What Are the Most Expensive States to Live In 2023?

Most Expensive States in the US 2023

What Are the Most Expensive States to Live In 2023?

For homeowners, one of the best ways to ensure that a mortgage stretches as far as possible is to live in a low-cost-of-living (COL) area. If COL is low, the amount of square feet you can buy for your money tends to go up. 

The problem is that prices seem to be going up everywhere. When the consumer price index (CPI) recently reported that the index of all items increased 6.5% before seasonal adjustments over the last 12 months, it was considered good news because of how high inflation was in 2022. Higher costs on everything from groceries to mortgages have taken a bite out of everyone's pocket, making the area you live all the more critical in 2023.

Not everyone has access to low COL areas. Many homeowners have no choice but to buy in a high COL area for work or to be near family. For others, there's some flexibility in planning. That's why we've tabulated the latest statistics that show the most expensive states to live in throughout 2023. Here's what we found.

The Cost of Living Index

First off: what affects the cost of living? Finding the most expensive state to live in requires tabulating numbers from the price of groceries to the cost of housing. And these numbers will inevitably vary from state to state. Your cost of living is also at the mercy of your circumstances. High childcare costs won't affect you if you don't have children. Those costs can make or break your budget if you have five children.

To help address this issue, many turn to the Cost of Living Index. This index compares by geography, such as town to town, and state to state. It factors in several common expenses, including:

  • Food
  • Shelter/homes
  • Transportation
  • Energy
  • Clothing
  • Healthcare
  • Childcare

By tracking typical prices across these categories, you can estimate what living in a particular area might cost. You can also use this number to track changes over time. For instance, did a state go up in COL relative to the others, or did it go down?

You'll find several different COL indexes, each using its own methodology. One of the most popular comes from the Economic Policy Institute, which regularly updates its family budget calculator to give people a sense of how much they can expect to pay in different areas.

If you're considering moving to one of the states on this list, that calculator can identify your actual COL. After all, even a statewide COL index will not apply equally to every town or city within that state.

The Most Expensive States in 2023

The average family in the U.S. pays about $61,000 a year in living expenses. That provides the context for the places in the U.S. where those living expenses can be far above the median. Let's look at what the data is saying about the highest cost of living states, according to World Population Review.

  • Hawaii. Tops on the list lands Hawaii, with a COL index of 193.3. The price of housing is the sore spot here, scoring 315, while other categories—like healthcare (115) bring down the average a bit. Hawaii also boasts a poverty rate among the lowest in the nation. For that, it has a high average income to thank. 
  • New York. Considering high COL areas tend to be states with dense population centers, New York's entry on this list shouldn't be too much of a surprise. Its COL index scored much lower than Hawaii's at 148.2. Again, housing was the main culprit here, driving up the average score compared to other categories, like groceries and utilities. Housing scored 230.1, lower than Hawaii's but still considerably above the national average.
  • California. High gas prices in California drive up its transportation costs, one reason it ranks as the third-highest COL state in the nation. At 131.1 on the index rating, its transportation costs are much higher than New York's 108 rating, for example. And with a single-family home priced at $683,996 on average, California's housing costs might not be as exaggerated as Hawaii's and New York's. However, they can still be a significant cause for concern.
  • Massachusetts. Though Massachusetts doesn't have the higher housing prices of California or New York, it still clocks in at 177 for real estate, landing it at number four on the list. However, Massachusetts generally performs well in the other categories, with groceries, utilities, and transportation all within ten points of each other, just under 120. 
  • Oregon. Closely trailing Massachusetts is Oregon, comparing favorably to Massachusetts in every category except transportation, where Oregon's 125.9 is higher than Massachusetts' 111. Higher gas prices on the west coast tend to drive up these costs for the Pacific states. However, Oregon is the first on the list to crack a utility index of less than 100. Overall, its score of 130 puts it nearly on par with Alaska and the second tier of high COL states as the high scores begin to level off.

Understanding where your state stacks up requires a grasp of the different categories that typically impact the cost of living: food, housing, utilities, and transportation. While you might save on transportation, you could pay more for housing and vice versa. Still, an overall high COL tells you to expect to spend more out of pocket across the board.

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