It’s no secret that cities in the southern US tend to have cheap cost of living. According to data from Numbeo, for example, a month’s worth of groceries costs close to $350 in Philadelphia. Meanwhile, in cities such as Lexington, Ky., Durham, N.C. and Houston, that price only runs in the $200 range.
Cheap cost of living, however, isn’t the only advantage these places enjoy. In recent years, cities across the US south — from Florida to Arizona and everything in between — have experienced significant growth and economic development. The result: employment and incomes have risen, while cost of living, though increasing, has remained manageable...for now.
High Salaries, Low Cost of Living, These Cities Dominate
A study by GOBankingRates identified 12 cities that epitomize this trend the most, boasting high incomes against cheap living costs. Mentioned already, Houston, Durham and Lexington ranked No. 11, No. 5 and No. 3 respectively in the study, with Lexington sporting an average household income of $77,827 against only about $20,000 needed for necessities, i.e. housing, transportation, healthcare costs and the like.
With the exception of three cities, all the top places for high incomes and cheap living are found in the South. In Phoenix, Dallas, Tampa, and the No. 1 city, Oklahoma City, even after accounting for annual cost of necessities, you can expect to have more than $50,000 left over if you're earning the average income. In Charlotte and Raleigh, that left over amount exceeds $60,000.
These cities have more in common, however, than merely shared geography. First, the healthcare industry employs the largest proportion of the civilian population in most of the 12 cities, such as:
- Charlotte: 11.8%
- Phoenix: 12.2%
- Oklahoma City: 13.4%
- Tampa: 13.5%
- Lexington: 16.3%
- Durham: 19.2%
Second, these cities benefit immensely from the high level of economic diversity their states provide. Georgia, Arizona, Texas and North Carolina rank among the best in the US for their dynamic, well-balanced economies.
Good Pay and Low Costs Mean More Opportunity
Cheap living and great pay have benefits well beyond simply putting more money back in your wallet. On a broader level, as the city’s population continues to earn salaries comfortably higher than their expenses, there’s greater opportunity to invest the excess back in the city.
Buying commercial property, buying rental property and, of course, starting new businesses are just a few ways to do this. Citizens of Oklahoma City, Phoenix, Houston and Charlotte are already doing this. In 2018, all four have risen to become the best cities to own condo rental property, and not coincidentally, also some of the best places to start a small business.
But Greater Wealth Inequality Could Follow
Unfortunately, there are some potential, latent dangers lurking. Cities experiencing this combination of high, rising incomes and low cost of living are often cities where gentrification and wealth inequality are on the march. Prime examples are Dallas and Houston. In the latter city, on average, the top 1% earns $1,691,321 a year versus the 99%, which earns just $59,161.
More striking is the income gap between neighboring places in the metro area. Take Bunker Hill Village for example, which enjoys a median income north of $250,000, while nearby Pasadena has an income of around $46,000. Put another way, households in Bunker Hill Village earn well over five times what households in Pasadena earn.
If income inequality like this grows worse, middle class households will increasingly find themselves under pressure. As middle incomes stagnate, top-earners continue to earn more, leading to even greater concentrations of wealth. As the middle class declines, the important roles they play — as home owners, as investors in the local economy, as customers of local banks and businesses — will decline as well. And what's unsettling is how many states are already suffering from this dissolution of the middle class.
With Great Pay And Cheap Living, These 9 Southern Cities Are Taking Over curated from Forbes - Real Estate
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