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Cost of Living Differences

Discussion in 'Uncategorized Threads' started by phirel, Nov 12, 2007.

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  1. phirel

    phirel TS Member

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    First, I am asking this question only with the intent of learning something. I have absolutely no points to make.

    Why is the cost of living so high in some areas of out country and much lower in other areas. Where I live, one can buy a new 1600 square foot house for $175,000. The exact same house costs $475,000 in other areas (Southern California). One can live at a higher standard earning $15 per hour in some regions than another person earning $35 per hour in other areas. And, in southern California where living costs are so very high, things like groceries, building materials, automobiles, furniture are less expensive than in regions where the cost of living is low.

    I do not understand.

    Pat Ireland
     
  2. Hipshot 3

    Hipshot 3 TS Member

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    Get out of that neigborhood quick Pat! The mexicans are moving in and all the property values are going to hell. Leave quick, while you still can!
     
  3. Bob Wilson

    Bob Wilson TS Member

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    Groceries are inexpensive in California due to the San Juaquin Valley, grocer for the world.
     
  4. pendennis

    pendennis Well-Known Member

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    Land prices, labor costs, materials, food, etc. All command different prices in different locales. Demand for homes is higher in Orange County, California, than Wayne County, Michigan. You can rent a one BR apartment in New York City, and easily pay over $1k/month, unless it's rent controlled. Housing is in high demand and is relatively scarce there. Elsewhere, the same apartment might only fetch $525/month.

    It cost more to ship commodities from one area where they may be manufactured, to where they are sold. That contributes to differences, also.

    It's just basic, regional economics. As Bob Wilson mentioned, groceries are cheaper in California. We pay a lot more for fresh produce here in Michigan, simply because of shipping costs from California and Florida.

    Best,
    Dennis
     
  5. smokerz

    smokerz TS Member

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    The only thing that's a LOT more expensive in CA is housing. It costs about the same to build a new house there as anywhere else, but it's very, VERY difficult to find buildable land. There are many restriction and covenants which prohibit tearing down and rebuilding, even renovating old houses. That $450,000 CA house probably sits on a $350,000 piece of land.
     
  6. dennis (nj)

    dennis (nj) Guest

    I recently saw a make-over show with a house purchased in CA by a builder/remodeler for $695,000 that should have been torn down if it was in another state . This house was a typical poorly built developement home with no insulation , looked like every room had mold growing up from the floor to half way up the wall in just about every room . Didn`t watch the rest because it made me sick thinking about how much money that must have went into the make-over and what it must have sold for when it was done !!!! Other than that , here in NJ , one of the highest taxed states , there are so many municipalities governing themselves with their own tax dollars for schools , police , sewer , water , garbage collection , and city workers , that we are pricing ourselves out of the houses we lived in for 30-40 years . Not wanting to merge with another town , so we pay the price . Still a nice state to be in regardless .
     
  7. perazzitms

    perazzitms TS Member

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    When you live where other people want to live, or there are fewer places TO live, your cost of living is more than in areas where people don't want to live.

    It's supply/demand; and charge what the market will bear.
     
  8. pendennis

    pendennis Well-Known Member

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    Smokerz brings up a very good point. Some time back we had a manager transfer from the San Jose area of California to Kentucky. His home, a very small cottage, sold for about $110k. It only had about 1k square feet. When he moved to Kentucky he bought a house almost three times in square footage for about the same amount, on a 3/4 acre lot. His lot in California probably was only about 5k square feet. That was in 1976.

    Dennis
     
  9. trappermike

    trappermike Well-Known Member

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    That very small cottage in San Jose is now worth $650,000- $750,000. It is the weather man. It does not snow here, it does not get hot and humid here. There is an ocean 30 minutes away and mountains 4 hours away. It is expensive because other than the liberals, it is a nice place to live. A 900 square foot condo sells for $400,000. I helped my daughter buy one.

    It is too expensivce, please don't come here to stay.

    Mike
     
  10. grammie

    grammie TS Member

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    Pat:

    everything is counted and tabulated,,and then counted and tabulated again!!!! Each area of the country has its own measuring device that calculates just how much the average person with the average paycheck can endure,,,and still not die of malnutrition and still be able to pay taxes!!!!

    It is in effect-------exactly the way the economic system of this country works!!!!

    Everything is more expensive if people "want it",,,,,,it is simply the "demand" to live in those areas that are the cause for higher prices in one area compared to another!!!!

    "I do not understand" is exactly what your government wants to hear!!!! It is what your priest or minister wants to hear!!!! It is what the keeper of the flock wants to hear...........Magic Words---I do not understand,,,,,,much can be done to a person under the guise of doing something good when in this state......

    AKA Grammie...........
     
  11. hubcap

    hubcap TS Member

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    The price of any product has nothing to do with the cost to bring that product to market. The market price of any given product is dictated by the relative demand for the product in any given marketplace.

    More demand = higher price
    Less demand = lower price

    Economics 101
     
  12. Finprof

    Finprof TS Member

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    As mentioned previously, cost of housing is driven by the price of land, and the price of land is driven by what can be earned by using it or living there. If you want a job as an investment banker you will probably have to live in Manhattan where an efficiency rents for $2400 a month, but you can make 300,000 or 400,000 a year. Similarly, rents are high around Silicon Valley, but there are high-paying jobs that aren't available elsewhere.
     
  13. markostrunk

    markostrunk Member

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    Some cost of living differences are just built in. Here in central Florida, our entire last year's heating AND cooling energy bill was equal to what we spend in one single winter month two years ago in Connecticut before we moved. And the difference will only increase.
     
  14. halfmile

    halfmile Well-Known Member

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    Grammie, good point. AND NOW for the kicker. When you are getting stuck, is it a knife invading your body, a suction device, or another party's appendage?

    HM
     
  15. TOOLMAKER 251

    TOOLMAKER 251 Active Member

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    Now someone tell me why gas and diesel cost more 2 miles away from the refinery then it does 200 miles? same fuel tax everywhere in the state. I am using Penna. as an example.
     
  16. Bruce Specht

    Bruce Specht Well-Known Member

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    Supply and demand
     
  17. pendennis

    pendennis Well-Known Member

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    Oddly, some things like cars, do not follow the classic supply and demand model. With cars, it's almost entirely retail price vs. retail price when competing.

    We used to pay certain competitors' dealers to provide us with retail prices as soon as they were published, so our prices would not be in excess of theirs. The competition also played the same game. The mentality at Ford was that of a second place company in the 1970's. We would not price a vehicle higher than GM regardless our costs. Within some parameters the only thing that mattered was the retail sticker.

    Best,
    Dennis
     
  18. phirel

    phirel TS Member

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    Zardozforty- I was impressed with your post "In our area the developer is out something like $80,000 for permits, fees, etc., before a shovel of dirt is turned!". In my area $80,000 would have a new home under a temporary roof with the rough plumbing and electrical work done.

    DB Bill- Your comments also gave me some insight explaining why the cost of development is less expensive in my area. To get my last project approved, and it was not a large development, I visited with the 5-7 neighbors of the project and made certain none of them objected. I then had lunch with the planning commission and explained what I wanted to do. Then I filed out the one page application, paid $30, and at the next Planning Commission meeting my project was approved after three minutes of discussion. Total time was about three weeks.

    Pat Ireland
     
  19. ledbet

    ledbet Member

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    Pat,

    You need to come and give development a try in Albemarle County! You will get a new appreciation for government delays and red tape.

    BL
     
  20. JBrooks

    JBrooks TS Member

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    That is the way it should be Pat. In my county, if you want to do say a room addition, you are billed by the Planning Department at $150.00 per hour for them to jack you around as long as they can. People here spend 10s of thousands of dollars just to go through planning to build a house. THEN, the development fees hit.
     
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