If I can save X dollars per year in San Francisco then I need to be able to save X dollars per year in Iowa not just live similar lifestyles on less money. Because savings has ZERO cost of living adjustments. Further, Social Security has zero cost of living adjustments so if your making less than the cap that has long term consequences. If your saving 15% at 200k that's 30% at 100k for the same net savings. While a 100k lifestyle in Pennsylvania may be like a 200k lifestyle in SF a 70k lifestyle in Pennsylvania is probably not like a 170k lifestyle in SF.
This is most apparent when you travel as a hotel in Europe does not give a discount because your living in the Midwest. Further, someone may be willing to live in an efficiency when that's saving 10k/year, but not when it's saving 3k/year.
>If I can save X dollars per year in San Francisco then I need to be able to save X dollars per year in Iowa not just live similar lifestyles on less money.
Agreed, and I think that is what people are saying. Also, do make sure you do an apples to apples comparison. In the Midwest, I may pay $1500/mo to live in a 2500 sq ft house (and less with all the tax credits related to interest/real estate). Compare the same cost for a 2500 sq ft house you are buying in SF. I generally see people comparing the 2500 sq ft house in Iowa with the 1300 sq ft apartment in SF, which is not a fair comparison.
Also, consider the age of the house.
How much per month would a 2500 sq ft house built after 2000 in the Bay Area cost you in mortgage + taxes?
Even that's not really a fair comparison. I would be willing to live in an efficiency to save an extra 10k / year because a 1000 sq ft apartment is not inherently worth that much to me. I have a 1br apartment because the cost difference is tiny, and efficiency's are hard to find. Further, I flat out don't want a 2500 sq ft house, but for those people who want that much space sure it's a different cost / benefit comparison.
A fair comparison is based on similar levels of someones personal utility function. If they like green carpets slightly more and they own their house they might get green carpets, but it's not really a large benefit to home ownership for them.
In the end of the day more people live in NYC metro area than live in New Mexico, Nebraska, West Virginia, Idaho, Hawaii, New Hampshire, Maine, Rhode Island, Montana, Delaware, South Dakota, North Dakota, Alaska, District of Columbia, Vermont, and Wyoming combined. Largely because they think it's a better tradeoff.
>I would be willing to live in an efficiency to save an extra 10k / year because a 1000 sq ft apartment is not inherently worth that much to me. I have a 1br apartment because the cost difference is tiny, and efficiency's are hard to find. Further, I flat out don't want a 2500 sq ft house, but for those people who want that much space sure it's a different cost / benefit comparison.
Sure, but then compare the cost with the same efficiency in the Midwest. When I lived there, you could get decent efficiencies for under $400/mo.
I am trying to do an neutral analysis not just favor one side.
Importantly, the gap between an efficiency in Midwest vs. SF is much less money than a 2500 sf house which favors SF. But, people would likely not get an efficiency in the Midwest on a 100k salary because the gap between an efficiency is also small. Or as a young friend of mine said, not being in WV is worth having a roommate in Northern Virginia.
Up-sizing lifestyle to compensate for downsizing culture seems very appealing when you have kids. Further, the closer you get to retirement the less important that years savings become. But, at that point you have already got a social circle in _ which biases as does even higher salaries you can get at 40+.
Still, I think based on behavior companies need to offer higher salaries outside of major metro areas before people stop concentrating in those areas. Yokyo Japan and many other major city's show the same trends suggesting it's not just US government policies responsible.
This is most apparent when you travel as a hotel in Europe does not give a discount because your living in the Midwest. Further, someone may be willing to live in an efficiency when that's saving 10k/year, but not when it's saving 3k/year.