“There’s no such thing as a free lunch” is a trite cliché, but it’s useful when thinking about differences in housing costs in different parts of the U.S., especially for anyone considering permanent remote work as a way to save money. Places that look relatively cheap at first glance aren’t necessarily more affordable for most people who might want to live there—and some places that seem expensive aren’t as pricey as they look after careful analysis.
Consider the latest data on relative housing costs by metro area, published Tuesday by the Bureau of Economic Analysis. This isn’t a measure of house prices, which are affected by everything from interest rates to speculative fervor, but a measure of actual housing costs paid by renters as well as an estimate of how much homeowners would pay if they had to rent their current residence. The ranges are vast: at the top is the San Francisco Bay Area, where housing costs are more than twice the U.S. average. On the opposite extreme are the smaller cities of Appalachia, the Deep South, and the Texas-Mexico border, where housing costs are about half the U.S. average.
There are good reasons for these disparities. For starters, the average wage of an employed worker in the SF Bay was about $115,000 last year. That’s almost twice the average wage of employed workers nationally. By contrast, the lowest-income metros offer jobs with average yearly wages under $40,000. In McAllen, Texas, for example—the lowest-cost metro with at least 500,000 people—the cost of housing is barely a quarter of what it is in the SF Bay. Relative to local incomes, however, the difference in housing costs almost vanishes because the difference in wages is so large.