A New Study Says Local Residents of These Six Cities are Most Likely in Debt

When it comes to mortgages and incomes, the math doesn’t add up for locals.

Photo: David Croxford 

A recently published study by WalletHub compared median mortgage balances with median income and home values to determine which cities’ residents are the most likely to have more debt than they’re able to pay back. The study looked at 2,500 cities across America, and Kailua, ‘Ewa Beach, Waipahu, Kahului, Lahaina and Kīhei were all among the top 29 most overleveraged cities.

What does that mean? In Kailua, the median income is $36,001. The median home value is $399,600 and the median mortgage debt is $292,812. By those numbers, a single Kailua resident’s mortgage-debt-to-income ratio would be 813 percent, and his or her mortgage-debt-to-house-value ratio would be 73 percent. Of course, many residents don’t live alone, so we doubled the median income, to $72,002. The new mortgage-debt-to-income ratio is still extremely high, at 407 percent—a recipe for never, ever paying off your mortgage.

Interest rates have crept up a bit lately; however, they’re still at historic lows when compared to data from the past 30 years. Low rates mean buyers can borrow more money, thus have greater purchasing power. Long gone are the days of stated income and loose mortgage rules that led to the housing crisis of 2009. However, it’s still important to only take on a mortgage that works for your income and lifestyle, even if it means starting out with a smaller home than you’d dreamed, to ensure you don’t wind up overleveraged.

To see the complete WalletHub report, click here.