This is really circular. Poorer places have cheaper cost of living. Part of the reason CA/NY have such high housing prices is that they have such high incomes.
It seems to me that everyone makes a tradeoff between earning potential and cost of living, which are usually in tension because a lot of the goods we…
This is really circular. Poorer places have cheaper cost of living. Part of the reason CA/NY have such high housing prices is that they have such high incomes.
It seems to me that everyone makes a tradeoff between earning potential and cost of living, which are usually in tension because a lot of the goods we care about are positional rival goods and a lot of earning potential is network effects.
You see people relocate to poorer areas when they are able to retain their income independent of place and live around people like themselves. So retirees, full time work from home, etc.
Real estate near high income potential gets bid up, and supply doesn't increase to keep the cost down. In part because "keeping out the riff raff" is part of the value of real estate, and high earning areas require higher prices to keep out the riff raff.
Discrimination might help in this case (keep out the riff raff based on something other then price), but we got the fair housing act and all that.
"for a lower cost of a living"
This is really circular. Poorer places have cheaper cost of living. Part of the reason CA/NY have such high housing prices is that they have such high incomes.
It seems to me that everyone makes a tradeoff between earning potential and cost of living, which are usually in tension because a lot of the goods we care about are positional rival goods and a lot of earning potential is network effects.
You see people relocate to poorer areas when they are able to retain their income independent of place and live around people like themselves. So retirees, full time work from home, etc.
Real estate near high income potential gets bid up, and supply doesn't increase to keep the cost down. In part because "keeping out the riff raff" is part of the value of real estate, and high earning areas require higher prices to keep out the riff raff.
Discrimination might help in this case (keep out the riff raff based on something other then price), but we got the fair housing act and all that.
Austin has lower cost of living because it's legal to build there.
Travis County which contains Austin has a per capita personal income of 60k.
Santa Clara is 150k.
A single family home in Travis County costs $500k. In Santa Clara its 1.86M.
1.86M / 150k = 12.4
500k / 60k = 8.33
Now 12.4 vs 8.33 ain't nothing to sneeze at. Income adjusted housing in Austin is 1/3 cheaper.
But non-income adjusted housing is 75% cheaper. Income differences are still doing a lot of the work here.