Economics

Where Incomes Are High and Prices Are Low

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Where do Americans earn the highest effective incomes—that is, the highest incomes once you adjust for the local cost of living? Joel Kotkin and Mark Schill ran the numbers, and this is what they found:

Striptease meets Kate & Allie

In first place is Houston, where the average annual wage in 2011 was $59,838, eighth highest in the nation. What puts Houston at the top of the list is the region's relatively low cost of living, which includes such things as consumer prices and services, utilities and transportation costs and, most importantly, housing prices: The ratio of the median home price to median annual household income in Houston is only 2.9, remarkably low for such a dynamic urban region; in San Francisco a house goes for 6.7 times the median local household income….

Most of the rest of the top 10 are relatively buoyant economies with relatively low costs of living. These include Dallas-Fort Worth (fifth), Charlotte, N.C. (sixth), Cincinnati (seventh), Austin, Texas (eighth), and Columbus, Ohio (10th). These areas all also have housing affordability rates below 3.0 except for Austin, which clocks in at 3.5. Similar situations down the list include such mid-sized cities as Nashville, (11th), St.Louis (12th), Pittsburgh, (13th), Denver (15th) and New Orleans (16th).

One major surprise is the metro area in third place: Detroit-Warren-Livonia, Mich. This can be explained by the relatively high wages paid in the resurgent auto industry and, as we have reported earlier, a huge surge in well-paying STEM (science, technology, engineering and math-related) jobs. Combine this with some of the most affordable housing in the nation and sizable reductions in unemployment—down 5% in Michigan over the past two years, the largest such drop in the nation. This longtime sad sack region has reason to feel hopeful.

The only expensive areas where incomes were high enough to overcome the steep prices and vault the cities into the top 10 were Silicon Valley (in second place) and Seattle (in ninth). Boston came in 32nd, San Francisco landed at 39th, New York finished 41st, and Los Angeles is 46th.

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  1. I guess I have to go with Jessica Lange.

    1. It’s a no-brainer.

      1. That depends on whether you are talking about then or now.

        Now, Susan Saint James has aged the best.

    2. But Jane’s an ignorant slut, and you know they’re better in bed.

      1. Yeah, I don’t think those are Jane Curtin’s real legs.

  2. This is probably why I’ve put down firm roots in my mid-sized city while other colleagues have struck out for NYC and Chicago to live like college students again. That and a complete lack of ambition and talent.

    And I can remember when all three of those women were hot.
    Also: You kids get off my fucking lawn!

    1. As a highly-skilled engineer, I could live in any part of the country that I wanted to. I live in Iowa because housing costs are modest, schools generally succeed in educating children, the police don’t routinely shoot and kill dogs, and the local politicians are mostly sane and rational (Tom Harkin being the obvious exception to the rule). The downside is that winter is brutal, spring is generally too fucking wet, and summer is always too fucking humid, but the 6 weeks of autumn somehow makes up for it.

      1. The downside is that winter is brutal, spring is generally too fucking wet, and summer is always too fucking humid, but the 6 weeks of autumn somehow makes up for it.

        And, it’s Iowa.

        1. Is this hell? No, it’s Iowa;-)

          1. Wasn’t Napolean Dynamite filmed in Iowa?

            1. In case you were serious:

              In 2004 the Napoleon Dynamite comedy film was filmed in Preston Idaho. Many places in Preston can be seen throughout the film. The film’s creators, Jared and Jerusha Hess are from Preston where Jared went to high school.

              http://prestonidaho.org/

              The squirrels hate the full link, so you’ll have to dig out the details on your own.

            2. Oh, and fuck you for making me google that 😉

              1. So it was one of those big, empty, “i” states.

  3. Would anybody agree with me that Michigan is improving since we elected a sort-of libertarianish govenor? Snyder is a fiscal conservative and a social moderate. Also, the republican led legislature has put a few freedom friendly reforms through (like loosening the motorcycle helmet laws).

    As much as I dislike republicans, I was sure glad to see all those democrats get booted real hard out of our state government in 2010.

    1. Considering that your former governor was Jennifer Grahnholm, you could only go up.

    2. I don’t think there would be any argument whatsoever. It certainly wasn’t the bailout fund that went directly towards union boss payouts which then required another Fed loan to pay it off so Obama could sell the silly narrative that the loan had been paid back.

  4. Richmond, Virginia, #22, so a little on the good side of middling for us.

    1. There’s quite a few of us Richmonders around I think.

  5. Anyone find a link to the actual list in there anywhere?

    1. It’s at the link in the article:

      http://www.newgeography.com/co…..e-furthest

    2. It’s posted at Kotkin’s website. Bookmark his site. It is “must read”.

  6. Yay! We win!

    Now don’t move here. Traffic is bad enough already.

    1. I can’t believe I left to go somewhere where the houses and utilities cost twice as much but the pay is the same. Someday my house will be right-side-up again (or there will be a tragic fire) and I’ll move back.

      1. I got a nice house in Spring for sale, Brett.

        1. Ah, me old stomping grounds. Grew up in The Weedlands. In 1992 I lived in the back, now my old house is right down the street from the “old” new HS. Unfortunately, I haven’t the income, currently, to carry 2 houses for any length of time.

          1. I carried two while waiting for the old house to sell when we moved up here. It was brutal.

        2. Parents just sold theirs up there too. Got tired of the commute to Greenway Plaza.

          Hopefully some exxonmobil people move in and drive up prices.

  7. The low cost of living is about the only good thing you can say about living in a place with a low cost of living.

    1. It’s very good for the poor and middle class, if they have fairly typical interests.

      Places with high cost of living generally are the only ones with the sort of amenities that appeal to the rich and the highly-educated-but-not-rich.

      If you care about the great mass of people, you would respect places with a low cost of living. The tradition of allowing lots of building makes Texas and other places a lot better for the masses than places that drive up the cost of living by refusing to build.

      Not surprising that Tony sticks up for the upper class here. Let them eat cake, eh?

      1. Places with high cost of living generally are the only ones with the sort of amenities that appeal to the rich and the highly-educated-but-not-rich.

        There’s plenty in Houston for the highly-educated-but-not-rich, if the amenities you’re talking about are music, art, and diverse food. Too bad about the heat.

        1. I see Fluffy just made the same point.

        2. He isn’t talking about music, art, or diverse food. He’s talking the Identity Politics Culture War. Those icky low-cost cities are sometimes located in *gasp* red-states and all are in flyover country. They aren’t *fabulous* enough for Tony.

          1. Cultural amenities only count if you get to them by light rail.

            1. We have some…er…problems with our trains here in Columbus.

                1. I think that joke applies to pretty much every city.

                  Va. Beach? Check.
                  DC? Check.
                  LA? Check.
                  NYC? Check.
                  etc.

            2. We got that, too. See? Everything a snooty lib could want, but with decent gun laws.

          2. Yup, no fabulousness here in H-town. Except the lesbian mayor. And the Montrose. And…

            Ah, the hell with it. If Tony doesn’t want to come here, we won’t mind at all.

          3. Those icky low-cost cities are sometimes located in *gasp* red-states and all are in flyover country

            Is flyover country anything that isn’t LA, NYC or Chicago?

            1. Those would be the capitals of non-flyover country.
              As someone from Chicago who has been living in LA, I can tell you this list is no shock. LA is a HORRIBLE place to live if you make less than $100K/year. Taxes and fees are abound and all businesses raise prices to try to keep up with that and pass those fees onto consumers and the cycle repeats endlessly.
              Chicago and NYC are no different either.

      2. Not at all, JT. Tony has a long-established antipathy for poor people – and “breeders”.

        But he claims to care about everyone.

        1. I like to think of myself as sufficiently self-aware to admit to my own prejudices. But you, of course, are prejudice-free and pure as fresh snow. Wishing a gay man death by AIDS is just a little funny joke. hahaha.

          1. Who, exactly, has wished a “a gay man death by AIDS”?

            As near as I can tell your whole belief system is based on shit you simply made up.

            1. I’m still puzzled by that, and how he thinks he’s above critique due to his sexual preferences.

              Notice he doesn’t care if straight people die of AIDS – because they’re straight.

    2. Yeah, Tony. My city is a hellhole. Please don’t visit.

    3. A single Google search and my first click brought me to this calendar of events for Houston.

      http://www.visithoustontexas.c…..ls/events/

      They appear to have plenty of cultural amenities.

      The only reason anyone living there would feel culturally deprived is if they’re too lazy to get up from the couch.

      I bet (without searching for it) that Houston has an orchestra, too. And you know what? I bet there aren’t 500 people in the entire United States who can tell the difference between Houston’s orchestra playing Mozart and Boston’s. Hell, there may not be 200 such people.

      1. My town is actually known for (and marketed as) being extremely gay-friendly. But in Tony’s case, we’ll make an exception.

        1. Columbus and Pittsburgh are both consistently listed as some of the friendliest cities to gays there are.

          But yeah, let’s keep Tony out.

        2. Gay mayor. Wish she was fiscally conservative and that our fiscally conservative city councillor wasn’t also crazy.

          But I guess it takes all kinds.

      2. Louisville is much smaller than Houston, and ditto.

        And I hate to say too much, because people might move here and create traffic, but we have one of the better local food scenes in the nation. At affordable prices (the cost of dining is even lower than overall cost of living).

        If you like pro sports, we suck. And Cincinnati/Indy/Nashville arent that far away if you are into that. But otherwise, Im not sure what any bigger city has that we dont have — they just have more of it.

        1. You have the Kentucky Derby. Fuck expensive pro-sports. They all cost too much. I’d much rather go to a minor league baseball or hockey game and get cheap(er) beer.

      3. But it’s Houston.

        1. May everyone feel like you.

        2. Can you expand on that? What’s wrong with it being Houston? Too many black people for your liking? Lesbian mayor? Seriously, Tony, fuck you. This is at about the same level of your usual discourse, but lacks even the nominal meaningless detail and obfuscation. Again, fuck you, fuck off and die you worthless time-wasting troll.

          1. Too hot. Too many cars. It’s in Texas.

            1. So you’re a racist homophobe? Thanks for confirming.

              1. Tony ain’t a homophobe. Racist? Yes.

            2. Everywhere is too :insert weather here:. And everywhere has too many cars. Being in Texas is a good thing if you like having a job or owning a business.

              Face it Tony. In order to banter with us, you must first be accepted by us. You will never be accepted by us.

              1. And who might “you” be?

              2. Everyplace might have cars, but the only place that actually has a legit beef in the US is Los Angeles. There is no road system more fucked up than LA. DC’s numbers get skewed from all the diplomatic bullshit blockades but from a sheer ‘how the fuck is it 3am and I’m stuck in a traffic jam on a 12 lane freeway?” perspective, Los Angeles is the king of shitty traffic and too many cars by a country mile.

      4. Houston does have an orchestra. And a museum with a pretty good collection. Heavy on Dutch 17th century madonnas and still lifes.

        1. Ooh, now that is of interest to my elite tastes. How often do you get to hear someone say, “I fucking love Dutch still lifes”? Because I do.

          1. I always preferred the madonnas because they were globe breasted chicks, often with a boob hanging out. (And usually a little nekkid baby standing on one of her hands, but that was easily ignored.)
            The still lifes are cool, too, though.

            1. I’m often a little creeped out by the baby (saw some particularly creepy ones recently at the Legion of Honor in SF, actually), but I like Madonnas too. The still lifes, though…more real-looking than a photograph in many cases. Almost 3-D. It’s sweet.

      5. I love how that events calendar has a gun expo as its second listing. They definitely have their priorities straight. 🙂

        1. i think there are several gun expos through the year.

          One word though: Rodeo!! World’s largest county fair and concert event.

      6. Not only do they have an orchestra, but last year they played the scores to The Matrix and Fellowship of the Ring, live with the movie. It was definitely worth doubling the ticket price to get a sitter for the kids for that!

    4. These aren’t places with low cost of living, they’re places where the income levels outpace the cost of living the most.

      WHY CAN’T IT READ? /Steve Jobs

    5. typical NYC/Cali elitist douche

      You know what one of the best things about living in the tri-state area or any city is? The food, especially the ethnic food.
      You can’t get dim sum or really good thai in TEXAS, LOLOLOL!!! Those rubes

      OH WAIT A MINUTE. Houston has one of the largest (I think) vietnamese populations, and a lot of southeast asians in general

      In general you can get hipster, new-ish, good food in any city. Or hipster, new-ish anything really. Your select city isn’t the only place, schmuck

      The only thing bad about Houston is the blaring heat and humidity, and the lack of public transit. But the former is a matter of nature, and the latter, well for the latter, Texas is the kind of place where they might experiment with some sort of privatization shceme to get more public transit, which wouldn’t cost a taxpayer dime, and show up your unionized multi-billion dollar bullshit.

      Oh and I’d imagine roaches, since it’s a hot area

      1. Houston has plenty of public transit. It’s called ‘the bus’. But for some reason, most people find their own cars a better experience.

        1. Cause we didn’t spend all of our money on rent, 🙂

      2. Some of the best dim sum I’ve had in my life, I’ve had in Houston.

      3. Compared to the palmetto bugs here in Tallahassee, the roaches in Houston are wee, tame little things that have the decency not to fly directly towards your mouth when threatened.

        1. I’ve also never woken up to see a roach on the ceiling over the bed, which I have with palmetto bugs in Florida.

      4. Edwin, you really don’t have to create a strawman elitist douche in your head, just respond to Tony.

    6. There are also fewer assholes like you around.

    7. Wow, Tony. Who pissed in your museli this morning?

    8. The low cost of living is about the only good thing you can say about living in a place with a low cost of living.

      Fort Worth has good museums, a good zoo, the Bass Hall, a reasonably well-respected college, tons of BBQ and Tex-Mex, and even an Apple Store and nearby teams in 4 major pro sports for those so inclined. But keep spewing your condescending fuckwittery.

      1. I live in a place such as I described. I live here because it’s cheap to live here, and I value living space. There’s a minimum level of arts, culture, and food to meet my requirements, but my city, while small, has been buoyed by a lot of oil wealth in its history.

  8. I was just interviewed for a documentary about the National Scenic River that runs through the back yard of my compound. I know I couldn’t afford that in many places on my salary.

    1. The Big Darby?

  9. Memphis, Cincinnati, Columbus, Nashville, Birmingham, Louisville.

    That is the list of cities that went up more than 15 spots. They seem to have something in common.

    1. They do have something in common. All have been graced with my presence.

      1. Ive driven thru Columbus, but I dont think Ive ever stopped…no wait, I interviewed someone somewhere in a restaurant in the Columbus metro area.

        So yeah, same for me.

        1. The door’s always open!

          1. Yeah — I’ve got a starter home I renovated five years ago and have been trying to flip ever since. I’d be happy to make you a deal.

            1. I’m in the same situation, but for the flipping. I’m just trying to move out and break even on the house I live in right now.

            2. I am going to assume that it isn’t in UA or Bexley. I don’t think those folks have any problems selling their homes.

            3. God. I fucking HATE being a landlord. Does admitting that get me booted from the monocle-and-tophat club?

              1. No. Not UA or Bexley. You know that saying, “location, location, location”? I chose poorly.

              2. Serious questions. What’s the rent? Where is the rental?

                1. Sorry EDGrLBC — I’ve got it listed for sale again. (I’m like the House Republicans and Obamacare — try, try again.) So it’s off the rental market for a time.

      2. I must be the reverse sugarfree-midas touch because most of the cities I’ve visited fall on the opposite end (chicago, honolulu, l.a.)

  10. Vermont is expensive and rural, thanks to NYC and Boston expats looking to go country/organic hip.
    I hate them so.

    1. And the salaries are low, compared to other places. But it’s damned beautiful and the people are great. I’ll stay as long as I can afford to.

  11. The use of median house price actually minimizes the differences in affordability. What I mean is that, while the median home in Chicago might cost 3.5x median salary and in Houston it’s 2.9x median salary, the median home in Chicago is probably something like a 1400 sq. foot 2BR/2BA condo, while the median in Houston may be a 2,500 sq. foot 4BR/3.5BA single-family with 1/4 acre lot.

    1. This is a very good point.

    2. From experience, I moved from Lexington, KY (not on the list, but I’m sure the cost of the median home there is similar to Cincinnati’s 2.5x median income) to Chicago (3.5x median income.) In Lexington, we sold (10 years ago) a 1,500 sq. ft., 2BR/2BA townhouse with small yard for something like $90K. We then bought a 1,200 sq. ft. 2BR/2BA condo in downtown Chicago for over $300K. It was a nice building, but there was no yard, and only a tiny balcony facing a parking garage.

      Shorter version: the same type of home in Chicago probably costs ~3x what it does in Lexington, but looking at the median makes it look like Chicago is only about 20% more expensive.

      1. Many years ago, when we bought our first house in the Houston metro, my sister bought a townhouse in Reston. She got an 1800 sq. ft. townhouse. I got a 2300 sg. ft. house on an acre with a pool and a guest house. We paid within $5K of what she did.

        Since I’m currently back in the market, I can say almost without exception: for what you pay in any other large urban area, you can get a bigger house in Houston.

        1. I paid twice as much in 2006 for a house on the eastern edge of Tallahassee that was virtually the same age, square footage, and lot as one I looked at in Spring in 2004. I’ll bet that house in Spring has held its value while mine is in the shitter.

  12. Do liberal cities limit new housing development? Evidence from California is a study from Matthew Kahn, who is a liberal and environmentalist/urbanist.

    He finds that the answer is yes. He then ends up arguing that thus liberals hurt the environment by encouraging sprawl.

  13. Did they factor in state local taxes?

    1. Ampersanded again! That should be “state and local taxes”

      For fuck’s sake, Reason, can’t you hire somebody qualified to fix the most basic of problems?

      1. Perhaps you should seek help for your ampersandophilia.

        1. First they came for the ampersands, and you said nothing, because you did not use ampersands.

          1. They’ll get my semicolon when they pry it from my cold, dead keyboard.

            1. Better than prying a keyboard from your colon, I suppose.

  14. Some places are cheap and high-income because they suck so badly that you have to pay people a lot to move there, and they STILL won’t pay shit for real estate in such a god-awful place.

    While taxes and government intrusion drives up prices, quite a lot in some cases, there is a bit more to the market that just those things.

    1. Actually, as incomes go up, the price of real estate goes up. Look at Wellington, North Dakota. Shithole that no one wants to live in, but the price of real estate is skyrocketing because people are moving there because the oil companies are paying them a shitload. But that hasn’t kept real estate prices down; in fact it’s been the opposite. None of the cities on this list fit your theory, because in reality none of them are such god-awful places.

      1. you’re talking about a short term phenomenom based on the transience of the oil field. Eventually, builders catch up and then once drilling has stopped, prices come back down. Then when the field depletes, prices crash.

        1. Right. Houston, for example, has an old and relatively mature economy, not a gold rush economy that was nonexistent the day before yesterday.

          Again, government intrusion and taxation have a big impact, but they aren’t the only factors that determine either the cost or living, nor average incomes, in an area.

      2. Most of them are at least somewhat god-awful. Some aren’t bad. A few are nice. It really depends on what you compare them to, and whether an affordable home that offers any amenities means that you have to commute to work, and how far.

  15. moving from hawaii to seattle, was a huge plus in this dept.

    my career remained the same but i got about a 30% raise and the cost of living in seattle is about 20% (conservative estimate) less.

    hawaii, fwiw (read “the price of paradise”) does pay more for the average high school educated job (not enough to make up the cost of living though), but the average college educated job pays LESS than the mainland.

    and the cost of living is not just due to isolation. i have priced fresh pineapple HALF A MILE from a pineapple field in kihei costing MORE than it did at the same time in california.

    see: excise taxes etc.

    1. oh, and it may not factor into costs by the above metrics but hawaii as a income tax state is way worse than WA as a sales tax (no income tax) state. income tax states disincentivize to an extent, working ovretime and/or making more money since the state takes a bigger and bigger chunk

      in WA, i am “penalized” for consumption, not income which is far preferable philosophically imo

    2. The helicopter cops in Honolulu used to just land their bird next to the pineapple fields can take what they wanted. True story.

      1. i can honestly say i never plucked a pineapple from a field. even when i surfed surf breaks where you had to walk through an entire tempting field of ’em.

        i aint perfect, but i aint no pineapple thief!

        fwiw, IIRC theft of “agricultural products” was TECHNICALLY a felony under the HRS. this was probaby a nod to the corporate power of dole etc. to disincentivize such actions, because any other theft of such small monetary value was a petty misdemeanor (hawaii didn’t call them petty, but had misdemeanors and gross misdemeanors, the former being the functional equivalent of petty)

    3. “i have priced fresh pineapple HALF A MILE from a pineapple field in kihei costing MORE than it did at the same time in california”

      Probably because you’re white.

  16. I think what skews Austin’s housing prices is that properties downtown and the much coveted 78704 area are ridiculously expensive. You definitely have to pay a premium to live in those areas, but it is dirt cheap to live anywhere WAY south or North of downtown, or of course, anything east of I-35

    1. You’re right about east of 35, but there are a lot more than two ridiculously expensive areas in Austin.

      1. I just picked the areas around me… i know if you go west, those prices are also ridiculous, but in those areas, you get more house for the money

    2. I thought 78704 was the Jester dorm… Shit, I did too many drugs in college.

  17. Hell yeah, life is pretty good here in H-town. As long as you don’t mind the blazing heat and shitty traffic.

    1. Wow, so late was this comment. Uh, Houston also has the best restaurant selection in the entire country, bar none. The local music scene is lousy though.

    2. What’s a good Houston equivalent for people who despise heat but don’t mind the cold?

    3. The heat certainly is blazing but we have mild winters and amazing falls/springs. And its in the 70s right now in the middle of July!

      I used to think the traffic was terrible till I lived in Austin for a while. It can be worse.

      1. Hmmm, maybe the heat isn’t as bad as I thought. I’ll have to check the temperature averages.

        1. It’s as bad a syou thought. We’re just getting pounded by thunderstorms today.

        2. depends mostly on whether its raining or sunny. If it stays sunny, we get above 100 soon enough. If its cloudy/rainy, we sit in the 80’s, low 90’s in the summer.

          Last year was brutal, no rain from may to september.

        3. Yeah, I checked and the average temperature for each month is about 15? higher than Portland, which is already too hot for me, so screw that.

  18. The stupid article has “New York-Northern New Jersey-Long Island, NY-NJ-PA” as a single metro area.

    I live in NJ and the only thing we have in common with NYC is television stations. Prices for everything are far higher on the other side of the river.

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