Monday, September 28, 2009

How Houston stacks up on income and cost of living

I recently came across this document from Atlanta with a lot of interesting data comparing 17 large and/or fast-growing American metros, including Houston (hat tip to 'Rail Claimore'). Some observations:
  • We're one of only three cities that are both very large and the fastest growing since 2000, along with Atlanta and DFW. I don't think it's a coincidence that all three of the large, fast-growing metros are below the national cost-of-living average, and all of the large, slow-growing metros are well above it.
  • At 89.4 (vs. 100 for the national average), we have the lowest cost-of-living index of any of the metros, particularly dominating the grocery, housing, and misc goods and services categories (all three of which I think are directly related to our no-zoning, low regulation, hyper-competitive development environment). We're near the best in transportation and health care. Our biggest weakness is utilities, which is not surprising given our climate.
  • Speaking of utilities, wouldn't the smart growth argument say that density reduces those costs? Yet NYC has the highest utilities index of all of the metros at 145.
  • Our per capita income rose a respectable 15.2% from 2000 to 2005 to $39,199, above CPI inflation at 13.4%. Oddly, Dallas, Austin, Chicago, and especially Atlanta lagged far behind. I think that may partially reflect the dot-com crash.
  • Austin, Atlanta, Dallas, Chicago, and Philly lost boatloads of higher-paying jobs. Again I suspect the dot-com crash. Houston held up because we had less exposure to the tech crash.
Overall, Houston ranks strongly, even with most of the data before the run-up in oil prices. But a lot has happened since this 2005/2006 data. I imagine the housing crash combined with the recession would rearrange a lot of these rankings, although I still suspect Houston would hold up well (and Austin and Dallas would probably look better than they do here). If you come across similar documents with more recent data, please pass them along. Thanks.

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At 7:45 PM, September 28, 2009, Blogger Alon Levy said...

Speaking of utilities, wouldn't the smart growth argument say that density reduces those costs? Yet NYC has the highest utilities index of all of the metros at 145.

It's true is that electricity costs more in New York per kWh. However, due to its low electricity consumption, New York State ranks third from the bottom nationwide in energy expenditure per capita (link). Water and heating are free in New York City - it's not like in the Sunbelt, where water is metered and even if you don't want to consume it you have to because your homeowner's compact says you have to water your lawn.

At 8:03 PM, September 28, 2009, Blogger Alon Levy said...

On another note: you can find more up-to-date data about income on the BEA website - it's as of 2007. Houston kept growing, in line with the rising price of oil. The rest of the Sunbelt kept stagnating. Detroit collapsed.

At 10:43 PM, September 28, 2009, Blogger Tory Gattis said...

Thanks. And the utilities index is based on an overall cost for a household - so even with low energy per capita, something is driving those bills up. I'm stunned water and heat are free. And it seems very wasteful.

At 11:59 PM, September 28, 2009, Blogger Alon Levy said...

The index is based on an assumption of a certain lifestyle for said household, though, which represents the average in Houston but not New York. The average electric bill of a household in New York is lower than this of a household in Houston. (It's also true globally - the official living costs for e.g. Moscow reflect a lifestyle of oligarchs, not middle-class Muscovites).

Water is free because New York has the infrastructure to allow it. It's spent the last 200 years building a water supply tunnel system, so that there are none of the water fights that plague California or Atlanta or Austin. There are also fewer people who are required by contract to water their lawns, which helps control costs.

Heating is free in New York because the city doesn't want people to freeze to death in winter.

At 9:26 AM, September 30, 2009, Anonymous Anonymous said...

Free heating? Wow!

Do you have more information? I couldn't find anything.

Found this, for instance, talking about NYC heating costs, so I'm confused:

Also, if home heating was free to begin with in New York City, why did Chavez give free heating oil to the poor there? And then suspend the program later because it when oil prices dropped (and times were tougher in the oil industry)?

At 11:15 AM, September 30, 2009, Blogger Unknown said...

This comment has been removed by the author.

At 11:17 AM, September 30, 2009, Blogger Unknown said...

I remember reading an article maybe five years ago in the New Yorker about New York's massive water tunnel system, and how it was in need of repair/replacement.

Apparently, the water is carried through an aqueduct and tunnel system from the Catskills. It was a really interesting article. Most of the water is delivered by gravity, so there's relatively little cost associated with pumping systems. I suspect that's part of what keeps the cost so low.
Does anyone know if there are any major changes planned to this system?

At 4:13 PM, September 30, 2009, Blogger Alon Levy said...

Do you have more information? I couldn't find anything.

No, it's just something multiple told me me and my girlfriend while we were hunting for apartments. Right now our utilities bill includes only electricity, which costs about $40-50 per summer month.

I think it's different in lower-income neighborhoods. In Harlem, we did pay for heating. But the brokers we saw later on the Upper East Side seem to think that it's illegal and that it's just another example of Harlem landlords violating the law.

On another note: the article you link to seems to concentrate on market rates too much. I'm willing to believe the average market-rate rent in Manhattan is $2,800, as the article states. But only 38% of New York's rental units and only 32% of Manhattan's are market-rate. Citywide, the median rent is $950, according to the Chamber of Commerce.

Does anyone know if there are any major changes planned to this system?

Yes. The city has been spending billions on building a new water tunnel to provide more capacity.

At 10:17 PM, September 30, 2009, Blogger Rail Claimore said...

Thanks for the hat tip, though I wish I could have found a better chart from the 1990's. I remember seeing one in some study by an entity out of Boston.


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