Seattle Housing : The biggest bubble?
Is your city overpriced?
Forbes : 7/21/2005
Cost of living -- from housing to the electric bill -- is going up just about everywhere, but these 10 cities have the rest of the country beat. Seattle tops the list. Again. Does your hometown make the cut?
Once an overpriced city, always an overpriced city.
That may not be how the old saw goes, but it's one of the things Forbes.com gleaned from the fourth edition of its "Most Overpriced Places" study. A couple of cities fell off the list, and others shuffled places. For the most part, the roster is still made up of metropolitan areas that will suck dollars from your wallet in a flash.
Now: Plenty of places are expensive. You probably think where you live is far too costly, especially since real estate costs keep heading north around the country. Movie tickets used to cost a quarter, and with a million dollars you could get a mansion. In Los Angeles this year, the median home price rose above a half-million dollars, according to the California Association of Realtors. Don't even get us started about the cost of catching a film.
Here's the full list:
- New York City
- Portland, Ore.
- San Jose, Calif.
- Bergen-Passaic, N.J.
- San Francisco
- Middlesex, N.J.
- Los Angeles
Still, if jobs are plentiful and incomes are rising, the real effect of increasing costs is small. But when prices go up, when employment is stagnant and when incomes are flat, well, that’s when things are overpriced.
How we got the list
To determine the 10 most overpriced places in the country, we started with the 150 cities examined in Forbes' 2005 Best Places for Business and Careers. They were ranked from 1 to 150, with 150 being the worst. We extracted the rankings for job growth, income growth and cost of living (including the cost of housing, utilities, transportation and other expenditures), then added to the mix a housing affordability index from research firm Economy.com.
The index measures how much of a local median-priced home (the price at which half the homes are more expensive and half are less expensive) you can buy if you earn the local median income, given current interest rates. We totaled everything to see which cities come out on top -- or on the bottom -- depending on your perspective.
Seattle in first ... again
Seattle, once again, took the highest spot on our "Overpriced List," because it's still recovering from the dot-com blowout five years ago. New York and San Francisco, which have hard-earned reputations for being super-pricey cities, made the cut, as did a couple of New Jersey locations..
Miami, on the other hand, dropped from the list, but came in at a close no. 12. Job growth there is solid, but the cost of housing is still high. Milwaukee came in just outside the top 10, as well, with its expensive housing.
Housing costs a big factor
In fact, housing costs were a major factor in determining the most-overpriced rankings. Despite all the talk of a bubble soon to burst, real estate continues racing up a steep price hill. The National Association of Realtors expects 2005 to be another record-setting year in the U.S.
If you're unfortunate enough to live in an overpriced city, stop your whining. After all, there must be something keeping you there, whether it's the museums or an easy commute. If you're lucky enough to live outside of the top 10, count your blessings -- and your dollars.