What are the Factors of Cost of Living in MSP (Minneapolis: middle-class, sales)

[lexuses82]

I have been looking at real estate around the metro and compared it to the real estate of similar sized metros. Why are cities like Atlanta, Charlotte or Dallas much lower in cost of living despite the quality of life of these cities being somewhat similar.

I would like to eventually move to Minneapolis but It seems like you need to spend a lot more here to get a really nice house vs not having to spend as much in other places.

[ellysbelly]

Personally, as someone who works in recruiting/HR and is a nationally quoted personal finance blogger, I find cost of living calculators-- if not entirely without merit-- pretty darn close to useless.

Look at your major costs: housing, insurance (home and car) and taxes (property and income) as well as your income potential in those different areas and go from there.

All other factors, especially in a world where online shopping and national chains exist, are the same regardless of where you live-- a t-shirt from the Gap will cost the same in NYC than it would in Nowhere, Alabama-- same, within reason, goes for a pound of beef or a tube of toothpaste. Gas prices can vary widely, due to taxes, but the impact is far overstated, even a difference of $.50/gallon (assuming 25 mph and 12K miles per year) is really only a difference of $240 year or $5ish per week-- not a life changing price difference, to be sure.

Housing stock also varies and no COL calculator can truly capture the difference in housing costs that you might see-- so see what you can get for your money in those different areas AND be sure to consider the commute to the downtown core (or wherever you're likely to work) might look like, not in distance but in TIME-- AND, most importantly, if you have kids, check out the school systems-- even if an area is a bit less affordable overall, it's well worth it if you don't have to consider private school for your children.

And, you really don't have to spend THAT much to get a nice house here-- you can get into a single family home, in most areas, in the $275K-$300K range (again starting) and can get a very nice house, by anyone's standards, in virtually any suburb for $400K-- of course, your money goes further is some suburbs (or areas of the Cities, if you prefer to live inside the Cities) than in others.

Quality of life is also subjective-- as what is important to YOU might be very different than what's important to others. Some people only care about theater (which BTW is fantastic here!) and restaurants (also fantastic)-- others care about professional sports (not as great as the theater or restaurants, but all four sports are here) and still others care about nature, hiking, biking.. shopping, whatever. Check out the availability and abundance of what floats your boat and then go from there.

Hope that helps!

[Steve Bowen]

In general, denser, more compact cities have higher housing costs than less dense cities with a large land area and a lot of suburban sprawl. Minneapolis is a far denser, more compact city than Charlotte, Dallas, or Atlanta, which have large amounts of suburban sprawl. This has a large impact on land prices, which impacts home prices.

I'd be curious to see how how much difference there is in housing costs within 5 a mile radius of the Central Business District of each city. Are the Sun Belt metros still that much cheaper? Or is their affordability mostly a function of having more homes in more distant, and therefore cheaper, locations?

[yeeah]

Cost of living calculators are a nice tool to have and it gives you an 'approximate' idea, however realize that there error of margin is quite big. When you use them, they will show Charlotte as a little cheaper than Minneapolis. However I found first hand, Charlotte and Atlanta to be a little expensive than Minneapolis.

Quality housing for e.g. is scarcer in Charlotte, so the same kind of home is much more expensive there than in Minneapolis. A summary (although a little subjective) in my view:

1. Home prices are lower in Twin cities for same quality of home.
2. Property taxes are same,
3. Home insurance is a little higher in Minneapolis (maybe due to snow
4. Auto insurance is quite less in Minneapolis (Charlotte/Atlanta - vandalism is too common, they'll literally snatch laptop out of your hands in downtown/uptown)
5. Food is same
6. Clothes are less in Minneapolis (so sales tax)
7. As for Weather, Charlotte and Atlanta rock.
8. Minneapolis is waay waay safer.

[Steve Bowen]

Also, I would argue that the key metric for affordability is the percentage of a household's budget devoted to housing and transportation in a given location.

Some folks crunched the numbers and found that in more expensive northern cities with good public transportation, residents spent less of their money on housing + transportation than in cheaper Sun Belt cities:

Middle-Class Miami Spends 72%(!) of Its Income on Housing and Transportation - The Atlantic.

[ellysbelly]

@Steve Bowen: Wholeheartedly agree-- I used to live in Manhattan and without having a car (car payment, insurance, gas, maintenance-- i.e. tires, wheel balancing, alignments, oil changes, etc) and with plentiful cheap food options-- other than giving up space, it was just as inexpensive AND more convenient to live in Manhattan than it was to live in Atlanta, plus my salary was much higher for a comparable position.

While moving back to Manhattan with my current lifestyle-- which includes a husband, three school aged kids and two big dogs-- isn't even remotely feasible-- it's definitely a great place to live as a single person or a childless couple (or with one or two small children)-- or as a retired person or couple- few places have nearly the amount of amenities that would allow someone to live independently for the long term as NYC (plentiful grocery and food delivery, laundry services, etc). Depending on where my kids settle down in the future, NYC is very likely my husband and my retirement destination for those very reasons.

[kuan]

Your heating bill might come as a shock to you the first time you receive it. You will need winter clothes, snowblowing equipment, and a good shovel. Snow tires optional.

Added unforseen costs include having to take more days off to care for your child during the winter, or finding emergency babysitting should you not be able to get off work when there's a snow day. (they don't tell you until 2 hours before)

Produce costs a lot here. There are no farmstands. There is no anticipation for seasonal fruit.

[ellysbelly]

@Kuan: Our heating bill here, while high, pales in comparison to what we used to pay for virtually year 'round air conditioning in our old stomping grounds (South Florida)-- and is mitigated by the fact that for much of the spring/summer/fall, you neither require heat nor A/C. Of course, if moving from a more temperate and less tropical environment, that heating bill might come as a HUGE shock! PS Getting electric blankets for my entire family helped our heating bill tremendously-- that, plus, a programmable thermostat to keep the house cooler when no one is home, will pay off in no time flat.

Even though I just moved from a semi-tropical environment to MN-- shockingly, other than a good coat, boots, gloves, socks and scarves (much of which we already owned, even though we lived in FL)-- and a few more sweaters/sweatshirts for the family plus snowpants, my wardrobe, even for winter, hasn't changed all that much (same goes for my kids)-- my regular base layer of jeans and a fitted, long sleeved tee worked in virtually all but the coldest weather. Yes, of course, I wore an extra layer or three and wore boots over my jeans instead of pairing them with flats or flip flops-- but it's not as though you need to throw everything out and start over, thankfully.

Winter coats and other necessary accouterments can be found, especially this time a year, for less than 1/4 of retail on eBay-- my kids each have The North Face coats, all purchased for under $35 inclusive of shipping-- Sorel and Columbia boots, scored again on eBay, for under $20 shipped-- Columbia snowpants for $10-$12 shipped. So under $200 to outfit three school aged kids for winter-- and younger children would be even cheaper to outfit. Ironically, I feel as though I saved money on kids' clothing, especially shoes, as they only wore their sneakers and other shoes while inside at school-- so there was virtually no wear and tear on their shoes, unlike in FL where they often wore out sneakers before they were outgrown.

Produce at ALDI and Costco, while not nearly as fresh and cheap as the farmer's markets I used to frequent in South Florida (oh, how I miss those!), are still plenty affordable-- and it's not a huge line item in my budget. We do have SOME seasonal produce here-- apples in the fall, for one. In the winter, I found myself opting for flash frozen produce (both cheap and plentiful, even when buying organic, at Costco and Trader Joes) over the sad looking and overpriced veggies that I saw in the markets. And, though the weather is far from temperate, it's still warm enough to have a decent garden in summer and growing small (but usually expensive!) herbs or even some veggies is easily doable inside all but the smallest homes.

[pete6032]

Originally Posted by Steve Bowen

Also, I would argue that the key metric for affordability is the percentage of a household's budget devoted to housing and transportation in a given location.

Some folks crunched the numbers and found that in more expensive northern cities with good public transportation, residents spent less of their money on housing + transportation than in cheaper Sun Belt cities:

Middle-Class Miami Spends 72%(!) of Its Income on Housing and Transportation - The Atlantic.

Wat? Something is wrong with that dataset. Washington DC is the most affordable?

[kuan]

^^^^^^^^ Moving to Minnesota makes you sensible too, or maybe @ellysbelly was sensible already

But yes, all the extra expenses can be mitigated, and you only really need to spend once on a good coat every fifteen years or so. I do believe though that it is still a bit more money to live in a cold climate than in warm, how much more depends on you.

You lifestyle will change. For me the most drastic change was in my grocery shopping habits. I was so grateful for Aldi when they opened, but even then the closest one is five miles away from me.