Cost of living is difficult to calculate accurately since it’s always changing in relation to other places around the country. The Bureau of Labor Statistics doesn’t even release an official cost of living comparison so other sources of statistics have to be used.
However, by including set variables for each state, including transportation, grocery, utility, housing, and other costs, cost of living trends become very apparent between states. Continue reading to learn about the 8 most expensive states to live in, including what drives their prices compared to other states. Hopefully, you don’t see your hometown on this list!
- Connecticut
- Alaska
- Maryland
- Massachusetts
- New York
- Oregon
- California
- Hawaii
Average house price: $662,447
Grocery cost index: 107.7
photo source: Wikimedia Commons
The eighth most expensive state in the U.S. is Connecticut. Its cost of living is high primarily due to housing prices, utilities, and other necessities. Alcohol, for example, is extremely expensive in Connecticut. The average bottle of wine at a restaurant is usually around twice the price of the national average.
The average cost of a home in Connecticut is $662,447, which is why its housing cost index is 142.2. The state also has high grocery prices and an average utility bill of $216 per month.
Did you know?
Cost indexes are expressed as ratios of the national average so that values can be compared to that average, which is represented by 100. For example, a cost index of 150.0 represents something that costs 50% more than the national average.
Average house price: $318,800
Grocery cost index: 132.4
photo source: Wikimedia Commons
Alaska is the nation’s remotest state, which impacts its cost of living. Practically everything has to be shipped to Alaska, so freight costs end up trickling down to the people. Despite a cost of living index of 128, the average house price in Alaska is not nearly as expensive as other states on this list. This is because the demand for housing in Alaska, for obvious reasons, is just not that high.
Alaska’s freezing temperatures also drive its residents’ energy bills extremely high compared to the rest of the country, which impacts how much it costs to live there year-round.
Did you know?
Alaska has a high median household income (around $78,000). Its residents supplement their income with oil dividends, which helps them deal with the high cost of living.
Average house price: $794,750
Grocery cost index: 114.6
photo source: Wikimedia Commons
It may come as a surprise, but Maryland is one of the most expensive states in the United States. The biggest reason is that it’s close to Washington D.C., which is one of the nation’s most expensive places. The average house in Maryland costs $794,750, which is higher even than many of the states listed below.
However, its comparatively low cost of living, with an index of 128.1, is due to a few factors. Firstly, Maryland has lower transportation costs than many of the states listed later, with an index of 107.1. But most of all, Maryland has a lower health cost index even than the national average at 85.7, which profoundly impacts its cost-of-living expenses.
Did you know?
Despite its high living costs, Maryland ties for the third-lowest poverty rate in the country behind New Hampshire and Utah (tied with Minnesota). It also ranks second in median household income at $82,000.
Average house price: $663,942
Grocery cost index: 128.1
photo source: Wikimedia Commons
Massachusetts, despite being a popular New England living and vacation destination, is an expensive state almost entirely because of Boston. One of the oldest cities in the country is also one of its priciest, which drives up the average home price in the state to almost $664,000. A cost of living index of 132.6 includes very high monthly energy bills (over $236 on average) and high gas prices.
A transportation index of 110.1 helps a little bit, but with a capital in the top 1% of expensive living arrangements, it’s a tough state to live in comfortably. With an average living cost of $2,899 each month, Boston is actually the 31st most expensive city on earth out of nearly 10,000.
Did you know?
Massachusetts is the most educated state in the country, which helps people deal with its high cost of living. As a result, Massachusetts residents have one of the highest average incomes in the United States: over $77,000 per household.
Average house price: $1,901,222
Grocery cost index: 113.4
photo source: Pixabay
New York is famous for its outrageous housing costs, with by far the highest in the nation. The average home in New York costs over $1.9 million. Even a two-bedroom rental costs $3,667 per month on average and it only gets worse the closer people move to the big city.
But remember that New York is a big state, not just a city. The relatively affordable outskirts of the state are the only thing keeping it this high up the list – if we were only talking about the city, this would be number one.
Did you know?
The cost of living index of 133.7 in New York is not as high as in other states, despite the soaring housing costs. This is partly due to the size of the state, partly because most people rent rather than buy in New York, and also because it has such a low transportation index of 105. Compared to later states, New York’s public transportation offerings have an obvious effect on lowering the average living costs.
Average house price: $549,358
Grocery cost index: 113.8
photo source: Wikipedia Commons
Oregon may not have the insane house prices of New York, but as mentioned, most people in New York are renters. That $549,358 median house price in Oregon hits closer to home (literally) for its 4.246 million people. Its high cost of living index comes from its extremely expensive transportation costs, especially compared to New York, which offers a lot of public transport. By contrast, Oregon has a 129.4 transportation index.
Just sugar and coffee and other basic groceries are expensive in Oregon as well. The only thing it has going for it is a utility cost lower than the national average, which is rare on this list.
Did you know?
We would be listing Washington D.C. right now if it was a state. The District of Colombia has a cost of living index of 161.1, lowered only by relatively low transportation costs. We didn’t include it since it isn’t technically a state.
Average house price: $626,170
Grocery cost index: 117.3
photo source: Wikipedia Commons
The most expensive state in the mainland United States, California may have a ton of land to work with, but it still manages to have a huge housing index of 196.5, nearly the highest on the list. An average home price of over $626,000 means that the state is mostly full of renters, with all those beachfront celebrity neighborhoods hiking up the market every chance it gets. From Malibu to LA – this is one of the states where a $1 million house is commonplace.
Despite this, the grocery cost index of 117.3 is not actually as high as other states previously on this list. This is likely because California boasts a lot of access to imports and transportation routes to centers of agriculture as well as numerous welfare plans. But it has some of the highest GAS prices in the entire nation.
Did you know?
The average monthly energy bill in California is just over $237. This is more than twice the national average of $115.49.
Average house price: $1,158,492
Grocery cost index: 167.7
photo source: Wikipedia Commons
The most expensive state to live in is Hawaii. Unsurprisingly, one of the world’s most luxurious vacation destinations, one of the honeymoon capitals of the world, is also the most expensive state to live in on a full-time basis. Its cost of living index soars above its competition, scoring 196.3, meaning it’s practically twice the index of the national average. This is in addition to a grocery index of 167.7, which is significantly higher than any city on this list. And as we’ve discussed already, groceries are a huge part of calculating the real cost of daily living in a place.
The final nail in the coffin of the wallets of prospective Hawaiians is a housing cost index of 336.3, which is absolutely insane. This means that the average home in Hawaii costs over $1.15 million, head and shoulders above nearly every other state.
Did you know?
Since Hawaii is in the Pacific Ocean, it has to have everything that it can’t make for itself shipped from the mainland United States. This means that even something as simple as a gallon of milk or a bag of chips carries with it the insane freight prices to get it there.
The Takeaway
Though each of these states derives its high prices from different sources, from transportation to groceries, all 8 are the most expensive to live in, at least in the United States. Thankfully, on a global scale, the United States is only ranked as the 20th most expensive country, so there are a lot of other places whose expenses make these look like a handout. Hopefully that’s some comfort, if you happen to call one of these places home.
