What do people mean when they say that DC is a “high cost of living“ area?

[Anonymous]

Anonymous wrote:Okay, Lucille Bluth. "How much could a banana cost? Ten dollars?"

Lol. This comment wins.

Everything about living in a HCOL is more expensive. Housing, usually income and property taxes, transportation, gas, groceries, restaurants, the movies. And then there is the culture aspect of it - if you live in a NYC or Boston or DC, you’re surrounded by great culture and theater, and will want to partake in those. You’ll be surrounded by wealthier people and tourists who are willing to pay premiums for those services, hence driving up the cost.

[Anonymous]

Anonymous wrote:That would be fine if you could get a decent house for $800k here, but it’s even tough to get one in a good suburb for double that.

I have an 800K house in upper MoCo. 2500 square feet and 2 acres. Commute would be horrible, but people are a lot nicer than when I lived down county. Also not much crime.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Okay, Lucille Bluth. "How much could a banana cost? Ten dollars?"

Lol. This comment wins.

Everything about living in a HCOL is more expensive. Housing, usually income and property taxes, transportation, gas, groceries, restaurants, the movies. And then there is the culture aspect of it - if you live in a NYC or Boston or DC, you’re surrounded by great culture and theater, and will want to partake in those. You’ll be surrounded by wealthier people and tourists who are willing to pay premiums for those services, hence driving up the cost.

Many things are more expensive, but some things are cheaper. Transport is way cheaper for us since we can get rid of a car (and drive the other one fewer miles). Insurance costs for us barely changed from rural new england, but we don't fill up every week now. And many things are the exact same cost - pretty much most things from Amazon, white goods, and big box stores. Honestly, I don't find housing costs as bad as some, since the large portion of costs are from an investment perspective (though it is still much higher in HCOL than LCOL).

What is difference is any service cost. Things that are highly automated, like mcdonalds arent too different, but fine dining, daycare, etc are way more expensive. Combination of high demand and limited supply. Looking at my budgets, I broadly agree with the Fed payscale differences in cost of living.

[Anonymous]

Daycare, camps, babysitters, lawn care, contractors, insurance, groceries, services are all more expensive here.

[Anonymous]

OMG, yes, cultural things are way more expensive because of demand. But there are some interesting free things that kind of offset it.

[Anonymous]

Anonymous wrote:Yes, obviously housing costs more. But let’s break that down a little bit. Let’s say that a house that costs $800,000 here in the suburbs would cost $400,000 somewhere in the Midwest. Assuming a 20% down payment, because the house costs $400,000 more, you’d have to come up with an extra $80,000 for the down payment, which could be hard when you’re just starting out.

But once you actually buy the house, if you assume 5% interest rates on a 30-year loan, the DC house costs $3,436 per month (principal and interest) versus the Midwest house at $1,718 per month. That’s an extra $1,718 per month or $20,600 per year (some of which is principal and is therefore really an investment and not an expense). Yes, we have to factor in taxes as well, but it still doesn’t seem like it would be *all that much cheaper* to live in other parts of the country.

As I understand it, housing, food and transportation comprise about 70% of household expenditures. We already talked about housing. Can food and transportation really be that much less expensive outside of major cities? If Pizza Hut sells a pizza here for $12, I doubt they’re selling it for $5 in Iowa. Same with cars – if a Toyota Corolla costs $25,000 here, I doubt they’re selling it for $10,000 in Montana.

Can you explain if you think I’m missing something?

Not to pile on, but the bolded, while technically correct, also demonstrates how out of touch OP is.

[Anonymous]

Anonymous wrote:That would be fine if you could get a decent house for $800k here, but it’s even tough to get one in a good suburb for double that.

Your position is that it is "tough" to find a "decent" house in a "good suburb" for $1.6m?

You're an idiot.

[Anonymous]

Anonymous wrote:Don't forget childcare. Infant care at local daycare centers runs $2800-$3200 per month near me. It's insane. Add a toddler and you could easily be paying $5k per month.

Yes, my friend in NC was complaining about paying $1800 a month for 2 kids in daycare. I told her that we had to pay double that and she was shocked (and this was a few years ago so I know prices are even crazier now).

[Anonymous]

And all of these costs are after tax.