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I can see how high real estate and sales taxes could increase the cost of living which I think would effect why a nurse, for example in a high col area would need to demand a higher wage to live there as apposed to a lower area. But someone without a skill who works at a job that many people would qualify for could not keep up. I'm surprised they don't move out of the area.
I'm surprised they don't move out of the area. I did exactly that. We were moving and we kept the real estate and sales taxes in mind when deciding where to move. We were able to buy more house and pay it off sooner. And now Dh retired and I am semi-retired we can still afford to live here. If we had moved to a higher tax area it would have been harder to meet our early retirement goal.
If you're at the bottom of the barrel to the middle of the income bracket, low COL places are often better from the standpoint of the absolute low cost of everything. If you're more educated or in a more lucrative field, you need to get to a metropolitan area.
Note that metropolitan and high COL don't necessarily go hand-in-hand. I live in Indianapolis and make over double what I did in small town Tennessee on 1/1/2014, but cost of living didn't jump anywhere near that much. I think the sweet spot are the mid-sized metros in flyover country.
Those aren't the flyover areas the OP was talking about. You're citing industrialized areas that have low housing cost and anti-union law. ATL and DFW are hardly flyover places.
It doesn't matter. The math still holds.
Quote:
Originally Posted by GeoffD
Look more closely at a true flyover place. Housing is cheap but for what middle and working class people spend money on, everything else is within 20% of what it costs in a major east coast or west coast city.
Yes, that's true. But housing is, BY FAR, almost everyone's biggest expense (we're talking younger people here, not retirees with their houses paid off). You can't say "housing is cheap, but....." and then act like it's a small expense like cable TV. Housing costs and rents here in the SF Bay Area are just absolutely punishing, even when the real estate market is depressed.
In general, the average person will have a higher standard of living in lower cost areas (Atlanta, Dallas, Phoenix) because generally the wages paid in high cost (NYC, SF, Boston, LA) are not sufficiently more to make up the difference. You do have more job opportunities in certain fields such as IT in the Bay area, Seattle, Boston, etc however. Over the long haul, you will probably wind up wealthier in high cost/high income areas provided you buy your house which typically appreciates over time and you get the tax write off of mortgage interest lowering your tax bill.
My son in Seattle has an income twice what his cousin in the rural South makes but the house he can afford is much less nice in comparison. My son wouldn't really consider living in the rural South but he's a bit jealous of the house his cousin was able to build...plusses & minus and subjective preferences.
Coming from Texas, the trade-off is the commute. I never realized until I left Texas how much I drove. I literally drive 70% less since I left there - and that actually saves me thousands per year. When I take into account the higher car turnover I had - I drove so many miles I had to buy new cars or do major repairs on cars every few years, actually living in higher CoL Oregon has pretty much broken even.
Housing is cheap in Texas because there's a ton of flat land in all directions to build out on around their big cities but you have to drive to it. But anyone who's lived in the DFW or Houston area knows what traffic is like. I used to commute an average of about 45 minutes one way - it would sometimes be double that when traffic was bad. If you want to live where you can bike to work or a 5-10 minute drive in a Texas city - well, you'll pay dearly for it.
Another tradeoff is crime. San Antonio is cheap in its south and east sides - that's because crime is bad there. San Antonio had 103 homicides in 2014. Seattle had 26. New Orleans is quite the bargain these days - nice houses in good locations selling in the 200s. 150 homicides in 2014 and that's a good year. You get what you pay for.
As for small towns - I'm originally from one. Housing can be VERY cheap. In my hometown you can get a quite nice 3/2 house for around $100K. My parents house is a 4/3 and it's worth around $150K- and only that much because of extensive landscaping. There are no jobs though. My SiL is a teacher - she had to work as a sub for three years before an actual teaching job opened up. Had she applied to open positions everywhere she could have started teaching full time right out of college but she was committed to staying in the town.
Doesn't it all depend on how one defines "standard of living"?
If nothing else, conversations on CD prove that people who live in high cost urban areas would consider a smaller lower cost place to have a lower "standard of living" due to lack of perceived amenities. And people who live in smaller lower cost places consider those who live in large urban areas to have a worse "standard of living" due to perceptions about crime and etc.
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