To live comfortably in some of America’s largest cities, you need to earn more than $200,000, a new analysis by GoBankingRates finds. That’s more than double the U.S. median household income of $83,730.
The analysis looked at the 50 most populous U.S. cities using Sperling’s BestPlaces cost of living index, which measures how average local prices for housing, groceries, transportation and other necessities differ from the national average.
They then adjusted spending data from the Bureau of Labor Statistics to reflect differences in regional costs, combined the results with home values from Zillow, and applied a 6.35% mortgage rate to estimate a homeowner’s typical monthly payment. (The renter’s housing costs are not included in the survey.)
From there, GoBankingRates defined a “comfortable” salary by estimating the household income needed to cover basic necessities according to the 50/30/20 budgeting rule (assuming necessities account for about half of household income) and doubling that number.
Unsurprisingly, the cities that require the highest salaries are also the cities with the highest housing costs, and housing is typically the largest monthly expense for households.
Here’s a look at 10 cities where you need the highest household income to live comfortably.
1. San Jose, California
2. San Francisco
3. San Diego
4. Los Angeles
5. New York City
6. Long Beach, California
7. Seattle, Washington
8. Boston
9. Oakland, California
10. Washington DC
Why are prices so high in these cities?
According to Zillow, the top-ranked cities all have home prices well above the national average of $363,932. The difference is widest in San Jose, where the average home price is more than four times the U.S. average.
California’s housing market is particularly marked by rising costs due to restrictive zoning, high construction costs and, as is common in large cities, well-paid workers driving demand.
Other major cities on the list (New York, Seattle, Boston, etc.) have similar reasons for high prices, limited housing space, and intense competition from high-income residents pushing up prices.
Higher home prices also tend to drive up rents because more people stay in the rental market longer or move farther away when they can’t afford to buy.
And while residents of large cities are often paid more to compensate for the rising cost of living, cost pressures can still be a burden. This is reflected in Realtor.com’s annual “Most Popular ZIP Codes” list, which shows that many of the most sought-after areas are located in relatively affordable suburbs or towns near expensive metros like Boston and New York.
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