List of Metro Areas By Cost Effectiveness (Home-Price Adjusted Income)

Over a decade ago, I wrote a post ranking major metro areas by cost effectiveness. Both median income and cost of living vary by city – an easy metric on cost effectiveness can be derived by simply dividing income by a measure of costs. I decided to reprise this study, but after finding the original data sources unavailable, chose to construct a new measure using median income divided by home price index for each metro [1].

Why home prices? As home prices have risen across many metropolitan areas in the US, housing costs are eating a larger share of household income than measured by CPI or many cost-of-living-indices. In addition, home prices (and the rents they imply) have proven to be a key impediment to household formation in expensive areas – witness the outflows from California now that the pandemic has severed the ties between location and employment!

I used Census Bureau data on household income for the top 25 metro areas in the US, divided by the Freddie Mac home price index for each (this index is available for every MSA in the US, unlike the more popular Case Shiller index).

Chicago tops the list in this analysis, driven by above-average median income coupled with the lowest home prices in the top 10 US metro areas. While Detroit is next (another vote for low home prices), it’s followed by San Francisco, Minneapolis, and Boston, all metro areas where above-average income offsets higher home prices. At the other extreme, Miami keeps its spot at the bottom, with high home prices and low median incomes. The bottom five is rounded out by Tampa, Los Angeles, San Antonio, and Orlando.

Clearly your mileage WILL vary [2] – while homes are cheaper off the coasts, it’s not yet clear if 100% remote work will continue to be possible for those who are able to take advantage today. Nor does this analysis account for income inequality within cities, as your income in city X might vary substantially more than in the relative comparisons below. Nonetheless, if you can tolerate the weather, it seems that Chicago and Detroit want folks back, and if need to be in the Sun Belt, Atlanta is the top option. If you need a beach, you’ve got to head down the list, where San Diego is the best bet.

Metro2019 Median Household IncomeDec 2019 Freddie Mac Housing Cost IndexCost Effectiveness
Chicago-Naperville-Elgin, IL-IN-WI75,379140.7             53,574.3
Detroit-Warren-Dearborn, MI63,474121.79             52,117.6
San Francisco-Oakland-Berkeley, CA114,696226.36             50,669.7
Minneapolis-St. Paul-Bloomington, MN-WI83,698166.06             50,402.3
Boston-Cambridge-Newton, MA-NH94,430190.68             49,522.8
Washington-Arlington-Alexandria, DC-VA-MD-WV105,659231.13             45,714.1
New York-Newark-Jersey City, NY-NJ-PA83,160190.46             43,662.7
Atlanta-Sandy Springs-Alpharetta, GA71,742168.3             42,627.5
St. Louis, MO-IL66,417157.18             42,255.4
Baltimore-Columbia-Towson, MD83,160197.96             42,008.5
Denver-Aurora-Lakewood, CO85,641218.42             39,209.3
Portland-Vancouver-Hillsboro, OR-WA78,439202.48             38,739.1
Seattle-Tacoma-Bellevue, WA94,027254.53             36,941.4
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD67,896189.78             35,776.2
Charlotte-Concord-Gastonia, NC-SC66,399186.16             35,667.7
San Diego-Chula Vista-Carlsbad, CA83,985237.92             35,299.7
Phoenix-Mesa-Chandler, AZ78,439225.34             34,809.2
Dallas-Fort Worth-Arlington, TX72,265208.29             34,694.4
Houston-The Woodlands-Sugar Land, TX69,193205.15             33,728.0
Riverside-San Bernadino (Inland Empire) CA70,954242.28             29,286.0
Orlando-Kissimmee-Sanford, FL61,876216.79             28,541.9
San Antonio-New Braunfels, TX62,355221.67             28,129.7
Los Angeles-Long Beach-Anaheim, CA77,774278.6             27,916.0
Tampa-St. Petersburg-Clearwater, FL57,906235.69             24,568.7
Miami-Fort Lauderdale-Pompano Beach, FL60,141254.05             23,672.9

[1] This is an overly simplistic measure to be sure – in reality you’d want to consider the net disposable income per household after factoring in wages, federal/state/local taxes, home prices, and other expenses, as adjusted by metro. In the pandemic world, perhaps it’s possible to take your job anywhere, in which only cost factors are impactful – but in the long run, it’s likely that local salaries will matter, whether because employers bring employees back to the office or because they begin to adjust salaries by location.

[2] NerdWallet, Best Places and others offer more detailed city vs city calculators, some of which enable tweaking of personal circumstances as well.

List of Metro Areas By Cost Effectiveness (Adjusted Income)

How cost-effective is your city? More precisely, how well does your hometown rank in median income when incomes are adjusted for the local cost of living? This combination of qualities can be thought of as the “cost-effectiveness” of a city, as measured by adjusting income for cost of living. A number of news sources produce “best cities” lists, and Kiplinger Magazine’s list enables a simple calculation of cost-effectiveness, since it publishes both median income and a cost-of-living index for each city [1]. The ranking of the 50 largest cities in the US by cost-effectiveness (median income / cost of living) is provided below:

Metro Area Cost of Living Index [2]
Median Household Income Adjusted Income [3]
1. Atlanta-Sandy Springs-Marietta, GA 0.94 57307 60965
2. Indianapolis-Carmel, IN 0.88 52607 59781
3. St. Louis, MO-IL 0.87 51713 59440
4. Washington-Arlington-Alexandria, DC-VA-MD-WV 1.38 81163 58814
5. Dallas-Fort Worth-Arlington, TX 0.92 53748 58422
6. Austin-Round Rock, TX 0.94 54827 58327
7. Houston-Sugar Land-Baytown, TX 0.89 51685 58073
8. Cincinnati-Middletown, OH-KY-IN 0.9 51926 57696
9. Denver-Aurora, CO 1.01 58039 57464
10. Nashville-Davidson–Murfreesboro–Franklin, TN 0.88 49979 56794
11. Kansas City, MO-KS 0.95 53564 56383
12. Charlotte-Gastonia-Concord, NC-SC 0.92 51702 56198
13. Salt Lake City, UT 0.98 55064 56188
14. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 1.03 57831 56147
15. Minneapolis-St. Paul-Bloomington, MN-WI 1.14 63866 56023
16. Columbus, OH 0.94 51687 54986
17. Hartford-West Hartford-East Hartford, CT 1.19 64989 54613
18. Jacksonville, FL 0.94 51269 54541
19. Las Vegas-Paradise, NV 1 54299 54299
20. Seattle-Tacoma-Bellevue, WA 1.14 61740 54158
21. Richmond, VA 1.05 56277 53597
22. Detroit-Warren-Livonia, MI 1 53593 53593
23. Phoenix-Mesa-Scottsdale, AZ 1 52857 52857
24. San Francisco-Oakland-Fremont, CA 1.37 72059 52598
25. San Jose-Sunnyvale-Santa Clara, CA 1.58 82664 52319
26. Chicago-Naperville-Joliet, IL-IN-WI 1.13 58946 52165
27. Birmingham-Hoover, AL 0.9 46667 51852
28. Boston-Cambridge-Quincy, MA-NH 1.29 66870 51837
29. Louisville-Jefferson County, KY-IN 0.89 46095 51792
30. Memphis, TN-MS-AR 0.86 44495 51738
31. Baltimore-Towson, MD 1.21 62524 51673
32. Sacramento–Arden-Arcade–Roseville, CA 1.15 58480 50852
33. Orlando-Kissimmee, FL 0.98 49789 50805
34. Milwaukee-Waukesha-West Allis, WI 1.02 51669 50656
35. New York-Northern New Jersey-Long Island, NY-NJ-PA 1.21 60964 50383
36. Rochester, NY 0.99 49508 50008
37. San Antonio, TX 0.93 46203 49681
38. Virginia Beach-Norfolk-Newport News, VA-NC 1.1 54442 49493
39. Oklahoma City, OK 0.89 43652 49047
40. Pittsburgh, PA 0.92 44814 48711
41. Buffalo-Niagara Falls, NY 0.93 44747 48115
42. Cleveland-Elyria-Mentor, OH 0.99 47600 48081
43. Providence-New Bedford-Fall River, RI-MA 1.16 54064 46607
44. San Diego-Carlsbad-San Marcos, CA 1.32 60970 46189
45. Portland-Vancouver-Beaverton, OR-WA 1.17 53935 46098
46. Tampa-St. Petersburg-Clearwater, FL 0.99 45243 45700
47. Riverside-San Bernardino-Ontario, CA 1.23 54991 44708
48. New Orleans-Metairie-Kenner, LA 1.06 45802 43209
49. Los Angeles-Long Beach-Santa Ana, CA 1.42 56680 39915
50. Miami-Fort Lauderdale-Pompano Beach, FL 1.2 47527 39606

Atlanta tops the list, followed by Indianapolis, St. Louis, Washington D.C., and Dallas. Rounding out the top 10 are Austin, Houston, Cincinnati, Denver, and Nashville. What city holds the unfortunate designation of being least cost-effective? Miami/Ft. Lauderdale is dead last, with Los Angeles, New Orleans, Orange County (California), and Tampa/St. Petersburg all in the bottom 5.

It clearly pays to live in Atlanta or the other top cities, as higher incomes and lower costs translate into a higher quality of life or simply greater net savings. The cities at the bottom of the list generally suffer from high real estate prices and rental costs coupled with lower median incomes.

[1] Here’s the full spreadsheet of data from including 300+ metro areas.

[2] The Cost of Living Index in’s original list is set so that the average cost of living in the US is 100. Here I have divided the Kiplinger index by 100 so that it can be more easily used in the Adjusted Income calculation.

[3] The Adjusted Income, or cost-effectiveness, is calculated by simply dividing a city’s median income by its cost of living (when the cost of living is a ratio centered around 1 as discussed above).