reported by the Federal Reserve Bank of New York, total household debt increased by 1.3% to reach $17.29 trillion in the third quarter of 2023. Mortgage balances rose to $12.14 trillion while credit card balances reached $1.08 trillion. Simultaneously, student loan balances increased to $1.6 trillion. Auto loan balances also experienced an increase, reaching $1.6 trillion. Other balances include retail credit cards and other consumer loans.
The external environment tends to impact household debt across the states. Other than rising inflation, soaring housing and transportation costs have been common in states such as Maryland, Florida, Colorado, Arizona, and Nevada which have experienced an inflow of migrants previously. The fiscal stress is higher in these high-growth areas as the mortgage and credit card burdens for residents increase under higher costs of living. Although median incomes are high in these states, they have been unable to chase the costs.
The US housing market has especially impacted the population. Amidst high interest rates, those owning houses are not willing to sell their houses since they will have to pay a higher rate for a new house. This adds to the housing shortage. As median home prices continue to climb, Americans who were looking to buy a house are considering renting one instead. The housing industry in the United States is subject to various challenges as of now. In 2023, Harvard University’s Joint Center for Housing Studies published the State of the Nation’s Housing 2023 report. First-time home buying reduced as the median home price in the US approached $3,000 per month in March 2023. People have also been spending a larger portion of their incomes on housing, experiencing a housing cost burden. The construction of affordable, medium-sized homes also declined due to rising material and land costs for home builders.
Other states including Kentucky, Iowa, Wisconsin, Arkansas, and Michigan incur less household debt as a result of lower real estate and living costs. The most underpriced housing markets in the US have also been previously covered. However, the inflation effect has been widespread as the majority of the US states have household debts that exceed median incomes. The financial stress in the United States is evident from the fact that New York is the only state with a debt-to-income ratio lower than 1%. This can be attributed to the high income and the low home and car ownership in the state.
The Role of Mortgage Lenders
Amidst rising financial burdens, companies offer mortgage loans to fulfill the needs of borrowers across the United States. Since housing accounts for a major cost for an average household, homeownership tends to be a foremost priority. As mentioned above, affordability issues have been rising in the country. However, mortgage lenders provide feasible options that enable many Americans to own a house. Some of these mortgage companies include Rocket Companies, Inc. (NYSE:RKT), loanDepot, Inc. (NYSE:LDI), and United Wholesale Mortgage (NYSE:UWMC). Let’s take a look at what these companies have been up to.
Rocket Mortgage, LLC is an American mortgage lender operating under Rocket Companies, Inc. (NYSE:RKT). The company has originated more than $1.6 trillion in home loans. On November 14, CNBC reported that the Rocket Visa Signature Card launched by Rocket Companies, Inc. (NYSE:RKT), assists US homebuyers. The new credit card earns 5X points on all purchases the card holders make and allows them to redeem rewards on closing costs and down payments with Rocket Mortgage and homeowners who have mortgages serviced by Rocket Mortgage. This way, homebuyers can eliminate difficulties in homeownership such as saving for a down payment and closing costs.
LoanDepot, Inc. (NYSE: LDI) is an equal housing lender and digital commerce company that helps customers through their homeownership journey. The company serves as one of the largest non-bank retail mortgage lenders in the US. The company operates offices across the country thereby making purchasing or refinancing a home relatively easier. It offers a variety of loan products ranging from zero down payment and buydown options to renovation loans. A strategic partnership was recently undertaken by the company to help a wider audience with homeownership. On November 16, loanDepot, Inc. (NYSE: LDI) reported that it has joined EXIT Realty Corp. International’s strategic partner network. The real estate professionals at EXIT Realty Corp. will be having full access to the expertise of the company’s local market loan consultants.
United Wholesale Mortgage (NYSE:UWMC) is an American wholesale mortgage lender. The company underwrites loans for independent brokers. Recently, it offered a no-cost appraisal to enable independent mortgage brokers to foster relationships with US real estate agents and borrowers. On November 15, United Wholesale Mortgage (NYSE:UWMC) reported that it would be covering the appraisal cost on all conventional and government home loans. This will be when an independent mortgage broker utilizes the company's 1-0 Temporary Rate Buydown product. Under this offering, borrowers will be saving up on the appraisal costs as well as the payment on the first year of the loan.
Now that we have taken a look at the debt situation in the US, let’s move to the 15 US states with the most debt per capita. Meanwhile, you can look at some of the best debt-free stocks to buy.
15 US States with the Most Debt Per Capita
In order to compile a list of the 15 US states with the most debt per capita, we sourced data from the Federal Reserve Bank of New York. The most recent debt statistics by state were available from 2022. Hence, we selected the total debt balance per capita in every state as our metric.
Finally, we ranked the 15 US states with the most debt per capita in ascending order of their total debt balance per capita, as of 2022.
15 US States with the Most Debt Per Capita
Total Debt Balance Per Capita: $64,140
In 2022, the per capita debt was recorded at $64,140 in Idaho. This constitutes 88.12% of the median household income in the state thereby ranking Idaho as one of the 15 US states with the most debt per capita.
Total Debt Balance Per Capita: $64,670
In 2022, the average resident in Connecticut carried a debt of $64,670. On the other hand, the total government debt accounted for 16.83% of the state’s GDP. Connecticut is another state holding a high debt per capita among other US states.
Total Debt Balance Per Capita: $65,600
Arkansas recorded a total debt per capita of $65,600 in 2022. The typical state resident holds debt equal to 70.63% of their annual household earnings. Thus, Arkansas is another state holding a high debt per capita in the United States.
Total Debt Balance Per Capita: $66,020
The average household debt per capita in Nevada was recorded at $66,020 in 2022. This accounts for 91.27% of the annual household earnings in the state. This makes Nevada one of the 15 US states with the most debt per capita. On the other hand, the total government debt is equal to 12.66% of Nevada’s GDP.
11. New Jersey
Total Debt Balance Per Capita: $66,800
New Jersey ranks as one of the US states with the most debt per capita. In 2022, the state recorded debt per capita of $66,800. New Jersey’s total government debt accounted for 13.17% of its GDP.
Total Debt Balance Per Capita: $66,950
In 2022, Oregon recorded $66,950 in debt per capita. The total government debt accounts for 14.59% of the state’s GDP. Hence, Oregon ranks among other states with the most debt per capita in the United States.
Total Debt Balance Per Capita: $67,670
With a total debt balance per capita of $67,670 as recorded in 2022, Alabama ranks as one of the 15 US states with the highest per capita debt. This debt accounts for 74.47% of the median household income in the state.
Total Debt Balance Per Capita: $74,110
An average Virginian held a debt of $74,110 in 2022 thereby ranking the state among other US states with high per capita debt balances. Mortgage debt and student debt add to the household debt in the state.
Total Debt Balance Per Capita: $74,260
The average resident in Massachusetts held a debt of $74,260 which equals $74,260 of their earnings. The high per capita debt balance makes the state one of the 15 US states with the highest debt per capita.
Total Debt Balance Per Capita: $79,240
Utah recorded a total debt per capita of $79,240 in 2022. Mortgage debt per capita and auto debt per capita add to the debt burden for the residents. Hence, Utah is one of the US states holding the most debt per capita.
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Disclosure: None. 15 US States with the Most Debt Per Capita is originally published on Insider Monkey.