Cost of living disparities mostly come down to housing

Introduction

When considering a move to a new city, one of the most important considerations is cost of living – how far will your money go in your new city compared to the one where you currently live? To help answer that question, Apartment List’s Cost of Living Calculator allows renters to compare living costs across hundreds of cities throughout the U.S. and determines the relative income levels needed to sustain similar living standards in different cities.

In this report, we dive deeper into this cost of living data, exploring key trends across the nation’s 100 largest cities, and breaking down the components that drive cost of living differences.

Visualizing cost of living differences

The overall cost of living in each city is determined by looking at prices for dozens of goods and services that are grouped into six main categories – housing, utilities, transportation, health care, groceries, and miscellaneous. The data tool below visualizes the relative cost of living for each of these six components, comparing local costs to the national average, and allowing for side-by-side comparisons of different cities.

The black hexagon outline in each panel represents the national average, while the purple shaded area represents the local costs for the selected city. When the purple area extends beyond the center hexagon, prices for the given component in the selected city are higher than the national average. When the purple area sits within the center hexagon, prices for that component are lower than the national average.

The tool defaults to showing the cities with the highest and lowest cost of living: San Francisco, CA and Topeka, KS, respectively. San Francisco is pricier than the national average along every dimension, but the housing axis specifically jumps out. Housing costs in San Francisco are a staggering 208 percent greater than average¹, while other dimensions range from 22 to 32 percent above average. Overall, after combining these components, cost of living in San Francisco is 83 percent higher than the nation as a whole.

In Topeka, healthcare costs, transportation costs, and utility costs are all only slightly below the average. But residents save on housing, groceries, and miscellaneous goods and services, bringing the overall cost of living 19 percent below average.

San Francisco and New York City have the nation’s highest cost of living

The chart below ranks the overall cost of living for the 100 largest cities in our dataset. As explained above, San Francisco tops the list with a cost of living that is 83 percent higher than the national average, and is followed closely by New York City where cost of living is 77 percent higher. These two cities lead the pack by a fairly wide margin; no other city has a premium of more than 55 percent.

Housing costs are roughly equal in the nation’s two most expensive cities; in New York, housing is 210 percent more expensive than the national average, just barely edging out San Francisco at 208 percent. But San Francisco takes the top spot for overall cost of living because of higher prices across the five remaining components. San Francisco ranks as the first or second most expensive city for transportation, utilities, and health care costs, whereas in New York, these expenses are only marginally higher than the national average.

The top 10 is rounded out by other large coastal cities, including Los Angeles; Oakland; Washington, D.C.; Seattle; Boston; and San Diego, where the overall cost of living is roughly 50 to 55 percent higher than nationwide. California, in particular, is home to five of the 10 most expensive cities in the nation.

At the other end of the spectrum, the cities with the lowest cost of living are generally dispersed across the Midwest and Southeastern United States. Topeka, KS; Mobile, AL; and Oklahoma City, OK rank as the three most affordable cities, in large part because of lower housing costs and grocery bills. Compared to the national average, a Topeka resident spends 28 percent less on housing, 19 percent less on groceries, and 22 percent less on miscellaneous items such as haircuts, toiletries, and appliance repairs, resulting in an overall cost of living that is 19 percent lower than the national average.

Housing costs vary more across the country than other spending categories

As suggested by the cities at the top and bottom of the cost of living spectrum, housing is by far the most significant factor in determining which places are affordable and which ones are not. This can be seen more explicitly by looking at the statistical range for each of the index components: the difference between the highest and lowest value. Transportation costs, for example, span from a minimum of 31 percent below average in Columbia, SC to a maximum of 34 percent above average in Boston, MA, for a range of 65 percentage points. Housing, on the other hand, spans from 42 percent below average in Mobile, AL to 210 percent above average in New York City, making the range a staggering 252 percentage points.

To visualize this, the chart below places this housing component on the x-axis and aggregates the remaining non-housing components on the y-axis. Note that the x-axis ranges from -50 percent to +200 percent, whereas the y-axis ranges from just -15 percent to +25 percent. The upward sloping trend shows that housing and non-housing costs tend to be positively correlated; in other words, in places where the cost of housing is high, so too is the cost of other goods and services. In the upper-right, we see that San Francisco and nearby Oakland have the highest non-housing cost of living in the country, in addition two of the highest housing costs.

That said, there are an interesting set of cities buck this trend. The cities in the chart’s lower-right quadrant have housing costs that are higher than the national average, but non-housing costs are below average. This set of cities includes large Sun Belt markets such as Phoenix, Austin, and Las Vegas, as well as smaller pandemic “zoom towns,” such as Boise and Reno. These cities all exploded in popularity during the COVID-19 pandemic, when many households moved to lower-cost, lower-density parts of the country. Housing demand overwhelmed supply and prices shot up rapidly. In many of these cities, rent prices in particular are up more than 30 percent since the start of the pandemic. Other day-to-day expenses have also risen with inflation, but not at the same rate. An affordable cost of living has been one of the primary draws of these cities, but surging demand is quickly driving housing costs out of the realm of affordability.

Conclusion

Moving to a new city is a major life decision that involves lots of moving pieces. The most significant of those pieces is housing. Finding a new home in a city where you’re not yet living can be stressful logistically, and on top of that, housing costs vary substantially across cities, much more so than other expenses. Thankfully, Apartment List is here to help you find a home you love, and our Cost of Living Calculator can arm you with the data you need to be prepared for differences in living costs.

About This Data

The Cost of Living Index constructed by the Council for Community and Economic Research crowdsources price data from researchers across the country to answer the following question: how do urban areas compare in the cost of maintaining a high-quality standard of living? Price data is collected for over 60 goods and services, split across six categories: housing, utilities, transportation, health care, groceries, and miscellaneous.

A complete description of the index, including the individual items that comprise each of the six categories and the weights used to construct the overall index, is available here.