Marcus: Hoosier Housing Costs and Income Below Average


Morton Marcus

Last week in this space we wrote: In 2022, the average Hoosier worker had a wage of $67,088, 33rd highest in the nation. This level of income permits her/him to buy the same basket of goodies as $73,067 buys in Averageton, USA.

This statement supports our Hoosier article of faith: It’s cheaper to live here than most other places in the United States. It doesn’t mean we live better, just spending less of our income than folks in other states to satisfy our cravings for the goodies of the market place.

There’s still more evidence. Indiana’s median household income in 2022 was the 13th lowest in the nation. Likewise, our median housing costs were 13th lowest among the 50 states. Our household income level was 11% below the national median and our housing costs were 24% below the comparable national figure.

Taken together, our median household income of $66,785 and our median housing costs (owners and renters combined) of $11,640 means we spent 17.4% of income on housing. The seventh lowest percent in the nation.

That 17.4% percent of income going for housing costs in Indiana was 14.2% for homeowners and 29.4% for renters. Home owners account for 71% of occupied housing units in the state with a balance of 29% of units rented.

These number tell us the relative cost of renting is twice that of home owning….29.4% being more than twice 14.2%. Nationally, the corresponding figures are similar but higher at 31.7% for renters and 16.2% for homeowners.

In addition, when examined in detail, the 2022 American Community Survey reported that 49% of renters and 17% of Indiana homeowners spent more than 30% of their respective incomes on housing.

Is this evidence of a housing shortage? Of the households spending 30% or more on housing, 106,200 (16%) have incomes of more than $50,000 a year. And the remaining 577,500 households are not without housing.

Setting aside legitimate questions of what is meant as income and what is meant as the cost of housing, we should ask: “What is this 30% of income rule?”

Why is 30% a line in the sand, a standard accepted by lenders and housing advocates alike? That figure is like the Federal poverty line created one weekend in the early 1960s by a group of federal statisticians and adjusted subsequently, but never challenged.

The 30% of income line was originally 25% for renters of public housing nearly 60 years ago. It was raised because of rising housing prices.

A shortage means the quantity demanded by consumers exceeds the amount offered by sellers at a given price. Could it be that consumers are wanting too much, too many amenities, so much more floor space? Maybe, but to challenge consumer sovereignty is a form of treason for which I do not wish to be charged.

Mr. Marcus is an economist. Reach him at [email protected]. Follow him and John Guy on Who Gets What? wherever podcasts are available or at