Estimated read time: 5-6 minutes
In March, USA Today released a report about the cost of living in each state. It might shock you to learn that Utah came out on top — especially when a February Redfin report showed Utah's housing prices continue to rise sharply year over year.
If you're confused as to how this could possibly be true, it might help to break down USA Today's methodology. Here are a few things to understand about what went into the rankings. Spoiler alert: Things might not be as cheap as you think.
Factors that affect affordability
The most affordable state isn't necessarily the state with the lowest cost of living. USA Today uses five different criteria to determine overall affordability in each state.
"To analyze 'affordability,' we calculate living expenses in relation to each state's median income," the report states. "We examine federal and state income tax as applied to the state's median income, median homeowner costs, reported grocery spending, health care spending and gasoline spending."
Though Utahns didn't necessarily have the lowest taxes, grocery or gasoline prices, the two biggest factors influencing overall affordability were median income and health care spending.
The information is based on median income, not average income
One of the main reasons why Utah is listed as the most affordable state by USA Today has to do with median income. The cost of living in Utah is higher than all but one of the top five most affordable states, but the median income is also higher than all but one of those states.
The cost of living in the Beehive State totaled $56,436 and median income was $89,168. This means Utahns spend 63.3% of their yearly income on necessities, leaving them with $32,732 in discretionary income — the highest amount per capita.
The least affordable state overall was New York with a total cost of living of $62,644 and a median income of $79,557. New Yorkers spend a whopping 78.7% of their annual income on necessary living expenses.
Still, things might have worked out a little differently if the study had looked at average income instead of median income.
Shane Stewart, a certified financial planner with Deseret Mutual Benefit Association, told KSL reporter Don Brinkerhoff, "[USA Today] using median [income] tells me they're trying to paint a more rosy picture than it actually is … if you use the average salary of about close to $50,000 here in Utah, you get a little better perspective on what that looks like and probably a more fair number to use."
Utah has the most affordable health care costs
In addition to a higher median income, Utahns have the benefit of paying less for healthcare than any other state. This played a significant role in the state's overall affordability.
"Utah spends the least in both absolute dollar amounts ($6,213) and as a percentage of income (7%), indicating a relatively efficient and affordable health care system," the report states. Utah was followed by Maryland, Colorado, Virginia and Hawaii. The most expensive states for healthcare were West Virginia, Louisiana, South Dakota, North Dakota and Kentucky.
Utah homeownership costs are among the most affordable — sort of
Yes, you read that correctly. The USA Today report found that Utah has some of the most affordable homeownership costs in the country. That may come as a surprise, because an April report from BestBrokers.com listed Utah as the third least affordable state to buy a home in 2024.
But pay close attention to the wording on this one. USA Today doesn't say that Utah has the most affordable houses in the nation. Total homeownership costs — which include monthly mortgage and insurance payments, homeowners association fees, taxes and utilities — just make up a lower percentage of Utahns' annual income when compared to other states.
Utah was the fourth most affordable state for homeownership with Utahns spending 24.5% of their annual income on these costs. The most affordable state was Indiana with 23%, followed by Delaware with 23.8%, Iowa at 24.3%, Utah and then Idaho with 24.9%. The least affordable state was New York with residents spending 35.5% of their annual income on homeownership costs.
One caveat with this is that the information comes from 2022 — prior to the surge in mortgage rates. The study also focuses on homeowners who are already in their homes and not those who are looking to buy homes.
Here's how Utah fared in other categories
Utah ranked fairly well for both grocery and gasoline costs, coming in at No. 10 and No. 14 for those categories, respectively. But income tax saw a much lower score with Utah ranking No. 42 out of 50 states.
Is Utah really the most affordable state?
It's important to take the USA Today report with a grain of salt. As with many things in life, what's affordable for one person may not be affordable for someone else. Timing is another important factor. Someone who bought their home in 2016 likely has a much lower payment and interest rate than someone who bought their home in 2023.
In the end, no matter what the report says, Utah's affordability might just depend on whom you ask.
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