Most expensive cities to live in; not exactly the top of the list a city wishes to be on.
The list is based on a cost of living index having taken into account a city’s median income and having compared it to what it costs for homeowners and renters to live comfortably in the city. These numbers were derived from Go Banking Rates, which was able to ascertain the ideal incomes in major U.S. cities using the 50/20/30 rule.
The 50/20/30 rule suggests you take 50% of your income for necessities (housing, food, healthcare, transportation), 20% for savings and 30% for personal items you don’t need but want.
#10 San Jose, CA
- Average Ideal Income: $170,586
- Median Income: $96,662
- Cost of Living Index: 1.76
#9 Honolulu, HI
- Average Ideal Income: $157,765
- Median Income: $80,078
- Cost of Living Index: 1.97
#8 Boston, MA
- Average Ideal Income: $124,901
- Median Income: $62,021
- Cost of Living Index: 2.01
#7 San Francisco, CA
- Average Ideal Income: $197,250
- Median Income: $96,265
- Cost of Living Index: 2.05
#6 Oakland, CA
- Average Ideal Income: $136,778
- Median Income: $63,251
- Cost of Living Index: 2.16
#5 Long Beach, CA
- Average Ideal Income: $131,702
- Median Income: $58,314
- Cost of Living Index: 2.26
#4 New York, NY
- Average Ideal Income: $138,500
- Median Income: $57,782
- Cost of Living Index: 2.40
#3 Los Angeles, CA
- Average Ideal Income: $143,300
- Median Income: $54,501
- Cost of Living Index: 2.63
#2 Denver, CO
- Average Ideal Income: $106,128
- Median Income: $38,991
- Cost of Living Index: 2.72
#1 Miami, FL
- Average Ideal Income: $107,245
- Median Income: $33,999
- Cost of Living Index: 3.15
Now that you have gotten through the list let me add the following for thought:
As a trained urban and regional planner one significant geographical feature of the cities listed comes to the forefront; 9 of the 10 cities on the list are coastal. Thus their ability to physically expand horizontally is hindered by water. The one exception is Denver which while in a basin can easily expand in all four directions with the major constraint in the future being potable water supply.
Another interesting observation concerns Denver and Miami and the Cost of Living Index. Miami, while having a diverse economy is also challenged income-wise by its higher than average population of retired residents; thus living on fixed or limited incomes. Thus the disparity between housing cost and income can be somewhat justified coupled with a real estate market that is buoyed by out of the region demand from snowbirds of the north to capital sheltering from Latin and South America.
Denver is truly the outlier on the list. Our economy is more diverse than Honolulu but not by much. In addition Denver is the only city/region on the list without a major seaport concerning trade and commerce.
Denver has been attracting the best and brightest for many years due to our pleasant climate and until recently an affordable cost of living. Yet is our cost of living and lifestyle sustainable longer-term if incomes do not catch up?
While Denver may be attractive concerning companies looking to relocate i.e. VF and others the reality is cost of living and lifestyle can be a determinate concerning corporate relocations. My concern if Denver continues on this trajectory concerning a disparity between income and cost-of-living coupled with competition for our brightest and best from cities such as Salt Lake, Austin, Dallas, Minneapolis, Atlanta and others; should be we concerned?
Yes! Denver historically has been a boom and bust city and while we may be fortunate to ride this wave of in-migration and housing price inflation increasing our wealth effect the same scenario happened in the late 1960’s before the inflation of the 1970’s. Also happened during the oil boom of the 1980’s until jobs fled en masse to Houston and Calgary in the late 1980’s into the early 1990’s.
This time may be different…yet even The Wall Street Journal advises:
For 2019 Graduates: The New Cities for New Grads: Salt Lake City, Pittsburgh and Baltimore. These emerging locales offer hot jobs for young workers—plus reasonable rents.
Next week a home listed in Congress Park that may be an example of Irrational Exuberance catching up with the reality of a charing real estate market.