Best places to live, COL vs. Salaries ?

[use2betrix]

On the flipside, there is flyover country with perfectly nice $150,000 homes, but a majority of jobs in the area that pay minimum wage.
Question:  What are your top metro areas that have a truly good balance of jobs with decent salaries, and reasonably priced housing/COL ?

Have you BEEN to flyover country?  That's an absurd statement.
MANY cities in the middle states have wonderful jobs available. That's why people live there.

I live in the Iowa City/Cedar Rapids, Iowa area.  Our COL is on par with Austin, TX. (Cedar Rapids has a lower COL than Iowa City area) There are plenty of excellent paying jobs to be had, especially for people with experience who are moving in looking for them. What industry do you work in? There is medical research, biotech, aerospace, manufacturing, "green" energy, educational publishing, and a ton of stuff I know nothing about. The vast majority of people in this area do not work in any sort of agricultural field.  To "make it" in the Iowa City area- you generally need a good education. There is an overabundance of people with PhDs running around; but if you have the skills, then it doesn't matter.

If you are willing to live rural and commute a bit, you can get a very inexpensive house. If you are willing to live in a small house, $130k-$150k will get you a perfectly nice home. If you want a very nice house, it is more $300-400k.

I agree with this. Iowa is a great state with great people. I lived in Iowa from the time I was 3 to 20. I lived in Iowa City for a while. My whole family went to Iowa State, and Ames is a great city as well, same with Des Moines (West Des Moines specifically)

If you want small towns, Okoboji is second to none for the Midwest. Not as many career options as big cities, however.

[CanuckExpat]

That can't be right unless the Google info for median household income is wrong (it shows Phoenix at 48k, and 50k for NYC).  You could probably pay rent for two houses in Phoenix for what you'd spend on one apartment in NYC.

Yeah, that chart is all kinds of wrong.

Your comments made me curious to dig up the report the chart came from.

The income figure comes not from median income of all families, but a “typical regional household: a statistical creation based on average values for median income, household size, and number of workers in the household". That income number for that NYC household is about $64,000, and it looks like the Phoenix number is between $50-55,000 (trying to guess from Figure 1).
They put the rental cost at NYC at just under $15,000 and the transportation costs at just under $6,000
The equivalent numbers they have for Phoenix are around $11,000-$12,000 for rent and transportation at just under $10,000 (Figures 2 and 3).
So those add up to give you the analysis in the original chart.

I don't know either market well enough to comment on if that sounds reasonable, but I'll give them the good faith assumption that they aren't making things up (the numbers come from a variety of data sources put together by HUD).

What might be surprising to you is that the New York City number for rental isn't more outrageous, but that's a regional number that may include the cheaper boroughs and outer suburbs, not just Manhattan. Also, that average cost may represent a small one bedroom rental somewhere in NYC, but a multi-bedroom single family home in Phoenix for example.

That would be consistent with what happens when you look at people's consumption habits on the average: as income rises, the "average american" spends roughly the same percentage on housing, transporation, and food. They just get bigger & more expensive houses and cars.. lifestyle inflation if you will.

Something similar probably happens in lower COL of living areas, people decide they can "get more house for the money" as realtors like to say, instead of getting the same amount of house for less money. (I'm going to wager there is a lot more people sharing small studio apartments in NYC vs. Phoenix for example, but that's probably by necessity more than choice).

[JLee]

That can't be right unless the Google info for median household income is wrong (it shows Phoenix at 48k, and 50k for NYC).  You could probably pay rent for two houses in Phoenix for what you'd spend on one apartment in NYC.

Yeah, that chart is all kinds of wrong.

Your comments made me curious to dig up the report the chart came from.

The income figure comes not from median income of all families, but a “typical regional household: a statistical creation based on average values for median income, household size, and number of workers in the household". That income number for that NYC household is about $64,000, and it looks like the Phoenix number is between $50-55,000 (trying to guess from Figure 1).
They put the rental cost at NYC at just under $15,000 and the transportation costs at just under $6,000
The equivalent numbers they have for Phoenix are around $11,000-$12,000 for rent and transportation at just under $10,000 (Figures 2 and 3).
So those add up to give you the analysis in the original chart.

I don't know either market well enough to comment on if that sounds reasonable, but I'll give them the good faith assumption that they aren't making things up (the numbers come from a variety of data sources put together by HUD).

What might be surprising to you is that the New York City number for rental isn't more outrageous, but that's a regional number that may include the cheaper boroughs and outer suburbs, not just Manhattan. Also, that average cost may represent a small one bedroom rental somewhere in NYC, but a multi-bedroom single family home in Phoenix for example.

That would be consistent with what happens when you look at people's consumption habits on the average: as income rises, the "average american" spends roughly the same percentage on housing, transporation, and food. They just get bigger & more expensive houses and cars.. lifestyle inflation if you will.

Something similar probably happens in lower COL of living areas, people decide they can "get more house for the money" as realtors like to say, instead of getting the same amount of house for less money. (I'm going to wager there is a lot more people sharing small studio apartments in NYC vs. Phoenix for example, but that's probably by necessity more than choice).

My mortgage/insurance/taxes/PMI on an 1825sq ft house in Phoenix is $848.95/mo.  It's $750-900 (or more) to rent a room in Jersey, not even in NYC...

[CanuckExpat]

My mortgage/insurance/taxes/PMI on an 1825sq ft house in Phoenix is $848.95/mo.  It's $750-900 (or more) to rent a room in Jersey, not even in NYC...

I believe you on what you pay for your house. That doesn't necessarily make it representative of what people spend on "average".
Don't know where the numbers come from exactly in that original report or the HUD analysis, and not quite that interested to dig into their methodology section.

This report from the Census with 2011 values (the report above was in 2010 dollars) seems to roughly agree with the annual numbers I saw in the report: Median gross rent for New York-Northern New Jersey-Long Island was ~$1,200 and for Phoenix-Mesa-Scottsdale was ~$900.

It seems to pass the sanity test, assuming the census numbers aren't made up :)

I have no doubt people on this board might spend much less than what the Census average reports.

[JLee]

Your comments made me curious to dig up the report the chart came from.

The income figure comes not from median income of all families, but a “typical regional household: a statistical creation based on average values for median income, household size, and number of workers in the household". That income number for that NYC household is about $64,000, and it looks like the Phoenix number is between $50-55,000 (trying to guess from Figure 1).
They put the rental cost at NYC at just under $15,000 and the transportation costs at just under $6,000
The equivalent numbers they have for Phoenix are around $11,000-$12,000 for rent and transportation at just under $10,000 (Figures 2 and 3).
So those add up to give you the analysis in the original chart.

My mortgage/insurance/taxes/PMI on an 1825sq ft house in Phoenix is $848.95/mo.  It's $750-900 (or more) to rent a room in Jersey, not even in NYC...

I believe you on what you pay for your house. That doesn't necessarily make it representative of what people spend on "average".
Don't know where the numbers come from exactly in that original report or the HUD analysis, and not quite that interested to dig into their methodology section.

This report from the Census with 2011 values (the report above was in 2010 dollars) seems to roughly agree with the annual numbers I saw in the report: Median gross rent for New York-Northern New Jersey-Long Island was ~$1,200 and for Phoenix-Mesa-Scottsdale was ~$900.

It seems to pass the sanity test, assuming the census numbers aren't made up :)

I have no doubt people on this board might spend much less than what the Census average reports.
[/quote]

I bought a decent house in a decent neighborhood - I could've spent half, I could've spent twice...but I don't see how $1200 can be remotely average in NYC. Check Craigslist! 


Even if that was the case - $900 in AZ and $1200 in NY, the salary spread advised by Google was not 33%..it was more like 10%.

[Gondolin]

For all the kvetching going on the answer is really just:

1) Pick a city where you can get a job in your industry that isn't
NYC, DC, Boston, Seattle or So Cal. There are scores of options depending on your particular life situation.

2) Move.

3) Profit.

[HazelStone]

The COL is noticeable for smaller things, too, like beer prices at bars/restaurants. $1-$3 off Boston prices. Just a small - but noteworthy, I think - comparison point.

And some excellent local breweries as well!

[CanuckExpat]

I bought a decent house in a decent neighborhood - I could've spent half, I could've spent twice...but I don't see how $1200 can be remotely average in NYC. Check Craigslist! 


Even if that was the case - $900 in AZ and $1200 in NY, the salary spread advised by Google was not 33%..it was more like 10%.

I think we've taken this off topic enough, and I've satisfied my curiosity about how those charts were generated that I will drop the topic.
If you don't believe the census number, you should contact them :)

[chesebert]

I'm going with the high COL and high Salary areas like Silicon Valley.  IMO those are the best places to make a lot of money and SAVE a lot of money fast.  Here's a real example:

Illinois suburb of Chicago (1 hour away from city)
Rent = $1400/month <$16,800 / yr>
Salary = $85k

Silicon Valley (San Jose)
Rent = $2900/month  <$34,800 / yr>
Salary = $150k


There's more to COL than rent, but rent is by far the largest difference in COL between places. Food was similarly priced (slightly more in Silicon Valley), cars cost the same, utilities are similar (slightly more Chicago due to terribly cold winters and hot summers).   

The biggest issue someone could have with the numbers I posted above is that not everyone will make $85k in Chicago or $150k in Silicon Valley.  That's true, so you'd have to run your own numbers. In general Silicon Valley pays higher salaries than LCOL areas by a longshot.

I think the difference becomes less dramatic the higher you in salary. I don't think you can expect to make 300k in SF if you are already making 150k in Chicago. Plus, would you really want to live in a $2900 apt in downtown SF? Not sure the quality of real estate is comparable. I think the RE in SF is generally at least 3X that of Chicago.

[cbr shadow]

I'm going with the high COL and high Salary areas like Silicon Valley.  IMO those are the best places to make a lot of money and SAVE a lot of money fast.  Here's a real example:

Illinois suburb of Chicago (1 hour away from city)
Rent = $1400/month <$16,800 / yr>
Salary = $85k

Silicon Valley (San Jose)
Rent = $2900/month  <$34,800 / yr>
Salary = $150k


There's more to COL than rent, but rent is by far the largest difference in COL between places. Food was similarly priced (slightly more in Silicon Valley), cars cost the same, utilities are similar (slightly more Chicago due to terribly cold winters and hot summers).   

The biggest issue someone could have with the numbers I posted above is that not everyone will make $85k in Chicago or $150k in Silicon Valley.  That's true, so you'd have to run your own numbers. In general Silicon Valley pays higher salaries than LCOL areas by a longshot.

I think the difference becomes less dramatic the higher you in salary. I don't think you can expect to make 300k in SF if you are already making 150k in Chicago. Plus, would you really want to live in a $2900 apt in downtown SF? Not sure the quality of real estate is comparable. I think the RE in SF is generally at least 3X that of Chicago.

To be fair, the $2900 that I quoted above was for a house in San Jose, not an apartment in San Francisco. The $2900 house in San Jose will be on par with the $1400 house in Chicago suburbs (Schaumburg specifically).  Both are small and pretty cheap for the area.

What's not being factored into the equation is weather, which is huge to me.  In Chicago the weather just sucks.  Some people like the "Change of the season" but it's constantly either bitter cold, crazy hot, raining, snowing or gloomy.  There are some nice days sprinkled in there, but if a nice day falls on a weekend you feel like you've been blessed by the Gods.

I definitely agree with your point that not everyone making $150k in Chicago can go to SF to make $300k.  That certainly didn't work that way for myself or my wife, or really anyone that I know.  I do think it's reasonable to think you can make a higher salary in SF than Chicago a lot of the time, but of course someone shouldn't just pick up and move there without finding a job and running the numbers first.

[ShoulderThingThatGoesUp]

I wanted to point out during this thread that what matters for how well you can save in a city depends on exactly the housing situation you get, not necessarily the median, but I wasn't sure how that could be researched usefully. Then I saw these two interesting looks at affordability that aggregate the distribution of housing prices rather than simply the median. So I wanted to bump the thread with them.

This lets you compare the rent percentile curve in different metro areas. It doesn't include small metro areas like Allentown or Cedar Rapids, but comparing Houston, Dallas, and Los Angeles is amazing.

This tries to find neighborhoods that have nice homes but also homes affordable to lower-income people. It's from Redfin and uses their data. A source of error that I noticed when I clicked on the most "mixed" neighborhood in Houston is that some of the neighborhoods they're using are just tiny - that one shows two listings, one of which is a vacant lot and the other is a half-million-dollar house.

[CanuckExpat]

This lets you compare the rent percentile curve in different metro areas. It doesn't include small metro areas like Allentown or Cedar Rapids, but comparing Houston, Dallas, and Los Angeles is amazing.

That first tool is very cool. Thanks for sharing.
Reading through the descriptions of how they put together the numbers, I came across this line which might explain some of the confusion we were seeing upthread:

"Remember, this is census data, so it’s representative of all rental units, not just market rate. That’s why, for example, NYC looks relatively inexpensive here, at least compared to cities like DC where market rate housing is cheaper but there isn’t as large a rent-controlled housing stock."

Unfortunately, reading the description, it looks like the tool kind of breaks down for comparing rents above $2000 as well. Still pretty interesting.

[VAR]

Since Atlanta was mentioned at the start I will chime in for anybody reading:
I'm from ATL. On paper you might consider it a relatively good ratio of COL vs pay, decent weather, access to a huge airport. But, Atlanta is a non-walkable, bikeable city with extremely poor transportation options around town - be it driving yourself or taking bus/train. You will sit in traffic. Every. Where. For example, I live less than 3 miles from work but it takes 15 minutes to get there due to heavy traffic and 4 stop lights.

Crime is pretty high, too many murders for the news to report they only mention particularly freaky ones, lots of drugs and gang related activity - especially in the suburbs. You will see very cheap nice looking houses listed - because they are in gang areas. Most grocery stores have security guards. Many other stores do too. The whole feeling is one of being watched and suspiciousness of everyone you see.
For all that there's a large international community as you sit in traffic every where you go, you will basically be driving past one strip mall after another. You can drive for over an hour just in strip mall suburban hell watching the same 5 stores pop up every few miles. There are a few small towns within the metro that are nice enclaves of semi walkability, decent culture. community, but houses in those areas will run you 2x or more the rates you see outside of those areas. And you will get a smaller, older house on a tiny lot for that money.
Food for thought.