Worries about inflation have been the biggest economic story of recent months. Month-over-month and year-over-year price increases have been at historic highs through much of 2021 and into 2022, with categories like energy and vehicles seeing increases of more than 40% since the beginning of 2021. It can be depressing to look at or go shopping anywhere. But the good news (maybe) is that two North Carolina cities actually rank as the most affordable places to live. This is according to research by Porch.com. Gosh, I’d hate to live anywhere else if this is considered affordable.
Causes of Rising Prices
A number of factors explain the recent nationwide trends in price increases. Strong fiscal stimulus from the federal government and rapid recovery in many sectors have brought more money into the U.S. economy. While a tight labor market has led to wage increases for many workers. As a result, with more money to spend, consumer demand has increased. However, ongoing issues with global supply chains have made many physical goods scarce. The result has been price increases in nearly every category, which puts pressure on households’ finances. In just the last week both my rent and internet have gone up significantly, and honestly, it can be demoralizing.
One common measure of inflation is the Consumer Price Index, (CPI). The CPI is calculated by the U.S. Bureau of Labor Statistics. It measures prices paid for a set of typical consumer expenses, including food, energy, transportation, apparel, shelter, and more. The year-over-year percentage change in the CPI has topped 5% in every month since June 2021. It even reached 7.5% in January of 2022.
Housing Prices
One of the biggest factors pressuring household finances since the pandemic began has been a rapid increase in the cost of housing. Housing is the largest regular expense for most families. The S&P/Case-Shiller U.S. National Home Price Index, which tracks the change in residential home prices in different regions of the country, showed year-over-year home price increases of more than 10% for every month of 2021. It peaked at 20% in August. Aside from a brief span in 2013 and 2014, growth in home prices had not topped 10% since the peak of the housing bubble in the early to mid-2000s.
Most common measures of inflation are simply average and may not clearly reflect differences for individual households. One major factor affecting how consumers experience prices across a range of goods, services, and housing is geography. According to data from the U.S. Bureau of Economic Analysis, four states—Hawaii, New Jersey, California, and New York—have typical prices more than 10% above the national average. Consequently five others—Mississippi, West Virginia, Arkansas, Alabama, and Kentucky—have prices more than 10% below the average. This means that between two households earning comparable amounts in Hawaii and Mississippi, the Mississippi household’s dollar will go much further.
So now we know the states where your dollar is likely to go further, but what about cities?
The Most Affordable Places To Live
Louisville/Jefferson County, KY-IN
Overall cost of living (compared to average): -8.1%
Cost of housing (compared to average): -29.2%
Cost of goods (compared to average): -4.4%
Cost of utilities (compared to average): +4.5%
Per capita personal income: $55,676
5. Cleveland-Elyria, OH
Overall cost of living (compared to average): -7.0%
Cost of housing (compared to average): -20.5%
Cost of goods (compared to average): -5.9%
Cost of utilities (compared to average): -2.6%
Per capita personal income: $58,846
10. Charlotte-Concord-Gastonia, NC-SC
Overall cost of living (compared to average): -5.4%
Cost of housing (compared to average): -11.3%
Cost of goods (compared to average): -4.3%
Cost of utilities (compared to average): +1.7%
Per capita personal income: $56,682
15. Raleigh-Cary, NC
Overall cost of living (compared to average): -4.3%
Cost of housing (compared to average): -4.8%
Cost of goods (compared to average): -4.3%
Cost of utilities (compared to average): +1.1%
Per capita personal income: $60,884
