Good thing the Commonwealth leads the nation with the highest average annual salary: $80,330.
By Sury Chakraborty
Living in Massachusetts? In this economy? That has got to be expensive.
And it is, according to Forbes Advisor.
An analysis the online news site published on July 15 revealed that the cost of living in Massachusetts exceeded $50,000 a year, making it the state with the second highest cost of living in the country.The highest cost of living goes to Hawaii, with an average annual expenditure of $55,491.
Good thing Massachusetts leads the nation with the highest average annual salary: $80,330.
A lot of that money goes to housing expenses. The median sales prices for single-family homes and condos in Greater Boston were $961,250 and $750,000, respectively, in June, according to the Greater Boston Association of Realtors. These skyrocketing housing costs are part of the reason why the Commonwealth came in only fifth for the highest disposable income: $26,470.
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The disposable income metric is based on two factors: salary and the cost of living. But, in general, the higher the income, the better, right? Maybe.
“I suppose you could argue it either way, but there’s a lot you can do with the higher income,” said Ted Rossman, a senior industry analyst at Bankrate, a financial services company based in New York City.
Massachusetts is not the only New England state with a high cost of living:
| STATE | COST OF LIVING | COL. RANKING | DISPOSABLE INCOME | D.I. RANKING |
|---|---|---|---|---|
| Conn. | $46,912 | 9 | $26,825 | 4 |
| N.H. | $45,575 | 12 | $20,527 | 30 |
| R.I. | $44,481 | 13 | $22,120 | 22 |
| Vt. | $43,927 | 15 | $18,848 | 40 |
Maine came in at No. 35 for cost of living and No. 35 for disposable income.
These were the top 10:
| RANK | STATE | COST OF LIVING |
|---|---|---|
| 1. | Hawaii | $55,491 |
| 2. | Massachusetts | $53,860 |
| 3. | California | $53,171 |
| 4. | New York | $49,623 |
| 5. | New Jersey | $49,511 |
| 6. | Alaska | $48,670 |
| 7. | Maryland | $48,235 |
| 8. | Washington | $47,231 |
| 9. | Conn. | $46,912 |
| 10. | Oregon | $46,193 |
The more urban commerce centers are the ones that are going to be most expensive, according to Rossman. “Part of the reason Boston is so expensive, and by extension, a lot of Massachusetts, is just proximity to jobs and culture.”
The report used data from Zillow to determine housing prices and the average mortgage payment. Two New England states — Massachusetts and New Hampshire — were among the top 10 states with the highest median home price and monthly mortgage payment:
| RANK | STATE | MEDIAN HOME PRICE | MONTHLY MORTGAGE PAYMENT |
|---|---|---|---|
| 1. | Hawaii | $ 837,324 | $5,004 |
| 2. | California | $ 743,362 | $4,442 |
| 3. | Massachusetts | $ 587,875 | $3,513 |
| 4. | Washington | $ 577,353 | $3,450 |
| 5. | Colorado | $ 543,143 | $3,245 |
| 6. | Utah | $ 510,934 | $3,053 |
| 7. | Oregon | $ 498,558 | $2,979 |
| 8. | New Jersey | $ 484,467 | $2,895 |
| 9. | New Hampshire | $ 446,839 | $2,670 |
| 10. | Montana | $ 446,602 | $2,669 |
Rhode Island came in at No. 13, and Maine landed at No. 18, followed by Vermont then Connecticut.
The same report also looked at rental costs and, Massachusetts, which has continually ranked high in the category, came in fourth in the nation. Here’s how all of the New England states fared for rental costs:
| RANK | STATE | RENTAL COST |
|---|---|---|
| 4. | Massachusetts | $1,806 |
| 8. | New Hampshire | $1,663 |
| 10. | Connecticut | $1,609 |
| 14. | Rhode Island | $1,527 |
| * | Maine | * |
| * | Vermont | * |
Besides rental costs or mortgage payments, there are also additional monthly housing costs that need to be included in your budget. This, according to the report, comprises property taxes, utilities, and homeowners insurance.
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These states were named the top 10 most expensive for monthly housing costs:
| RANK | STATE | MEDIAN MONTHLY HOUSING COST |
|---|---|---|
| 1. | California | $2,111 |
| 2. | Hawaii | $2,059 |
| 3. | Massachusetts | $1,960 |
| 4. | N.J. | $1,953 |
| 5. | Maryland | $1,818 |
| 6. | Washington | $1,809 |
| 7. | Colorado | $1,780 |
| 8. | Connecticut | $1,734 |
| 9. | New Hampshire | $1,671 |
| 10. | New York | $1,669 |
Rhode Island ranked No. 11 ($1,613), Vermont was No. 18 ($1,417), and Maine came in at No. 28 ($1,164).
Besides housing and housing related expenses, there are other costs that factor into your cost of living, such as food, transportation, healthcare, and more. In almost every category — including food prices, healthcare, and income taxes — Massachusetts was among the top 10 states, according to the report.
There are several ways of navigating a cost-of-living crisis, according to the report, building creating a monthly budget with an app, creating weekly meal plans, biking to work, refinancing your mortgage, and more.
“It’s important to note that the essence of personal finance is living on less than you make. So that’s going to be different calculations for different people,” Rossman said.
More on housing costs
- Rental market update (July edition). Where are prices falling?
- Biden to call for 5% cap on annual rent increases
- Zillow: You need to put down 61.7% to afford a home in metro Boston
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