The modifier "where" vs "which/in which"

[Scott.Wachs]

Hi everyone,
I'm confused on the modifier in this situation "where" I thought where is used to modify an noun place. Not a hypothetical place such as a community. In this situation where modifies the word community. Here is the problem.

At Shiprock, New Mexico, a perennially
powerful girls’ high school basketball team
has become a path to college for some and
a source of pride for a community where
the household incomes of 49 percent of them are below the poverty level.

I chose
(D) which has 49 percent of the household incomes

The correct answer
(C) where 49 percent of the household incomes are

[dianapaolasanchez]

You can use which only when the place is something metaphorical such as condition, situation, case, circumstance or arrangement. In this sentence describe the "community", it is an area.