Most affordable city: Houston, TX

This interesting chart graphs world cities on two axes with NYC set to 100 on both axes: Cost of living index and Local Purchasing Power Index (a metric that’s used to gauge the number of goods and services someone on an average salary can buy in that specific city).

The 578 different cities around the world fall on a roughly line with a positive slope. Cities with a low cost of living and low purchasing power are on the lower left (Kabul). Cities with a high cost of living and high purchasing power are on the upper right (Zug, Switzerland). NYC is in the middle in terms of purchasing power but lies above the line (high cost of living). Houston, TX is at the extreme of affordability with a cost of living of only 64 and purchasing power of 174. (Dallas is close.)

Want a really low cost of living in a town where the locals are doing well for themselves? Cyberjaya, Malaysia has a cost of living of only 25 and a local purchasing power of 128. This would be a prosperous town where the average person could afford the necessities better than in NYC. It’s an outlier because most cities with a low cost of living have high poverty (low local purchasing power).

https://www.visualcapitalist.com/cp/comparing-cost-of-living…

Wendy

Wendy

7 Likes

I lived in Houston off and on for 25 years (1981-2006) until I fled Texas for Washington State in 2006 when the policymakers at the state house in Austin started making too many uneconomic decisions.

My health insurance premiums dropped by 60% and taxes were lower, too, in WA State.

One big reason I was able to retire early at age 38 was because I’ve always used a rent vs. buy calculation to inform my real estate decisions. And for whatever reason, I was always able to find a comfortable garden apartment with palm trees, pools and tennis courts for $500 or $600/month in Houston. It made little sense to accept the burdens and hassles of owning a home. I saved at least a million dollars over two decades – and since that money was invested in the stock market instead of poorly appreciating single family real estate, it compounded into millions more.

Unfortunately, the future doesn’t look too bright for Houston. Climate change is going to impose huge costs on the city. And residents will pay for it either in higher taxes, or the increasing frequency of floods and other infrastructure failures that will be even more expensive to recover from.

intercst

9 Likes

I wouldn’t want to live in the Houston area for any amount of money. The hurricane risk scares me away. I’m willing to visit, but there’s NO WAY I’m moving there.

1 Like

DopplerValue writes,

I wouldn’t want to live in the Houston area for any amount of money. The hurricane risk scares me away. I’m willing to visit, but there’s NO WAY I’m moving there.

Houston is 50 miles inland from the Gulf Coast. You’re not going to get any storm surge in a hurricane. As long as you stay inside during the high winds in the middle of the storm, you’re fine.

The run-of-the-mill flooding risk is a bigger concern for me. Eventually they’ll need to dig enough drainage canals to the point where the city looks like Amsterdam. That’s going to be expensive.

intercst

Houston, TX is at the extreme of affordability with a cost of living of only 64 and purchasing power of 174. (Dallas is close.)

Wendy,

If no one has said it yet, that happens in Houston every time there is a gasoline bubble.

Leap1 asks,

If no one has said it yet, that happens in Houston every time there is a gasoline bubble.

I was working in Houston in 1986 when the price of a barrel of oil declined to $8/bbl from a high of $40/bbl five years before. The “oil bust” created a ton of real estate bargains which was great as long as you didn’t need a job. I decamped to California before returning 3 years later.

I didn’t see real estate prices like that again until I was living in a Portland OR suburb in 2012 at the tail end of Bush mortgage crisis when I bought my current home for 70%-off its 2008 value. It’s since quadrupled in price in less than ten years.

That’s about the only way you’re going to get an S&P500-like return in residential real estate – buy at the bottom after a total collapse.

intercst

2 Likes

I might have missed it but I did not see how they defined “city”.

I am not familiar with Houston but the statistics for the city of Houston could be very different than for the entire Houston metropolitan area.

It varies a lot but in many cities either high or low income people tend to live in the downtown area which is officially and then their counterparts tend to live out in the suburbs which is outside the official city but still in the metropolitan area.

1 Like

Watty writes,

I am not familiar with Houston but the statistics for the city of Houston could be very different than for the entire Houston metropolitan area.

Texas has pretty strong annexation laws so the City of Houston is almost the entire metropolitan area. There are a couple of upmarket towns to the West of the CBD (Bellaire, West University) that incorporated themselves before the City engulfed them, but a huge 665 sq mile area surrounding downtown is “City of Houston”.

intercst

1 Like

Houston, TX is at the extreme of affordability with a cost of living of only 64 and purchasing power of 174.

===============================================================

San Antonio, TX is better than Houston because of many factors including cost of living.

San Antonio has a cost of living of only 50 and purchasing power of 152.

Jaak

2 Likes