How do BH define Cost of Living Cities

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IntangibleAssets
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How do BH define Cost of Living Cities

Post by IntangibleAssets » Fri May 31, 2019 12:55 pm

This is something that has been interesting to me for awhile reading several threads. Everyone has opinions all over the place. How are most BH defining their COL where they live?

I usually use this site to gauge: https://www.bestplaces.net/cost-of-living/

I guess I would consider 95-115ish a MCOL something like that, but maybe I'm way off base??

100 = US Average. (Below 100 means cheaper than the US average. Above 100 means more expensive.

Are there any rough metrics other people follow? There are tons of COL calcs out there, maybe I'm not using the right one!!

Bungo
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Re: How do BH define Cost of Living Cities

Post by Bungo » Fri May 31, 2019 1:17 pm

I think the COL index is meaningless unless you're a new arrival. Long term homeowners in nominally HCOL cities usually have much lower costs than suggested by the index. Certainly true in the SF Bay Area, where only the newcomers are paying the insane $3-4k/month for an apartment, which is presumably the main factor in the COL index (260 for SJ, 300 for SF, according to your link).

livesoft
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Re: How do BH define Cost of Living Cities

Post by livesoft » Fri May 31, 2019 1:27 pm

I consider where I live to be LCOL. But that link in the OP says it is about 20% higher than the average. I do like that the link gives a few categories to help one make a judgement.

I'd probably divide the spectrum into 3 more or less even strata: Low, Medium, High just like the Morningstar 9-box style grid divides stocks into 33% into each of Value, Blend, and Growth. I don't know if one can get that info from the link.
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runner3081
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Re: How do BH define Cost of Living Cities

Post by runner3081 » Fri May 31, 2019 1:37 pm

I think we just had a thread with a similar question. Will see if I can find it.

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IntangibleAssets
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Re: How do BH define Cost of Living Cities

Post by IntangibleAssets » Fri May 31, 2019 1:58 pm

Thanks all, I agree there is probably not one great site. For example my city is right around 100 in that index and I think of it as LCOL to VLCOL, would never occur to me to be a MCOL city but maybe I'm just out of touch!

I visit NYC/LI regularly and it is noticeably more expensive

KlangFool
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Re: How do BH define Cost of Living Cities

Post by KlangFool » Fri May 31, 2019 2:02 pm

OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool

PVW
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Re: How do BH define Cost of Living Cities

Post by PVW » Fri May 31, 2019 2:30 pm

KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
These terms are often vague and subjective, but I agree that the price of housing is generally what people are think of when they refer to the cost of living of a city. According to Zillow, the median list price in the US is $155 per square foot. So I'd define that as MCOL and the other categories are relative to that.

Here is an interesting map that shows the average (mean, median?) price per square foot (sale, list?) in the US
http://metrocosm.com/us-housing-markets-map.html

stoptothink
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Re: How do BH define Cost of Living Cities

Post by stoptothink » Fri May 31, 2019 2:35 pm

livesoft wrote:
Fri May 31, 2019 1:27 pm
I consider where I live to be LCOL. But that link in the OP says it is about 20% higher than the average. I do like that the link gives a few categories to help one make a judgement.

I'd probably divide the spectrum into 3 more or less even strata: Low, Medium, High just like the Morningstar 9-box style grid divides stocks into 33% into each of Value, Blend, and Growth. I don't know if one can get that info from the link.
Interesting, my result was 119.2. I bet almost anything that just 5yrs ago it was under 100. Real estate is out of control in this area. The original purchase price of my (townhome) home (not by me), in 2013 was $144k, various estimates now have it valued at ~$260k.

carolinaman
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Re: How do BH define Cost of Living Cities

Post by carolinaman » Sat Jun 01, 2019 7:57 am

The COL can vary a lot within a metro area depending on where you are or want to be. For example, my daughter lives in Mt Pleasant, SC a suburb of Charleston, SC. It is a very expensive place to live. Housing costs are much higher than the metro average and other things seem more expensive as well. When our daughter and SIL built their home, all the subs charged a substantial premium for work done there. My daughter refers to that and other high costs as the Mt Pleasant "premium". I suspect this is a common phenomenon in other metro areas. The COL will vary depending upon your needs.

blackholescion
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Re: How do BH define Cost of Living Cities

Post by blackholescion » Sat Jun 01, 2019 8:27 am

carolinaman wrote:
Sat Jun 01, 2019 7:57 am
The COL can vary a lot within a metro area depending on where you are or want to be. For example, my daughter lives in Mt Pleasant, SC a suburb of Charleston, SC. It is a very expensive place to live. Housing costs are much higher than the metro average and other things seem more expensive as well. When our daughter and SIL built their home, all the subs charged a substantial premium for work done there. My daughter refers to that and other high costs as the Mt Pleasant "premium". I suspect this is a common phenomenon in other metro areas. The COL will vary depending upon your needs.
PVW wrote:
Fri May 31, 2019 2:30 pm
KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
These terms are often vague and subjective, but I agree that the price of housing is generally what people are think of when they refer to the cost of living of a city. According to Zillow, the median list price in the US is $155 per square foot. So I'd define that as MCOL and the other categories are relative to that.

Here is an interesting map that shows the average (mean, median?) price per square foot (sale, list?) in the US
http://metrocosm.com/us-housing-markets-map.html


Yeah this is all really interesting.

We paid 165 a square foot but are on 2 acres, near state parks (walking distance), and land that won’t be highly developed (near a university). 10-15 minutes away you can get a home for 110 a square foot with 1/4 of the land. However the traffic patterns mean that it would add at least 20 minutes to our commute and there’s less land for the family to enjoy. Would I say this area is medium to high COL or low COL?

A different part of the area we sold our house for 150 a square foot which firmly puts it in medium.

Cycle
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Re: How do BH define Cost of Living Cities

Post by Cycle » Sat Jun 01, 2019 8:58 am

I look at a the cost of a cup of coffee. It's the same in San Fransisco as it is in Minneapolis, therefore the cost of living is the same in both.

This is of course assuming you don't need a house or apartment, or need to buy gas... Or go to Aldi.
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Watty
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Re: How do BH define Cost of Living Cities

Post by Watty » Sat Jun 01, 2019 9:11 am

Using the cost per square foot is not a good measure since in many high cost of living areas the lot for a single family home is the majority of the cost and the building itself is only a small percentage.

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IntangibleAssets
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Re: How do BH define Cost of Living Cities

Post by IntangibleAssets » Sat Jun 01, 2019 9:24 am

Bungo wrote:
Fri May 31, 2019 1:17 pm
I think the COL index is meaningless unless you're a new arrival. Long term homeowners in nominally HCOL cities usually have much lower costs than suggested by the index. Certainly true in the SF Bay Area, where only the newcomers are paying the insane $3-4k/month for an apartment, which is presumably the main factor in the COL index (260 for SJ, 300 for SF, according to your link).
I agree with this in principle.

I guess I wish there were more defined definitions on BH to facilitate discussions, all of the "can I buy X house" thread would be better off for it. Everyone (myself included) dances around the specific cities for anonymity reasons (understandable), but we rely on the OP to define COL. Some cities are more obvious than others of course...then areas within places have their own bubble of prices...

anyway, I digress.. it's all very interesting to me

Thegame14
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Re: How do BH define Cost of Living Cities

Post by Thegame14 » Sat Jun 01, 2019 9:42 am

my town 156.4, but we have sections even though it is a town of about 55K people. there is a small flood zone where houses are 200K, most average houses are 400-600K and the a small section of all houses over $1M

THY4373
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Re: How do BH define Cost of Living Cities

Post by THY4373 » Sat Jun 01, 2019 10:03 am

These cost of living calculators are sort of like the 4% SWR rule they are perhaps where you start your analysis not end it. Also averages don't tell you a whole lot about the specifics of your situation. The biggest gap I see in the calculator posted up thread is it doesn't address taxes. After shelter costs taxes are probably the next biggest change from city to city. I understand why they don't do that since sorting out the average impact of sales taxes, state income taxes, local income taxes, property taxes, personal property taxes, and commuter taxes along with some others I am probably forgetting would be impossible or at least largely meaningless if you weren't exactly matching their average profile.

In my experience moving from a HCOL to a LCOL area is that the biggest changes were housing cost, taxes (though not in my case because I stayed in same state) and private school tuition for my son. Other costs were mostly down though not by much. Another considerable savings is my commute time is way down so less wear and tear on car and time I can use on more productive things.

bsteiner
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Re: How do BH define Cost of Living Cities

Post by bsteiner » Sat Jun 01, 2019 10:21 am

Clients and colleagues outside the United States think NYC is a bargain.

quantAndHold
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Re: How do BH define Cost of Living Cities

Post by quantAndHold » Sat Jun 01, 2019 10:24 am

Bungo wrote:
Fri May 31, 2019 1:17 pm
I think the COL index is meaningless unless you're a new arrival. Long term homeowners in nominally HCOL cities usually have much lower costs than suggested by the index. Certainly true in the SF Bay Area, where only the newcomers are paying the insane $3-4k/month for an apartment, which is presumably the main factor in the COL index (260 for SJ, 300 for SF, according to your link).
Renters in SF pay $4k for a decent 2 bedroom apartment no matter how long they’ve lived there.
Yes, I’m really that pedantic.

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Re: How do BH define Cost of Living Cities

Post by stoptothink » Sat Jun 01, 2019 10:25 am

bsteiner wrote:
Sat Jun 01, 2019 10:21 am
Clients and colleagues outside the United States think NYC is a bargain.
Clients and colleagues from where? Hong Kong, Paris, Geneva, Singapore? NYC is on every worldwide top-10 HCOL cities list.

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Re: How do BH define Cost of Living Cities

Post by snackdog » Sat Jun 01, 2019 10:34 am

quantAndHold wrote:
Sat Jun 01, 2019 10:24 am

Renters in SF pay $4k for a decent 2 bedroom apartment no matter how long they’ve lived there.
Um, SF has pretty aggressive rent control (as do quite a few other places in the US including NYC), so the longer one has lived there the less one may be paying.

JackoC
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Re: How do BH define Cost of Living Cities

Post by JackoC » Sat Jun 01, 2019 10:38 am

Fortunately, at least for the purposes of defining COL, we live in an area that's HCOL by any definition, NY. Even if you create separate categories like Very, Super or Hyper HCOL it's going to be in the highest category if there's more than one city in the category, at least within the US. So we don't have to worry about our category, just the cost. :happy

It is though mainly about real estate. Other stuff is significantly more expensive in the City to perhaps affect the overall equation, but here in NJ right across the river that's not as true. Eg. the City doesn't (for the most part) allow big supermarkets and warehouse stores so some stuff you buy there, food particularly, is significantly more expensive than elsewhere in the country. On our side that's not as true. Similarly gasoline, utilities, significantly more in the City itself than closely surrounding areas. Here it's mainly real estate that's expensive, though including taxes *on* real estate and utilities to some degree still compared to rest of country. Also prices at small stores and restaurants especially heavily affected by again, high rents. Costco next to Teterboro airport v Costco in Twin Falls ID? That difference if any doesn't jump out at me.

Prop taxes are BTW one reason it's only partly true that house price escalation doesn't affect long term owners. High prices tend to grease the skids toward high $ property taxes. I've been told on this forum I shouldn't complain about my $21k/yr prop taxes because they are only ~1% of market. But the huge value increase here did not directly raise my town's operating cost which the taxes pay. The taxes went up in $'s because that was the democratic outcome. The outcome could have been other measures and priorities to hold city spending to CPI increase and then the prop tax % of market would have fallen more (it *has* fallen, but slower than house prices went up). Although obviously if we had to pay today's house price, we'd still have to pay the $21k/yr on top. So obviously we're better off having purchased at <1/3 of today's price CPI adjusted, counting the unrealized gain on the house, but still our cash COL assuming we want to stay here has risen above CPI due in part to the RE price explosion.

The median US house price is around $226k last I checked. Aside from specifying a size, somewhere in there is in fact a reasonable dividing line in a binary H/L COL area. Bringing in 'M' or more categories you have to decide where to cut it in thirds etc. I don't agree that $200k+ 'normal' house prices makes an area 'HCOL' if there's more than two categories. Especially for discussion here realistically considering this is mainly an upper middle class+ forum and I guess most people here buying houses now or in future probably buy above the median in their area, even with all the posts telling them they shouldn't.

quantAndHold
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Re: How do BH define Cost of Living Cities

Post by quantAndHold » Sat Jun 01, 2019 10:45 am

snackdog wrote:
Sat Jun 01, 2019 10:34 am
quantAndHold wrote:
Sat Jun 01, 2019 10:24 am

Renters in SF pay $4k for a decent 2 bedroom apartment no matter how long they’ve lived there.
Um, SF has pretty aggressive rent control (as do quite a few other places in the US including NYC), so the longer one has lived there the less one may be paying.
Um, only about half of the rental housing in SF is subject to rent control. The rest is loopholed out. Post 1979 construction, condos, single family homes, small buildings where the landlord resides, etc, are not rent controlled.
Yes, I’m really that pedantic.

JackoC
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Re: How do BH define Cost of Living Cities

Post by JackoC » Sat Jun 01, 2019 11:01 am

snackdog wrote:
Sat Jun 01, 2019 10:34 am
quantAndHold wrote:
Sat Jun 01, 2019 10:24 am

Renters in SF pay $4k for a decent 2 bedroom apartment no matter how long they’ve lived there.
Um, SF has pretty aggressive rent control (as do quite a few other places in the US including NYC), so the longer one has lived there the less one may be paying.
Not that many places in the US have significant rent controls actually, but it's true NY is another major example, probably the biggest. Rent Stabilization is actually differentiated here from the older system Rent Control which was even more rigid. There are hardly any RC apts left, but over 1 mil units are RS, besides several 100k public housing units. But generically of course RS is a form of rent control small r, small c.

Which does create a big differentiation in rents. Which on an 'individual actionable' basis means it depends your circumstance. People on the outside looking in at possible move to the City as is the subject of threads here time to time typically have ~zero chance of getting an RS apartment so RS rents are seldom directly relevant to them. Free market rents and purchase prices are relevant to them. On a macro scale it's also questionable if NY's scheme actually makes average rents lower than they'd otherwise be or just stratifies them, or even raises the average (given the associated disincentive to efficient use of buildings). But that's getting off topic for this forum.

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Re: How do BH define Cost of Living Cities

Post by mnnice » Sat Jun 01, 2019 11:21 am

KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
I looked up my present location that is rated 99 on the Best Places link. Zillow (which is very accurate here) only had one house listed/recently sold that was larger than 2,000 square feet and under 200k. I suspect it had a structural problem as it had great curb appeal. Anyway I don’t think you can buy that much house for $200k in most MCOL places.

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Re: How do BH define Cost of Living Cities

Post by KlangFool » Sat Jun 01, 2019 11:47 am

mnnice wrote:
Sat Jun 01, 2019 11:21 am
KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
I looked up my present location that is rated 99 on the Best Places link. Zillow (which is very accurate here) only had one house listed/recently sold that was larger than 2,000 square feet and under 200k. I suspect it had a structural problem as it had great curb appeal. Anyway, I don’t think you can buy that much house for $200k in most MCOL places.
mnnice,

And your point is?

A) You cannot buy a 2,000 square feet house at 200K for an MCOL area.

B) Your area is not an MCOL area.

Is it (A) or (B)? I am confused by your post.

No, it is not an end all and be all rule. But, it is a good first order approximation whether the area is an MCOL area. In my area, 400K buys you a 2,000 square feet townhouse. It is definitely not an MCOL area. An SFH starts from 500K to 600K.

KlangFool

mnnice
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Re: How do BH define Cost of Living Cities

Post by mnnice » Sat Jun 01, 2019 12:06 pm

KlangFool wrote:
Sat Jun 01, 2019 11:47 am
mnnice wrote:
Sat Jun 01, 2019 11:21 am
KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
I looked up my present location that is rated 99 on the Best Places link. Zillow (which is very accurate here) only had one house listed/recently sold that was larger than 2,000 square feet and under 200k. I suspect it had a structural problem as it had great curb appeal. Anyway, I don’t think you can buy that much house for $200k in most MCOL places.
mnnice,

And your point is?

A) You cannot buy a 2,000 square feet house at 200K for an MCOL area.

B) Your area is not an MCOL area.

Is it (A) or (B)? I am confused by your post.

No, it is not an end all and be all rule. But, it is a good first order approximation whether the area is an MCOL area. In my area, 400K buys you a 2,000 square feet townhouse. It is definitely not an MCOL area. An SFH starts from 500K to 600K.

KlangFool
My point is A. Lots of places one standard deviation from median cost of living do not have houses that big for sale for under $200k. If you are able find such a unicorn it is likely to have significant problems (next door to a strip club or 5 figure structural problems to fix).

If you had made the same statement 20 years ago or said single family house 1500 square feet I’d probably agree with you.

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Re: How do BH define Cost of Living Cities

Post by KlangFool » Sat Jun 01, 2019 12:24 pm

mnnice wrote:
Sat Jun 01, 2019 12:06 pm
KlangFool wrote:
Sat Jun 01, 2019 11:47 am
mnnice wrote:
Sat Jun 01, 2019 11:21 am
KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
I looked up my present location that is rated 99 on the Best Places link. Zillow (which is very accurate here) only had one house listed/recently sold that was larger than 2,000 square feet and under 200k. I suspect it had a structural problem as it had great curb appeal. Anyway, I don’t think you can buy that much house for $200k in most MCOL places.
mnnice,

And your point is?

A) You cannot buy a 2,000 square feet house at 200K for an MCOL area.

B) Your area is not an MCOL area.

Is it (A) or (B)? I am confused by your post.

No, it is not an end all and be all rule. But, it is a good first order approximation whether the area is an MCOL area. In my area, 400K buys you a 2,000 square feet townhouse. It is definitely not an MCOL area. An SFH starts from 500K to 600K.

KlangFool
My point is A. Lots of places one standard deviation from median cost of living do not have houses that big for sale for under $200k. If you are able find such a unicorn it is likely to have significant problems (next door to a strip club or 5 figure structural problems to fix).

If you had made the same statement 20 years ago or said single family house 1500 square feet I’d probably agree with you.
mnnice,

Given that your answer is (A), my follow-on question would be how do you know that your area is an MCOL area?

<< If you had made the same statement 20 years ago or said single family house 1500 square feet I’d probably agree with you.>>

https://www.zillow.com/homes/for_sale/S ... ect/11_zm/

I do not know whether that is true. For some places like Sugarland, Texas, you can get a 2,500 square feet single family house for about 250K. The price of a house (non-inflation adjusted) in this area had been about the same for 20+ years. So, do you consider this as an MCOL area or LCOL area?

KlangFool

Bungo
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Re: How do BH define Cost of Living Cities

Post by Bungo » Sat Jun 01, 2019 12:43 pm

quantAndHold wrote:
Sat Jun 01, 2019 10:24 am
Bungo wrote:
Fri May 31, 2019 1:17 pm
I think the COL index is meaningless unless you're a new arrival. Long term homeowners in nominally HCOL cities usually have much lower costs than suggested by the index. Certainly true in the SF Bay Area, where only the newcomers are paying the insane $3-4k/month for an apartment, which is presumably the main factor in the COL index (260 for SJ, 300 for SF, according to your link).
Renters in SF pay $4k for a decent 2 bedroom apartment no matter how long they’ve lived there.
This is quite false due to rent control. In any case, I was explicitly referring to long term homeowners.

Traveler
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Re: How do BH define Cost of Living Cities

Post by Traveler » Sat Jun 01, 2019 1:25 pm

I live in Atlanta which I consider a MCOL city or metro area. However, because I bought my townhouse for $60,000 at the bottom of the market eight years ago, I live as if it is a VLCOL place. And my salary likely correlates to a a MCOL or HCOL city.There's no way I'm moving anytime soon.

ThatGuy
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Re: How do BH define Cost of Living Cities

Post by ThatGuy » Sat Jun 01, 2019 1:38 pm

KlangFool wrote:
Fri May 31, 2019 2:02 pm
If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.
I'm probably going to regret responding to this, but 2,000-3,0000 square feet at $200k strikes me as really cheap. SF & NY apparently have a median home price of about $1.3 million now.

My own WAG at this would be one standard deviation around the US median. So if we're going by house prices, the US Census thinks the median is $193k. And that's not for SFH of 2-3 thousand square feet, it's for all houses, condos, townhouses, etc. I wonder if it includes people who live on boats?
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hoops777
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Re: How do BH define Cost of Living Cities

Post by hoops777 » Sat Jun 01, 2019 2:01 pm

KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
No it is not that simple and those numbers are extremely questionable.They also require more of a range.So 185,000 is LCOL and 225,000 is HCOL?What is VHCOL 300,000?What does at around mean?Within 100,000,10,000?Also a big difference between 2000 and 3000 sq.ft.
Last edited by hoops777 on Sat Jun 01, 2019 2:10 pm, edited 1 time in total.
K.I.S.S........so easy to say so difficult to do.

7eight9
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Re: How do BH define Cost of Living Cities

Post by 7eight9 » Sat Jun 01, 2019 2:09 pm

The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
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Re: How do BH define Cost of Living Cities

Post by KlangFool » Sat Jun 01, 2019 2:19 pm

ThatGuy wrote:
Sat Jun 01, 2019 1:38 pm
KlangFool wrote:
Fri May 31, 2019 2:02 pm
If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.
I'm probably going to regret responding to this, but 2,000-3,0000 square feet at $200k strikes me as really cheap. SF & NY apparently have a median home price of about $1.3 million now.
ThatGuy,

That means SF and NY is not an MCOL area. How high above the MCOL is up to you to decide? HCOL? VHCOL?

<<My own WAG at this would be one standard deviation around the US median. So if we're going by house prices, the US Census thinks the median is $193k. And that's not for SFH of 2-3 thousand square feet, it's for all houses, condos, townhouses, etc. I wonder if it includes people who live on boats?>>

The number translates into $100 per square feet.

KlangFool

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Re: How do BH define Cost of Living Cities

Post by KlangFool » Sat Jun 01, 2019 2:21 pm

hoops777 wrote:
Sat Jun 01, 2019 2:01 pm
KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
No it is not that simple and those numbers are extremely questionable.They also require more of a range.So 185,000 is LCOL and 225,000 is HCOL?What is VHCOL 300,000?What does at around mean?Within 100,000,10,000?Also a big difference between 2000 and 3000 sq.ft.
The number translates into $100 per square feet. Check the house/townhouse/condo price in your area.

KlangFool

KlangFool
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Re: How do BH define Cost of Living Cities

Post by KlangFool » Sat Jun 01, 2019 2:24 pm

7eight9 wrote:
Sat Jun 01, 2019 2:09 pm
The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
7eight9,

Median household income in my area is around 150K. Median house price is 600K. But, it is $200 per square feet area. 600K only get you a 3,000 square feet house. I do not think it is an MCOL area.

KlangFool

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snackdog
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Re: How do BH define Cost of Living Cities

Post by snackdog » Sat Jun 01, 2019 2:41 pm

This list jibes with my experience putting NY, HI, AK, CA cities at the top of the list. Bloomington IN surprised me at #9 but I haven't been there so I guess it must be pretty posh.

https://www.numbeo.com/cost-of-living/r ... region=019

hoops777
Posts: 3060
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Re: How do BH define Cost of Living Cities

Post by hoops777 » Sat Jun 01, 2019 3:18 pm

KlangFool wrote:
Sat Jun 01, 2019 2:21 pm
hoops777 wrote:
Sat Jun 01, 2019 2:01 pm
KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
No it is not that simple and those numbers are extremely questionable.They also require more of a range.So 185,000 is LCOL and 225,000 is HCOL?What is VHCOL 300,000?What does at around mean?Within 100,000,10,000?Also a big difference between 2000 and 3000 sq.ft.
The number translates into $100 per square feet. Check the house/townhouse/condo price in your area.

KlangFool
I guess I am really missing something here,but you cannot use 100 per sq ft and then say a 2000 to 3000 sq ft house over 200,000 is HCOL.
K.I.S.S........so easy to say so difficult to do.

KlangFool
Posts: 16567
Joined: Sat Oct 11, 2008 12:35 pm

Re: How do BH define Cost of Living Cities

Post by KlangFool » Sat Jun 01, 2019 3:29 pm

hoops777 wrote:
Sat Jun 01, 2019 3:18 pm
KlangFool wrote:
Sat Jun 01, 2019 2:21 pm
hoops777 wrote:
Sat Jun 01, 2019 2:01 pm
KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
No it is not that simple and those numbers are extremely questionable.They also require more of a range.So 185,000 is LCOL and 225,000 is HCOL?What is VHCOL 300,000?What does at around mean?Within 100,000,10,000?Also a big difference between 2000 and 3000 sq.ft.
The number translates into $100 per square feet. Check the house/townhouse/condo price in your area.

KlangFool
I guess I am really missing something here,but you cannot use 100 per sq ft and then say a 2000 to 3000 sq ft house over 200,000 is HCOL.
My point is more centered around the $100 per square feet as the benchmark for MCOL.

<<So 185,000 is LCOL and 225,000 is HCOL?>>

If the 185K buys you a 500 square feet condo, it is an HCOL area. Ditto, if the 225K house is a 4,000 square feet house, it is an LCOL area.

KlangFool

hoops777
Posts: 3060
Joined: Sun Apr 10, 2011 12:23 pm

Re: How do BH define Cost of Living Cities

Post by hoops777 » Sat Jun 01, 2019 3:44 pm

KlangFool wrote:
Sat Jun 01, 2019 3:29 pm
hoops777 wrote:
Sat Jun 01, 2019 3:18 pm
KlangFool wrote:
Sat Jun 01, 2019 2:21 pm
hoops777 wrote:
Sat Jun 01, 2019 2:01 pm
KlangFool wrote:
Fri May 31, 2019 2:02 pm
OP,

It is very simple.

If you can buy a Single-family house of 2,000 to 3,000 square feet at around 200K, it is an MCOL area. Anything lower than that, it is LCOL. Anything higher than that, it is HCOL or VHCOL.

KlangFool
No it is not that simple and those numbers are extremely questionable.They also require more of a range.So 185,000 is LCOL and 225,000 is HCOL?What is VHCOL 300,000?What does at around mean?Within 100,000,10,000?Also a big difference between 2000 and 3000 sq.ft.
The number translates into $100 per square feet. Check the house/townhouse/condo price in your area.

KlangFool
I guess I am really missing something here,but you cannot use 100 per sq ft and then say a 2000 to 3000 sq ft house over 200,000 is HCOL.
My point is more centered around the $100 per square feet as the benchmark for MCOL.

<<So 185,000 is LCOL and 225,000 is HCOL?>>

If the 185K buys you a 500 square feet condo, it is an HCOL area. Ditto, if the 225K house is a 4,000 square feet house, it is an LCOL area.

KlangFool
Fair enough.That makes more sense but you still need a wider range to determine the different levels.To be honest it doesn’t really matter what label one puts on an area.The individual has to determine what the COL is to them and their needs/abilities.
K.I.S.S........so easy to say so difficult to do.

Bungo
Posts: 922
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Re: How do BH define Cost of Living Cities

Post by Bungo » Sat Jun 01, 2019 3:45 pm

snackdog wrote:
Sat Jun 01, 2019 2:41 pm
This list jibes with my experience putting NY, HI, AK, CA cities at the top of the list. Bloomington IN surprised me at #9 but I haven't been there so I guess it must be pretty posh.

https://www.numbeo.com/cost-of-living/r ... region=019
That has to be a typo. There's no way Bloomington, Indiana (median price per square foot: $147, versus US median of $155) is more expensive than Berkeley ($714), Seattle ($521), Boston ($732), etc. In fact, the whole list looks bogus. Philadelphia and Miami more expensive than San Jose?

Edit: ah, looking at the "more information about these indices" page, the cost of living index in the first column excludes rent. Try sorting by the third column (cost of living plus rent) instead. It looks somewhat more plausible although something's still off. Bloomington, Indiana more expensive than Toronto? I seriously doubt that.
Last edited by Bungo on Sat Jun 01, 2019 3:51 pm, edited 2 times in total.

Sam1
Posts: 506
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Re: How do BH define Cost of Living Cities

Post by Sam1 » Sat Jun 01, 2019 3:49 pm

KlangFool wrote:
Sat Jun 01, 2019 2:24 pm
7eight9 wrote:
Sat Jun 01, 2019 2:09 pm
The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
7eight9,

Median household income in my area is around 150K. Median house price is 600K. But, it is $200 per square feet area. 600K only get you a 3,000 square feet house. I do not think it is an MCOL area.

KlangFool
My neighborhood price per square foot is around 500. Our desirable neighborhood is closer to $1,000. I can’t imagine being able to get 3,000 square feet for $600k! That would be $1.5 million here.

KlangFool
Posts: 16567
Joined: Sat Oct 11, 2008 12:35 pm

Re: How do BH define Cost of Living Cities

Post by KlangFool » Sat Jun 01, 2019 4:12 pm

Sam1 wrote:
Sat Jun 01, 2019 3:49 pm
KlangFool wrote:
Sat Jun 01, 2019 2:24 pm
7eight9 wrote:
Sat Jun 01, 2019 2:09 pm
The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
7eight9,

Median household income in my area is around 150K. Median house price is 600K. But, it is $200 per square feet area. 600K only get you a 3,000 square feet house. I do not think it is an MCOL area.

KlangFool
My neighborhood price per square foot is around 500. Our desirable neighborhood is closer to $1,000. I can’t imagine being able to get 3,000 square feet for $600k! That would be $1.5 million here.
Sam1,

I hope that you are paid well enough to live in your neighborhood. For example, 2.5 times to 5 times more than elsewhere.

KlangFool

EddyB
Posts: 1360
Joined: Fri May 24, 2013 3:43 pm

Re: How do BH define Cost of Living Cities

Post by EddyB » Sat Jun 01, 2019 4:50 pm

KlangFool wrote:
Sat Jun 01, 2019 4:12 pm
Sam1 wrote:
Sat Jun 01, 2019 3:49 pm
KlangFool wrote:
Sat Jun 01, 2019 2:24 pm
7eight9 wrote:
Sat Jun 01, 2019 2:09 pm
The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
7eight9,

Median household income in my area is around 150K. Median house price is 600K. But, it is $200 per square feet area. 600K only get you a 3,000 square feet house. I do not think it is an MCOL area.

KlangFool
My neighborhood price per square foot is around 500. Our desirable neighborhood is closer to $1,000. I can’t imagine being able to get 3,000 square feet for $600k! That would be $1.5 million here.
Sam1,

I hope that you are paid well enough to live in your neighborhood. For example, 2.5 times to 5 times more than elsewhere.

KlangFool
Being paid well enough to live in one area doesn’t require being paid more than one could make in other areas—it just requires being paid enough to be happy with one’s choice.

Sam1
Posts: 506
Joined: Mon Apr 09, 2018 7:24 am

Re: How do BH define Cost of Living Cities

Post by Sam1 » Sat Jun 01, 2019 4:57 pm

KlangFool wrote:
Sat Jun 01, 2019 4:12 pm
Sam1 wrote:
Sat Jun 01, 2019 3:49 pm
KlangFool wrote:
Sat Jun 01, 2019 2:24 pm
7eight9 wrote:
Sat Jun 01, 2019 2:09 pm
The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
7eight9,

Median household income in my area is around 150K. Median house price is 600K. But, it is $200 per square feet area. 600K only get you a 3,000 square feet house. I do not think it is an MCOL area.

KlangFool
My neighborhood price per square foot is around 500. Our desirable neighborhood is closer to $1,000. I can’t imagine being able to get 3,000 square feet for $600k! That would be $1.5 million here.
Sam1,

I hope that you are paid well enough to live in your neighborhood. For example, 2.5 times to 5 times more than elsewhere.

KlangFool
We are around 500k HHI. We bought a while ago so housing costs are lower. We can afford to own and save so we haven’t considered relocating.

KlangFool
Posts: 16567
Joined: Sat Oct 11, 2008 12:35 pm

Re: How do BH define Cost of Living Cities

Post by KlangFool » Sat Jun 01, 2019 5:00 pm

Sam1 wrote:
Sat Jun 01, 2019 4:57 pm
KlangFool wrote:
Sat Jun 01, 2019 4:12 pm
Sam1 wrote:
Sat Jun 01, 2019 3:49 pm
KlangFool wrote:
Sat Jun 01, 2019 2:24 pm
7eight9 wrote:
Sat Jun 01, 2019 2:09 pm
The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
7eight9,

Median household income in my area is around 150K. Median house price is 600K. But, it is $200 per square feet area. 600K only get you a 3,000 square feet house. I do not think it is an MCOL area.

KlangFool
My neighborhood price per square foot is around 500. Our desirable neighborhood is closer to $1,000. I can’t imagine being able to get 3,000 square feet for $600k! That would be $1.5 million here.
Sam1,

I hope that you are paid well enough to live in your neighborhood. For example, 2.5 times to 5 times more than elsewhere.

KlangFool
We are around 500k HHI. We bought a while ago so housing costs are lower. We can afford to own and save so we haven’t considered relocating.
Sam1,

Okay. So, your numbers work out.

KlangFool

randomguy
Posts: 9020
Joined: Wed Sep 17, 2014 9:00 am

Re: How do BH define Cost of Living Cities

Post by randomguy » Sat Jun 01, 2019 5:06 pm

7eight9 wrote:
Sat Jun 01, 2019 2:09 pm
The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
That is affordability not COL. If there is a HCOL were the average house is 2 million and the average income income is 1 million. That isn't a LCOL town:)

randomguy
Posts: 9020
Joined: Wed Sep 17, 2014 9:00 am

Re: How do BH define Cost of Living Cities

Post by randomguy » Sat Jun 01, 2019 5:15 pm

Sam1 wrote:
Sat Jun 01, 2019 3:49 pm
KlangFool wrote:
Sat Jun 01, 2019 2:24 pm
7eight9 wrote:
Sat Jun 01, 2019 2:09 pm
The ratio of median household income vs. median house price might be a useful tool to use when considering COL.

Los Angeles clocked in at 9.6 years while Youngstown, Ohio came in at 1.9 years.

Article - https://www.citylab.com/equity/2018/05/ ... ck/561404/
7eight9,

Median household income in my area is around 150K. Median house price is 600K. But, it is $200 per square feet area. 600K only get you a 3,000 square feet house. I do not think it is an MCOL area.

KlangFool
My neighborhood price per square foot is around 500. Our desirable neighborhood is closer to $1,000. I can’t imagine being able to get 3,000 square feet for $600k! That would be $1.5 million here.
The gap between HCOL (500-700k for your 3000 sq ft house) and VHCOL (2.0 million + for your 3000 sq ft house) is larger than the gap between MCOL (300-400k houses) and low cost (200k) houses. You can envision getting say a 30% raise and be able to afford to move from a MCOL to a HCOL one and things more or less working out. Moving to the VHCOL requires you to lower your expectations (1200 sq ft is plenty right?) while still paying a ton more.

Ron Ronnerson
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Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: How do BH define Cost of Living Cities

Post by Ron Ronnerson » Sun Jun 02, 2019 9:19 am

Bungo wrote:
Fri May 31, 2019 1:17 pm
I think the COL index is meaningless unless you're a new arrival. Long term homeowners in nominally HCOL cities usually have much lower costs than suggested by the index. Certainly true in the SF Bay Area, where only the newcomers are paying the insane $3-4k/month for an apartment, which is presumably the main factor in the COL index (260 for SJ, 300 for SF, according to your link).
I agree that COL is a more meaningful term for people new to the area. You don’t necessarily even have to be a homeowner for all that long for COL in a particular place to become counter to conventional wisdom. We bought our home in the Bay Area 9 years ago (in a great neighborhood with excellent schools). Our mortgage is $1800/month and, thanks to Prop 13, our property taxes are based on the purchase price. Due to our housing costs being reasonable in this so-called VHCOL area, we’re able to save around half our income. By using tax-advantaged accounts, our California state income tax rate comes down to 0%. Despite the popular misconception, CA is a state with progressive taxes as opposed to high taxes. My wife and I are both 44, have a net worth of $1M, and I’m expecting a six-figure pension that should entirely cover our retirement expenses. These numbers likely don’t happen for a single income household where the employee is a public-school teacher just about anywhere else. Yet, for someone new to the area, good luck trying to survive out here on my salary.

quantAndHold
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Joined: Thu Sep 17, 2015 10:39 pm

Re: How do BH define Cost of Living Cities

Post by quantAndHold » Sun Jun 02, 2019 10:48 am

KlangFool wrote:
Sat Jun 01, 2019 3:29 pm
hoops777 wrote:
Sat Jun 01, 2019 3:18 pm
KlangFool wrote:
Sat Jun 01, 2019 2:21 pm

The number translates into $100 per square feet. Check the house/townhouse/condo price in your area.

KlangFool
I guess I am really missing something here,but you cannot use 100 per sq ft and then say a 2000 to 3000 sq ft house over 200,000 is HCOL.
My point is more centered around the $100 per square feet as the benchmark for MCOL.

<<So 185,000 is LCOL and 225,000 is HCOL?>>

If the 185K buys you a 500 square feet condo, it is an HCOL area. Ditto, if the 225K house is a 4,000 square feet house, it is an LCOL area.

KlangFool
Nationwide, the average cost of construction, not including the price of the land, is over $100/sqft. Even in LCOL areas, it’s above $90/sqft. If $100/sqft is the dividing line between low and high, then you’re saying that anyplace where the land under the house doesn’t have a negative value is HCOL.

Also, the median home price nationwide is currently over $300k. You’re saying that a lot of people who are paying less than the median home price for median homes are living in HCOL areas.

Valuation according to KlangFool seems arbitrarily low to me, since it’s so much lower than current averages.
Yes, I’m really that pedantic.

KlangFool
Posts: 16567
Joined: Sat Oct 11, 2008 12:35 pm

Re: How do BH define Cost of Living Cities

Post by KlangFool » Sun Jun 02, 2019 10:55 am

quantAndHold wrote:
Sun Jun 02, 2019 10:48 am
KlangFool wrote:
Sat Jun 01, 2019 3:29 pm
hoops777 wrote:
Sat Jun 01, 2019 3:18 pm
KlangFool wrote:
Sat Jun 01, 2019 2:21 pm

The number translates into $100 per square feet. Check the house/townhouse/condo price in your area.

KlangFool
I guess I am really missing something here,but you cannot use 100 per sq ft and then say a 2000 to 3000 sq ft house over 200,000 is HCOL.
My point is more centered around the $100 per square feet as the benchmark for MCOL.

<<So 185,000 is LCOL and 225,000 is HCOL?>>

If the 185K buys you a 500 square feet condo, it is an HCOL area. Ditto, if the 225K house is a 4,000 square feet house, it is an LCOL area.

KlangFool
Nationwide, the average cost of construction, not including the price of the land, is over $100/sqft. Even in LCOL areas, it’s above $90/sqft. If $100/sqft is the dividing line between low and high, then you’re saying that anyplace where the land under the house doesn’t have a negative value is HCOL.

Also, the median home price nationwide is currently over $300k. You’re saying that a lot of people who are paying less than the median home price for median homes are living in HCOL areas.

Valuation according to KlangFool seems arbitrarily low to me, since it’s so much lower than current averages.
quantAndHold,

<< Nationwide, the average cost of construction, not including the price of the land, is over $100/sqft. Even in LCOL areas, it’s above $90/sqft.>>

<<Also, the median home price nationwide is currently over $300k.>>

Please complete your post by stating the median home size.

Please note that the median is not the same as the average. They are not interchangeable. Please state whether your post is about the median or the average.

Thanks.

KlangFool

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