American household debt totaled a record $12.73 trillion as of March 2017, so cost of living concerns are more pertinent than ever. Americans have high expectations for their standard of living, but the price of sustaining those expectations can be steep — and it’s rising in certain parts of the country much more than others.
GOBankingRates conducted a study to identify which cities have seen the largest cost of living increase over a one-year period from 2016 to 2017. The study evaluated U.S. cities based on two principal metrics:
- The increase in its cost of living index, which includes food, rent, utilities and transportation.
- The increase in the amount of income required to “live comfortably,” a concept used in GOBankingRates studies that combines the money needed to pay for necessities — including food, rent, utilities, transportation and healthcare — with the amount one should budget toward discretionary spending and savings.
We identified the cities where the cost of living index had increased by at least two points (out of a total 100) and the amount of income required to live comfortably had also risen. Combining these two metrics provides both the objective and more subjective side of cost of living expenses. Most cost of living indices do not account for the ability to save or pay for unnecessary purchases, and yet they’re both important parts of people’s financial lives. Click through to find out the worst places to live because of rising costs.
10. New Orleans
- Live Comfortably Amount Increase: $1,221
- Cost of Living Index Increase: 2.15 points
It now costs more than $62,000 to live comfortably in New Orleans. The median rent in New Orleans for single-family residences increased by almost 18 percent over the last two years. At the same time, more New Orleans families find themselves living in substandard rental housing while dishing out a large proportion of their income to rent and utilities.
- Live Comfortably Amount Increase: $1,111
- Cost of Living Index Increase: 2.58 points
The economy of Indianapolis thrived in 2016, spearheaded by strong growth in the city’s tech industry. Economic prosperity has coincided with a 10 percent rise in the median home list price since 2015. Indianapolis is still a relative bargain; it only takes $47,127 to live comfortably here, the lowest amount of the cities on this list.
8. Virginia Beach, Va.
- Live Comfortably Amount Increase: $1,720
- Cost of Living Index Increase: 2.65 points
Housing prices in Virginia Beach have seen modest rises in the past two years, from $279,900 in April 2015 to $289,000 in April 2017. So what accounts for the cost of living increase?
Part of the issue is that wages are not keeping up with housing costs. Many Virginia Beach residents, such as teachers, office and store clerks, and other middle- to lower-income workers are having a tough time paying the city’s median rent. According to The Virginian-Pilot, the city council is considering creating higher-paying jobs to aid in closing this wage gap.
- Live Comfortably Amount Increase: $2,590
- Cost of Living Index Increase: 2.78 points
Cost of living increases can hurt your budget, but they can be indicative of positive economic trends. According to a report by CBRE, the commercial real estate services firm, for the first time in at least 25 years, jobs in Philadelphia are growing faster than in New York City. Several sectors are contributing to job growth, but the stand-outs are the educational and health services sectors, which added more than 27,000 jobs in the last year.
Job prospects and a healthy economy tend to raise housing prices, and thus costs. In line with this, the median listing price for a Philadelphia home shot up almost $20,000 year-over-year, from $155,000 in April 2016 to $174,900 in 2017.
6. Los Angeles
- Live Comfortably Amount Increase: $1,676
- Cost of Living Index Increase: 2.89 points
According to new income limits set by HUD, an individual earning $50,500 a year in Los Angeles County is now considered low-income. It will take an annual salary of $76,047 to live comfortably in 2017, the highest amount of the cities on this list. Even so, Los Angeles is a great place to move to find your dream job.
Keeping up with housing costs in Los Angeles can be difficult. Since 2015, the median rent for a single-family residence increased over 14 percent, to $4,000 a month as of April 2017. Over the same period, the median list price in Los Angeles jumped nearly 20 percent, from less than $620,000 to just under $740,000.
5. Jacksonville, Fla.
- Live Comfortably Amount Increase: $2,095
- Cost of Living Index Increase: 3.36 points
Jacksonville’s housing prices have made noticeable moves, with the median list price up 16 percent in the last two years. Employment opportunities are plentiful in Jacksonville as tourism, healthcare and retail sectors added thousands of jobs in recent years.
4. Austin, Texas
- Live Comfortably Amount Increase: $1,407
- Cost of Living Index Increase: 3.84 points
You can live comfortably in Austin making less than $55,000 per year. Though still affordable compared to other major cities, Austin is showing signs of creeping costs of living. A recent Zandan Poll survey found that more people think Austin is losing its appeal due to the rising cost of living.
3. Louisville, Ky.
- Live Comfortably Amount Increase: $2,066
- Cost of Living Index Increase: 4.49 points
In 2017, you only need to earn around $49,000 a year to live comfortably in Louisville. But that’s $2,000 more than what was needed in 2016 for the same standard of living.
Home prices have risen in Louisville in the past two years, with the median listing price jumping $25,000 to $149,900. The cost of living might be rising in Louisville, but it’s still one of the best places to retire.
- Live Comfortably Amount Increase: $3,190
- Cost of Living Index Increase: 7.32 points
Seattle has been a hotbed of economic activity and growth in recent years. As the city has taken off, housing prices have blown up as well. In two years, the median list price in Seattle jumped by almost a third, from $475,000 to $630,000 as of April 2017.
Cost of living in Seattle is getting so bad that, according to a recent survey, 45 percent of millennials living in the area said they think they will have to move to a cheaper city if they want to maintain the same standard of living. And, it takes a salary of $75,283 to live comfortably in Seattle — the second-highest amount of the cities on this list.
1. Nashville, Tenn.
- Live Comfortably Amount Increase: $9,135
- Cost of Living Index Increase: 8.61 points
Housing costs are closely tied to a city’s cost of living. Viewed in this way, it makes sense why Nashville topped the list. Home prices have been surging over the years in Nashville. From April 2015 to April 2017, the median list price for a home rose by almost 30 percent, from under $260,000 to nearly $340,000. It takes a salary of $70,150 to live in Nashville today.
GOBankingRates examined U.S. cities to determine which had experienced the largest growth in cost of living expenses over the past year, from 2016 to 2017. Cities were evaluated based on the change in each city’s Cost of Living Index from 2016 to 2017, sourced from Numbeo.com. Numbeo’s Cost of Living Index is a relative indicator of consumer prices, including groceries, restaurants, transportation, utilities and rents. Numbeo index values were captured on May 22, 2017.
Cities were also evaluated based on the change in the amount of income required to “live comfortably” in that city, sourced from two previous GOBankingRates’ studies: You’ll Need This Much Money to Live Comfortably in the 50 Biggest Cities in America, published April 2017, and How Much Money You Need to Live Comfortably in the 50 Biggest Cities, published April 2016.
Live comfortably factors include housing, groceries, utilities and health insurance premiums. Monthly costs were totaled and multiplied by 12 to get the annual dollar cost of necessities in each city. This dollar amount for necessities was then doubled to find the actual annual income needed to live comfortably in the city, assuming a person is following the 50-30-20 budgeting guideline, which requires an income double the cost of necessities. This study also compared the amount of income needed in each city to each city’s actual median pretax household income, according to the latest U.S. Census Bureau data. The amount of money specified for savings is equal to 20 percent of the total income needed, and the amount specified for discretionary spending is equal to 30 percent of the total income needed.
Source by:- gobankingrates