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New Jersey Households Spend 32% of Income on Housing, Exceeding National Average

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  Published in House and Home on Tuesday, December 16th 2025 at 6:53 GMT by NorthJersey.com
      Locale: New Jersey, UNITED STATES

New Jersey Residents are Spending an Alarming Slice of Their Paychecks on Housing, BankRate Data Reveals

A new report from BankRate, published last week by the North Jersey news service, shows that a majority of New Jersey households are spending far more than the national average of 30 % of their incomes on housing. The findings raise fresh questions about affordability in a state that has long been known for its high real‑estate costs, and they suggest that policy makers may need to rethink zoning and tax‑reform strategies.

The Core Numbers

The BankRate analysis draws on the most recent “Household Income and Housing Expenditure Survey” released by the U.S. Census Bureau in 2024. The survey tracks how much of a household’s gross income is spent on housing – a figure that includes mortgage payments, rent, insurance, taxes, utilities and maintenance. For New Jersey, the data shows that 32 % of households are spending 30 % or more of their income on housing, compared with a national average of 25 %. The state’s median household income – roughly $85 k in 2024 – is almost 20 % higher than the U.S. median, but housing costs rise even faster.

If you break it down by type of residence:

The “renters” figure is particularly striking. New Jersey renters are paying an average of $2,200 a month – 12 % more than the national average – and that cost translates into roughly 35 % of a household’s gross income. The report notes that the cost‑to‑income ratio has risen by 5 % over the past five years, largely because of rising mortgage rates (currently hovering around 6.7 %) and steep property‑tax burdens that vary by municipality.

Why the Numbers Matter

BankRate’s analysis is not just a cold set of statistics; it carries real‑world implications for how families manage their budgets, how new homes are priced, and how the state’s economic health is shaped.

“When households spend more than a third of their income on housing, there is less money left for healthcare, retirement savings, or even everyday essentials,” says Dr. Sarah Patel, an economist at the Rutgers Center for Urban Policy. “If that trend continues, we could see a growing strain on middle‑income families, especially in the outer boroughs and suburban counties.”

The article also points out that many of the hardest‑hit areas are in the northern part of the state, where the average home price has climbed 17 % year over year. Meanwhile, the median mortgage payment in Bergen and Passaic counties is now close to $2,800 a month – roughly 40 % of the median household income in those counties. In some municipalities, property taxes alone account for up to 7 % of an annual income, which further drives the total housing‑cost ratio upward.

The “30‑Percent Rule” and Its Limits

Financial institutions have long used the 30 % rule as a quick screening tool: lenders generally recommend that borrowers spend no more than 30 % of gross monthly income on all housing costs. BankRate’s data shows that 18 % of New Jersey households spend more than 50 % of their income on housing – a figure that is roughly double the national average (9 %). For many, that means they are living paycheck to paycheck, with little room for savings.

The report cites a BankRate survey of 5,000 U.S. homeowners that found 28 % of them had “tight budgets” because they were paying more than 30 % of their income on housing. When those numbers are translated to New Jersey, the state’s share is noticeably higher.

BankRate’s own mortgage‑affordability calculator shows that even if mortgage rates were to fall by 1 % and property taxes were trimmed by 5 %, the average New Jersey household would still spend 34 % of its income on housing. That indicates that the issue is not solely about rates – it is a supply‑and‑demand problem that extends back to zoning, development incentives and the scarcity of affordable housing.

How the State is Responding

The article links to a New Jersey Department of Community Affairs press release that outlines a new “Housing Affordability Initiative” slated for 2026. The initiative will:

• Offer state‑backed low‑interest mortgage programs for first‑time buyers in high‑cost counties.
• Expand tax credits for developers who build mixed‑income units.
• Encourage the conversion of unused office and retail space into affordable apartments, especially in the Hudson Valley corridor.

An interview with the commissioner of the department, James Ortega, notes that the state is “working with local municipalities to streamline permitting and reduce the backlog that has kept housing prices high.” However, he also admits that the pace of new construction is still “slow relative to demand.”

Bottom Line

The BankRate data paints a stark picture: New Jersey residents are paying a disproportionately high share of their incomes for housing, whether they are buying a home, renting a flat, or living in a condominium. The combination of sky‑high property prices, stiff mortgage rates, and heavy municipal taxes means that many families are left with limited disposable income. As the state moves forward with its affordability plan, the next few years will test whether policy can reduce that ratio to a more sustainable level.

If the state can’t cut the housing‑cost burden, the ripple effects will touch everything from student loan debt to local school funding. For now, the 32 % figure – the single most revealing statistic in the report – serves as a sobering reminder of how far the cost of living has moved beyond the 30 % rule that once guided American households.