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What defines HCL?
Old 10-23-2018, 08:01 AM   #1
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What defines HCL?

I understand NY, California real estate taxes and home/rent prices. What other factors are considered in HCL areas? Gas is more expensive in some areas depending on gas taxes.

Example: We live in downstate IL. I'm comparing to Chicago and suburbs. Housing, property taxes and gas are clearly higher in Chicago/suburbs. But the number and variety of discount stores, grocery options, house maintenance costs (huge variety of contractors to choose from in Chicago), available choices for every restaurant/bar you can think of, from super exclusive to super cheap(but good). We've been hoping for a Costco, Whole Foods, Ikea for years. We are so limited in furniture stores. Granted, Amazon makes it easier, but I"d like to have to option to shop in person.
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Old 10-23-2018, 10:42 AM   #2
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It's a relative term. We each can define it any way we choose.

Consider all the costs, then decide if that is "high" for you, or not.
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Old 10-23-2018, 11:00 AM   #3
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I agree it's not simple. However, I have noticed little things like, for example, we like to go out to eat. We sometimes eat at a chain breakfast place. At our local establishment we are $30 + tip for the two of us. We went to the location in the southeast and it was $23 + tip. If every meal is 20% cheaper that adds up.
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Old 10-23-2018, 11:12 AM   #4
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In our case, itís the value of property. My 50 y/o 2000 sf home in the northeast was double the price of my new 2000 sf home in SE. Property taxes on older NE home 10x the price of new SE home. Oil bills to heat older home 3x the cost of heating and cooling SE home.

Food, eating out, and other items are negligible. Those big ticket items make a huge difference.
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Old 10-23-2018, 11:16 AM   #5
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Originally Posted by joeea View Post
It's a relative term. We each can define it any way we choose.

Consider all the costs, then decide if that is "high" for you, or not.
+1

It's a sliding scale. What might seem HCOL to me, might not seem so to a billionaire.

Those in the rural South might regard New Orleans as HCOL, but those living in big coastal cities might regard New Orleans as LCOL. I guess that actually we are somewhere near the middle.

As for what to consider, yes, consider ALL costs. Not just housing, not just taxes, not just utilities, but ALL costs.

Here's a good cost of living comparison tool, that I like.
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Old 10-23-2018, 11:56 AM   #6
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Originally Posted by W2R View Post
+1

It's a sliding scale. What might seem HCOL to me, might not seem so to a billionaire.

Those in the rural South might regard New Orleans as HCOL, but those living in big coastal cities might regard New Orleans as LCOL. I guess that actually we are somewhere near the middle.

As for what to consider, yes, consider ALL costs. Not just housing, not just taxes, not just utilities, but ALL costs.

Here's a good cost of living comparison tool, that I like.
+1.

I have used BankRate COL tool to decide on a promotions / job changes requiring a relo.
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Old 10-23-2018, 02:43 PM   #7
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Quote:
Originally Posted by Rianne View Post
I understand NY, California real estate taxes and home/rent prices. What other factors are considered in HCL areas?
Typically, housing is one's largest expense, then food, then gas.

Cost of living indices compare the cost of living in a major city to a corresponding metro area. They usually include factors such as:
  • Housing
  • Groceries
  • Utilities
  • Transportation/Gas
  • Health Care

In retirement, the standard indices may not matter as much, as the largest factor, housing, is fully paid off, so the real housing costs that matter are then only property taxes and upkeep/HOA fees.

In Hawaii, we have very low property taxes, relative to places with no income tax, like FL. So if my place is paid off when I retire, I'll only pay <$100/mo in property taxes. If I buy groceries at COSTCO/Sam's Club, and don't eat out too much, I can live in a very high COL area very inexpensively.
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Old 10-23-2018, 03:58 PM   #8
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I used to live in Chicago. I loved the vibrancy and wonderful midwestern people. One under the radar cost is potential higher future taxes. That stateís finances are a mess and there a huge unfounded public pension liabilities.
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Old 10-23-2018, 04:26 PM   #9
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Originally Posted by Rianne View Post

Example: We live in downstate IL. I'm comparing to Chicago and suburbs. Housing, property taxes and gas are clearly higher in Chicago/suburbs. But the number and variety of discount stores, grocery options, house maintenance costs (huge variety of contractors to choose from in Chicago), available choices for every restaurant/bar you can think of, from super exclusive to super cheap(but good). We've been hoping for a Costco, Whole Foods, Ikea for years. We are so limited in furniture stores. Granted, Amazon makes it easier, but I"d like to have to option to shop in person.
Just got back from a weekend in Chicago visiting our DS. Restaurants and bars are numerous, with great food and many options. But they are expensive compared to my Missouri norms. Cocktails at EVERY bar/ restaurant were $10-12. Brunch for 4 easily runs to $100 with tax and tip, and I am talking a simple meal, not a buffet. FWIW, this not Downtown, but in the Logan Square area. Nice, but not an upper class area.

Also, DS needs to buy a parking pass to park on the street in front of this house. There are other incidental costs and taxes that add up.

So, in my opinion, part of the increased costs of living in a HCOL area are things that I take for granted as cheap or free.
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Old 10-23-2018, 04:49 PM   #10
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Don't look at it in terms of Cost, but rather Value.

If what I want is easily affordable, then I consider my area to be a Low Cost of living area.

If I think the things I enjoy are expensive, then the value is out of proportion and I'm in what is (for me) a High Cost of living area, and I might consider moving.

Having lived in every part of the spectrum, from areas anyone would consider poor to other areas anyone would consider expensive, I believe this definition applies universally.
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Old 10-23-2018, 05:36 PM   #11
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I agree about housing being a major consideration to warrants one's COL. But don't forget about property taxes that vary widely. And state and/or city income taxes have to be considered. Then there is a wide variance in the cost of utilities. And some places have automobile insurance substantially more or less costly than other places. Taxes to renew car tags can be major expenditures in many states.

Groceries may be just about the one thing that are priced somewhat constant in much of the U.S.--excluding Hawaii.

I was recently in Chicagoland, and the price of fast foods there is substantially more expensive than in the Mid South. And I didn't see nearly as many chain restaurants as in much of the country with a lower cost of doing business.

One think I have noticed in my travels is that what is an average house in size and quality in a HCOL area is not necessarily as nice as a house in LCOL places. For example, a regular $600K house in Toronto (as seen on HGTV) is not somewhere I would consider living. Individuals living in LCOL places often have homes that are far nicer than in most of the country at half the cost or less.

Living in a ultra low cost of living place is what allowed us to retire early, have two homes paid for and allow us to maintain the same standard of living as when we were working.
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Old 10-23-2018, 09:03 PM   #12
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Cost of living is really just one factor of many when considering housing, residency and community.

I've lived in TX, CA, MS, MN, and HI. All had varying COL but I adapted to each one, to my liking. Just as you likely would to your liking. IF you like paying a bunch of money for local fruit and vegetables, you will, or else you will just not care, or you will find the cheap places to retail.

I can say, with exception, living remote, or the further you are from american oil, the more $$ you pay for gas.

But if you are on an island, you drive less. If you are in cold, you heat more, if you are in hot, you use air more. NOW barrier to housing entry is totally different in each of the states I lived in, therefore only owned in the easiest state for ME to own in.
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Old 10-23-2018, 09:12 PM   #13
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I have spent much of my life in a LCOL but past 22 years a MCOL. Yes your house is nicer in low cost area. However, the quality of life with weather and activities to do is much improved where we live. Not worth it to me. We can’t afford to live in HCOL so never considered it.
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