Why Is Philly Cheaper Than Other East Coast Cities? (Philadelphia: apartment, insurance)

[drive carephilly]

Originally Posted by BajanYankee

You didn't answer my question. If half of the housing in Philly burned down (and then all new construction was banned), would it become as expensive as SF?

Your question is a hypothetical that wouldn't happen in the real world . . . but I answered it anyway and provided real world examples. (which you conveniently ignored) To explain it again - If housing in Philadelphia magically disappeared and the employment base remained the same then yes, housing costs would go up dramatically. In the real world, vacancy rates in SF are half what they are in Philly. If the rate in Philly dropped to 3% overnight rents would explode. Would a 3% vacancy rate mean the same rents as SF? Maybe not because I would imagine that part of what people are paying for is the weather and the scenic beauty of the Bay Area. Philadelphia doesn't have an ocean or mountains.

Compared to DC (3.4% vacancy) or Boston (3.1% for apartments - 1% for houses) Philadelphia has similar topography. The weather in Philly and DC is very similar so if Philly vacancy rates dropped to Boston levels then yes, absolutely, Philly would have very similar rents.

Yes, they do. Do you have any idea how many houses my wife and I have been outbid on? And these people didn't magically come up with 850 Grand because supply was short. "Oh, supply is so short, I'll just magically wish an extra $200,000 per year onto my salary!" The number of people both willing and able to buy a house at the $700K price point in BK or DC is tremendous.

LOL. Yeah, that's why I think people are suckers for paying that much to live in NYC. Your higher pay doesn't add up to a better quality of life. It's just enough to keep people from leaving.

[drive carephilly]

Originally Posted by BajanYankee

Okay, so as the housing prices go up in Philly, employers are going to magically create profits they don't have and pay their employees more? Got it.

What school did you go to that you've never heard of inflation?

employers don't magically create profits, they pass the costs on to the consumer.

I managed a restaurant for a few years. When food costs rose dramatically a few years ago we printed new menus with an average 5% price rise. When we expanded and our labor costs went up dramatically part of it came out of our bottom line and part of it was passed on to our customers.

[rotodome]

Ok, FWIW, this is my experience:
I am a professional who moved from Philly to NYC.
I am not in a field where one typically gets big bonuses to offset one's salary. I did not move here to work in finance, or some other blatant moneymaker profession. Those are not my priorities. I do a version of the same job I did in Philly.

When I first moved (in 2005), my salary went up by a 20%, and my rent went up by 27%. After I moved out of my "landing pad" apt (it's hard to find good deals when you're relocating from another state), my rent was/is 12% higher than my Philly rent. In Philly I lived in a 1300sf 2BR 2Bath rowhouse with a yard & basement. Now I live in a 1200sf 2BR 2bath apartment with a yard & basement. All in all, pretty comparable.*

Sooo, for me, no huge overblown salary discrepancy, but also no huge overblown COL increase.

*But I rent. Where it gets to be NOT comparable is if you want to BUY real estate. Buying NYC real estate is bonkers expensive.

[RightonWalnut]

Originally Posted by BajanYankee

Yes. It's a simple proposition, right? Someone making $80K a year can't buy a $800K house. But someone making $400K per year can. And in SF, DC and NYC, you have a lot of people who make that kind of money.

The market dictates that. NYC (finance and a lot of other stuff), DC (law and policy) and SF (tech) are at the top of their game in their respective niches and thus draw the top talent in the national (and global) labor pool. The services of an Apple programmer are in greater demand than someone working at a top Philadelphia company. And that's why you don't have many people in Philly bringing home Apple and Google type paychecks.

Yes, you can. The fact that you have a crapload of people bringing in a crapload of cash is probably the biggest factor.

This is a totally ridiculous argument. Boston is no more confined by the Boston Harbor than Chicago is by Lake Michigan. It is a sprawling, low density metro area so prices are not sky high simply because there isn't enough land to build on.

Yes, which means that you have a lot of people there raking in lots of dough. You just completely contradicted yourself.

The status as the nation's capital is not what drives up the COL. Its the industry that's derived from that that drives it up.

Boston has a lot of venture capital and private equity. Plus top tier law firms and the most NHI funding of any city in the country. Not to mention megaschools like Harvard that are economic drivers on their own.

What is San Francisco the capital of? That argument makes absolutely no sense. Now I will agree that Philadelphia does not have a particular niche the way DC, NYC and SF do. And that's what makes it less expensive. It's not a city that attracts the top talent that commands the highest possible salaries in any given field.

No one bringing home Apple or Google type paychecks? Sure you do. What about the big hitters at Comcast? Surgeons at UPenn? CHOP? etc. You are acting like no one in Philadelphia makes money and it is pretty funny. You are acting like a surgeon at CHOP would not be paid more if moving to a hospital in NYC... it's the same job just different pay. You literally make no sense.

THE AMOUNT OF WEALTH IS NOT A RESULT OF HIGH REAL ESTATE PRICES. HIGH CONCENTRATION OF WEALTH IN AN AREA IS A GRADUAL PROCESS RESULTING IN THE EVENTUAL CONCENTRATION OF HIGH WEALTH. ALL METRO AREAS HAVE WEALTHY PLACES. WHAT THEY GET PAID HAS TO DO WITH THE COL IN AN AREA. COL IS A RESULT OF A NUMBER OF THINGS. NO JUST ONE SPECIFIC PHENOMENON.

I was not saying Boston is confined, but BECAUSE Boston is a coastal city and BECAUSE it sits on the ocean is a large contributing factor as to why it is more expensive. Do you know anything about real estate?! If you did maybe this conversation would make more sense to you. There are more factors contributing to the cost of Boston but it's location on the ocean is a MAJOR factor. OCEAN FRONT PROPERTY. Location Location Location.

We don't need to argue why NYC is expensive, we all know why. DC is expensive BECAUSE IT IS THE US CAPITAL. With recent expansion of the government and more job openings in a country wide weak job market, the result is people cramming to DC for jobs. With the height limit, the ability to build upward is no longer possible. Skyscrapers, normally, in other cities, are built at points of high real estate prices to relieve what would otherwise be sky high real estate prices (like you see in DC). With high demand now, and the inability to build upwards to relieve these real estate prices, DC's COL sky rockets.

San Francisco is the FINANCIAL CAPITAL OF THE WEST. Also, San Francisco is physically constrained by land, resulting in higher real estate prices. (i.e. mountains on one side and the ocean on the other side with the Bay in the Middle).... this results in SF begin constrained with water on both sides and WATERFRONT PROPERTY on both sides.

Philadelphia has top tier law firms as well. It's pretty funny that you are saying it does not when Philadelphia is known as one of the top Law cities in the country. Also, Philadelphia has MEGASCHOOLS that are economic drivers of their own as well like UPENN and DREXEL. Sound familiar? Temple is getting up there too.

Philadelphia absolutely has it's own niche... Eds and Meds. The fact that you don't know this shows just how out of touch with the metro you have become.

[drive carephilly]

Originally Posted by rotodome

Sooo, for me, no huge overblown salary discrepancy, but also no huge overblown COL increase.

*But I rent. Where it gets to be NOT comparable is if you want to BUY real estate. Buying NYC real estate is bonkers expensive.

Do you live pretty far from your work (by Philly standards)?

When I worked in Lower Manhattan in the late 90s it was already pretty expensive and a lot of young-ish coworkers (who were on the beginning end of the pay scale) were commuting 45 minutes from Brooklyn.
Here, a 45 minute train ride puts you in Paoli.

[RightonWalnut]

I find it hilarious that we are judging the COL of metro areas by the amount of 1%ers in that metro area....

Is this argument logical to anyone besides Bajan?

[RightonWalnut]

Bajan, look at this link. These are the top 5 U.S. cities with the MOST White Collar jobs.

Los Alamos leads U.S. rankings of white-collar jobs - The Business Journals

NY
LA
Chicago
DC
Philly

So, in using your logic for how expensive a place is, Philadelphia should be MORE expensive than both Boston and San Francisco... but it is not. Chicago should be MORE expensive than DC... but it is not. San Francisco is ALMOST if not MORE expensive than NYC... how do you explain that? Boston is more expensive than Philadelphia and Chicago... how do you explain that? How do you explain LA's low cost of living relative to San Francisco when LA CERTAINLY has more wealth?

There are SO many factors that contribute to COL... and while the amount of White Collar jobs can certainly be a factor... it is not the ONLY factor... or else Philadelphia and Chicago would be MUCH more expensive than they currently are. In fact, they would be more expensive than San Francisco and Boston.

[rotodome]

Originally Posted by drive carephilly

Do you live pretty far from your work (by Philly standards)?

When I worked in Lower Manhattan in the late 90s it was already pretty expensive and a lot of young-ish coworkers (who were on the beginning end of the pay scale) were commuting 45 minutes from Brooklyn.
Here, a 45 minute train ride puts you in Paoli.

I live in Brooklyn. I bike to work usually. It's about 5 miles door to door. Takes about 30 mins. Similar on the subway (maybe a little longer).
Philly standards are different, yes. I know where you're going with this. But my neighborhood is pretty comparable amenities-wise from my neighborhood in Philly (WashWest) as is the lifestyle. It is really nothing like living in Paoli or any Philly suburb and commuting by car or commuter rail. It's not like walking 10 minutes to work either (which I did for years in Philly, and which had pluses AND minuses). By Philly standards, the commute is more comparable to a commute from West Philly to Center City.

[rotodome]

Originally Posted by Summersm343

I find it hilarious that we are judging the COL of metro areas by the amount of 1%ers in that metro area....

Agreed!

[BajanYankee]

Originally Posted by Summersm343

I find it hilarious that we are judging the COL of metro areas by the amount of 1%ers in that metro area....

Is this argument logical to anyone besides Bajan?

Only that "one percent" you're referring to is largely concentrated in a few metro areas in the country. And they constitute more than one percent of the population in those metros. In the DC metro, 43 percent of households earn in excess of $100,000. What you have in America is a lot of wealth concentrated in a few cities on the Coasts. And yes, that drives the COL up in those cities. Manhattan would not be super-expensive if it contained nothing but Dominican immigrants. It's the bankers and lawyers that drive up the prices.

And yes, I went to a pretty good high school (Go Lancers!). And a pretty good college, too.