Katherine Lavacca has no savings and will begin repaying student loans this coming summer.
The 24-year-old reporter juggles two jobs, doesn’t own a television and will soon take on a third roommate when she moves into a three-bedroom flat. Still, Lavacca says she’s living her ideal life.
In Brooklyn — part of one of the priciest metropolitan areas in the United States — this situation is far from unusual.
“You learn to go without some things,” said Lavacca, who writes for the New York Post and works evenings at Blackbarn, a farm-to-table restaurant about a 30-minute train ride from her Bushwick apartment to Manhattan.
But, based on a Savinly analysis of recent regional price figures from the U.S. Bureau of Economic Analysis, the nation’s priciest metro areas — like New York — are becoming even more expensive. And they’re doing so much more quickly than the national average.
The San Francisco Bay Area contains a number of the country’s costliest major cities, and it’s also a place where prices are climbing fastest, the analysis found.
Susie Orr, a game developer in Palo Alto, recently relocated from that city to Oakland mostly because of housing costs. For the 32-year-old, it means enduring a roughly 90-minute commute many mornings.
“I’d describe Oakland as a lot like Brooklyn,” she said. “It’s a bit less pricey, has decent public transit and a thriving cultural scene.”
San Francisco, San Jose, Boston, Seattle and Denver rank among the priciest cities, with rapidly rising prices. They’re all confronting a growing housing crunch created by a shortage of affordable homes and apartments, said Laurie Goodman, a senior economist at the Urban Institute.
For Lynne Williams, who moved to the Bay Area in 2011, that has meant relocating two dozen times in under seven years. The 36-year-old, who works for Tesla, has relied on hostels and shared single rooms in houses and apartments, sometimes unsure if she’d have a bed that night.
“It takes a particular kind of person to trust you can keep bouncing around and find a place to sleep,” said Williams, who is currently staying north of San Francisco in Concord in a coworker’s spare room for $500 a month.
Goodman doesn’t foresee the cost of living leveling off soon. Still, she acknowledges there will ultimately be a tipping point for these cities.
Indeed, people ages 20 to 34 are actually moving away from expensive coastal hubs toward more affordable metros in the South and Midwest, according to an analysis by Indeed Chief Economist Jed Kolko.
“At some juncture, it becomes a crisis when companies like Google can’t recruit new hires because nobody wants to live there,” Goodman said. “No matter how much they pay, it’s simply too costly to reside there.”
The 10 Cities Where the Cost of Living Is Increasing the Fastest
Newly released Commerce Department figures show that several of the nation’s priciest urban areas are experiencing price growth much faster than the rest of the country.
Below are the 10 metro areas where costs are climbing most rapidly, alongside their position on the most expensive cities list, using 2016 data. To determine rankings, we applied a statistical approach that weighted the rate of price increases and the overall cost of rent, goods and services. For instance, No. 1 San Jose combined the highest living costs with the fastest cost growth in 2016.
1. San Jose, California
Local Price Increase: 2%
Price Rank: 1
2. San Francisco, California
Local Price Increase: 2%
Price Rank: 2
3. Bridgeport, Connecticut
Local Price Increase: 1.8%
Price Rank: 5
4. New York City, New York
Local Price Increase: 1.5%
Price Rank: 4
5. Ventura, California
Local Price Increase: 1.6%
Price Rank: 8
6. Denver, Colorado
Local Price Increase: 2%
Price Rank: 16
7. Seattle, Washington
Local Price Increase: 1.8%
Price Rank: 12
8. Honolulu, Hawaii
Local Price Increase: 1.2%
Price Rank: 3
9. Boston, Massachusetts
Local Price Increase: 1.7%
Price Rank: 11
10. Los Angeles, California
Local Price Increase: 1.3%
Price Rank: 7
Rising Home Values Fuel High Living Costs
Recent local price data indicates that housing costs are the main driver pushing up the overall cost of living.
In 2009, the median sale price for a home in San Francisco was a bit over $420,000, according to figures from online real estate service Zillow. By March, that median climbed past $866,000 — a rise exceeding 106%.
The picture is similar for one-bedroom rentals, often the most affordable option for young adults trying to make it in pricey markets. Over the past eight years, the median monthly rent for a one-bedroom increased 47% to more than $2,300.
Meanwhile, median household income inside San Francisco rose by 7.5% to $55,322 between 2009 and 2016, per the latest U.S. Census Bureau American Community Survey data.
“They’re adding jobs faster than they’re adding housing,” said Goodman. “San Francisco is the classic example.”
But this challenge isn’t unique to San Francisco; it’s appearing in many U.S. cities. Restrictive zoning and building regulations make it hard to develop enough housing, particularly apartments affordable to younger residents.
Indeed, in Boston it’s becoming tough even for relatively affluent people to live near the city core.
“That’s a high-end problem,” Goodman remarked.
Higher rents force retailers and other local businesses to either raise prices for goods and services or relocate beyond expensive city limits — which, in turn, increases shipping and operational expenses, Goodman explained.
“I don’t have a tidy solution,” she admitted. “I’ve thought about it extensively, but I don’t have a good fix.”
How People Cope with Steep Living Costs
Although housing experts are still searching for answers to the growing crisis, residents of costly cities are adapting to rising expenses in various ways.
Orr, who now lives in Oakland, looks for the best grocery deals and sometimes buys produce at farmers markets. Lavacca, meanwhile, misses the grocery options from her hometown.
“Back in Florida you can pop into Publix, grab BOGO deals and feed yourself for a week,” she said. “In New York, that’s much tougher.”
Lavacca recommends taking a part-time job at a restaurant because many offer free or discounted meals. Local community gardens or agricultural co-ops can provide free, healthy food in exchange for a few hours of volunteer work, Williams noted. As a vegan, Williams stretches her budget by buying bulk staples and prepping meals for the week.
Trying out a two-week test stay with friends or an Airbnb can help you understand commuting options and see if you can realistically live within a tight budget. And be conservative when you build that budget — these metros are likely to surprise you with hidden costs, Lavacca advised.
Also, embrace low-cost leisure. Keeping pace with friends who frequent bars can drain your finances. Instead, find inexpensive solo activities.
Attend DIY music shows that often cost $5 at the door. Appreciate free outdoor spaces. And rather than splurging on a $150 Bay cruise, take the Golden Gate Ferry for about $14.
“Just go catch a matinee on your own,” Lavacca said. “Don’t lock yourself in your apartment simply because you can’t afford expensive nights out.”
If you’re weighing where to move, consider reading resources about the best cities for families and the best cities for millennials to find places that better match your budget and lifestyle.
Alex Mahadevan is a data journalist at Savinly.
