Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Real Value of Housing Money in Each State

Last week, an infographic from the Tax Foundation went viral showing the relative value of $100 in each state. As I wrote then: "The above data doesn't tell the full story. ... A large portion of the differences in price parity is based on the cost of rent or the comparable mortgage payments."

I calculated the relative value of housing dollars using data on regional price parities from the Bureau of Economic Analysis. The $100 level is based on the national average; each state's data is then relative to that level. When you include everything, the relative value of $100 in each state varied from $84.60 to $114.74.

Now, I've created my own infographic to show the relative value of housing dollars in each state compared with the national average. Read on to learn more.

By state, in terms of housing, your dollars go the furthest in Mississippi, where the relative value of $100 is $161.03. Your dollars get you the least in Hawaii, with a relative value of $62.89. That means the same amount of money for housing is worth 150% more in Mississippi than in Hawaii. Even in less extreme cases, the differences can be high.

Take Massachusetts and Rhode Island, for example. The relative value of housing in Massachusetts is $82.37. But in neighboring Rhode Island, your housing dollars are worth $98.43 compared with the national average. In other words, housing-related money is worth 20% more in Rhode Island than in Massachusetts.

There are some good reasons for the disparity. Housing prices are generally higher in areas where more people want to live. That's why coastal states usually have higher prices than inland states. Second, housing prices are generally higher in areas with higher average incomes. New York City and Silicon Valley have some of the highest housing prices in the U.S., as that's where many of the highest-paying jobs in the U.S. are.

Another big reason for the vast disparities in housing prices is that the areas with the most demand and highest prices typically have some sort of supply constraints on housing that keep prices high. In general, coastal areas are known for having strict zoning requirements that make it more expensive or impossible for developers to build there. For example, Manhattan has limited housing supply, given that it's an island and has rent control, which lowers the incentive for developers to upgrade old buildings. Washington, D.C. has limited housing supply because of the strict height restriction on buildings in the city, while San Francisco has limited housing supply for a multitude of reasons, including height restrictions, rent control, and many other factors.

The effect
Compared with the Northeast, most states have lower costs of living. The disparities in the cost of housing are one of the main reasons there has been a migration from high-cost states such as New York and California to the South, where your dollars go much further. Combine that with better weather and low to no income taxes, and you can see why many retirees decide to move south.

Bottom line
The cost of living by state is important to consider when you're thinking of moving to a new state. The grass isn't always greener on the other side of the state line. While a salary in a different state may be higher than your current salary, the cost of living can translate to dramatic differences in how far that salary goes, as well as your overall well-being.

No matter what state you live in, there is only one road to achieving financial freedom: saving and investing wisely. For over 20 years, The Motley Fool has focused on showing investors the way to financial freedom.

How to get even more income during retirement
Social Security plays a key role in your financial security, but it’s not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Read/Post Comments (1) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 04, 2014, at 8:35 PM, rowlandw123 wrote:

    More helpful would be a county by county analysis, or at least the highest and lowest county in each state. There is a huge disparity in my home state, MA, between the gilded Boston suburbs vs Springfield and parts of the Berkshires.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3089973, ~/Articles/ArticleHandler.aspx, 9/4/2015 9:27:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Dzombak

Dan Dzombak has written for The Motley Fool since 2008. He covers value investing, investing process, and success among other things. You can follow him on Facebook or Twitter by clicking the buttons below or head over to his blog at

Today's Market

updated 11 minutes ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes