Defining cost of living for real estate purposes

[PMJL34]

Hi everyone,

It's now 2023 and the real estate market has changed quite a bit in the past several years. I thought It might be good for us to re-define what price range constitutes cost of living as it relates to real estate markets. This way we have some kind of mutual understanding for this forum.

Should we use at a typical 3bed/2bath home as a measuring stick? I honestly have no idea, but I'll take a stab at it:

VHCOL - 1.5M+
HCOL - 800K-1.5M
MCOL - 400k -800K
LCOL - 100K-400K
VLCOL - sub 100k

Thoughts?
 

[GilesMM]

Cost of living is much more than housing. But how will you use this definition? What’s the purpose?

[HPstache]

Hi everyone,

It's now 2023 and the real estate market has changed quite a bit in the past several years. I thought It might be good for us to re-define what price range constitutes cost of living as it relates to real estate markets. This way we have some kind of mutual understanding for this forum.

Should we use at a typical 3bed/2bath home as a measuring stick? I honestly have no idea, but I'll take a stab at it:

VHCOL - 1.5M+
HCOL - 800K-1.5M
MCOL - 400k -800K
LCOL - 100K-400K
VLCOL - sub 100k

Thoughts?

This would be my stab at it:

VHCOL - 1.0M+
HCOL - 600K-1.0M
MCOL - 300k -600K
LCOL - 150K-300K
VLCOL - sub 150k

[Villanelle]

Are you talking a single-family home, or and 3/2?  In some areas the difference between the two seems much greater, especially urban areas where SF places are rare.

Cost of living is much more than housing. But how will you use this definition? What’s the purpose?

This.

The military pays a housing allowance that is calculated based on the price of real estate (renting) and a few basic utulities in an area.  Separately, it offers a Cost-of-living allowance for areas where everything outside real estate is more expensive than normal.  There is not always a correlation between the two.  For example, the DC area, gets ~$1000 (in some cases even more!) less per month than San Diego in housing allowance, but received a small COL pay (2021-2) while San Diego got none.  So, less expensive housing, but more expensive other-things

[PMJL34]

I’m referring specifically to real estate. And yes 3/2 sfh. Not food or energy costs like that.

I think it’s important because we use these acronyms/terms frequently but I don’t think we all define them the same way which causes confusion.

[badger1988]

Are you attempting to define for something like "median" house in a region, or are you thinking of a metric that applies to individual houses regardless of location? I consider the area I live in to be LCOL. However, I see current listings for 3bd/2ba ranging anywhere from 30k to 750k.

I think your proposed range for LCOL is a bit wide, compared to the others. I'd suggest something more like the following (I just took your 1.5M VHCOL threshold and kept dividing by 2.5 for each step down):

VHCOL - 1.5M+
HCOL - 600K-1.5M
MCOL - 240k -600K
LCOL - 96K-240K
VLCOL - sub 96k

Also, "re-defining" implies there was previously an agreed definition. What would you consider to be the previous definition?

[Paper Chaser]

What value does this have?

There's so much more that goes into the cost of living in a location, I don't see people adhering to whatever new definition we might come up with.

[Ladychips]

I think this is an interesting thought process.  I live in a LCOL location.  5 years ago, I could buy a 3/2 "starter home" all day long for $80,000. I could buy a nice (not extra but everything would work and I could live there without making any changes/upgrades) house for $100,000-$120,000. 

I have a couple of friends looking for houses now. You can't buy ANY house for $80,000 and can't buy much for $120,000. I'd say $150,000 is the bottom to buy a decent house and $230,000 for a nice house.  That's spot of difference in 5 years...

[clarkfan1979]

Hi everyone,

It's now 2023 and the real estate market has changed quite a bit in the past several years. I thought It might be good for us to re-define what price range constitutes cost of living as it relates to real estate markets. This way we have some kind of mutual understanding for this forum.

Should we use at a typical 3bed/2bath home as a measuring stick? I honestly have no idea, but I'll take a stab at it:

VHCOL - 1.5M+
HCOL - 800K-1.5M
MCOL - 400k -800K
LCOL - 100K-400K
VLCOL - sub 100k

Thoughts?

Below is my opinion

VHCOL - 1.0M+
HCOL - 550K - 999K
MCOL - 350k - 549K
LCOL - 200K - 349K
VLCOL - 199K and below