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The Places in America Where Most Income Goes to Rent (priceonomics.com)
99 points by aberoham on Aug 8, 2018 | hide | past | web | favorite | 152 comments



I'm genuinely curious why they bothered publishing this in its current state. They don't make tax calculations, so they assume you're paying rent with untaxed income, which makes the comparison all but meaningless.


They also weirdly assume you have a 2BR on a single income, which is not the norm.


Is it not the norm? It certainly was until quite recently.

A young family with one breadwinner and a couple of small kids might reasonably want to live in a 2BR, in many countries not just USA.


I just want to add that the rent doesn't scale proportionately to number of bedrooms.

E.g. a 1BR in San Jose where I live goes for $2100/mo, a 2BR goes for $2400 (obviously, it's different everywhere - a friend of mine is renting a room in SF for $2K+).

It makes sense for a couple to get a 2BR even on a single income if it's good enough (and usually, once you can afford spending $2100/mo on rent, you can afford $2400 too). For 15% increase in rent, one gets the ability to e.g. comfortably invite friends/parents from out of state for a couple of days.

Of course, single-income no-kids couple does not look immediately look like the norm these days; but once you think of it, there are plenty of situations other than children that make sense for such a scenario: one of the partners might be in school / looking for a job / changing fields / being involved in something that doesn't provide a stable salary (arts, entrepreneurship) / did I mention start-ups? / etc


This is also because in San Jose// San Francisco, most of the population is a single twenty or thirty something that only need a 1Bedroom. The demand for 1BR is therefore absolutely huge compared to 2+BR


> A young family with one breadwinner

That norm is quickly going out of style at least


>That norm [young family with one breadwinner] is quickly going out of style at least

Not convinced: "Among married-couple families with children, 96.8 percent had at least one employed parent, and 61.1 percent had both parents employed" -- https://www.bls.gov/opub/ted/2017/employment-in-families-wit...


So the norm for a young family is to have two breadwinners by your stated data.


It's above the majority, but "norm" seems like it implies a lot more, like at least 2 sigma....sorry if it sounds like I'm splitting hairs here.


How much of that is influenced by economic necessity?

My wife would love nothing more than to raise the kids but making ends meet is proving a tough tradeoff


Unsure. But equality is one factor. At least where I live women outnumber men at universities - meaning that if one partner in the relation has an "important career", it's very soon going to be more often the mother.

Another factor is rents and house prices. If everyone you are competing with for that house can pay the mortgage on two incomes, you aren't going to afford it on one. So that's economic necessity I guess.


> At least where I live women outnumber men at universities - meaning that if one partner in the relation has an "important career", it's very soon going to be more often the mother.

You can't logically conclude that based on that one data point.


College enrollment at all schools across the US (both 2 year and 4 year) is ~56% women, if I did the math right. Source: https://nces.ed.gov/programs/digest/d16/tables/dt16_303.70.a...


Women go less into STEM and higher income domains, compared to men. They have more degrees in aggregate but it's a higher proportion of "worthless" degrees. It is not meaningful to predict income.


I’m an anecdata scientist...

Jokes aside, it was a data point to illustrate a change that I know takes place also in other countries; that women account for an ever larger fraction of people with higher education. The number of families where the mother makes more money than the man is slowly increasing.


>Jokes aside, it was a data point to illustrate a change that I know takes place also in other countries; that women account for an ever larger fraction of people with higher education. The number of families where the mother makes more money than the man is slowly increasing.

I think if you dig into the data for US universities, you'll find that women are underrepresented in high-paying STEM majors and over-represented in low-paying majors like Dance or Early Childhood Development or Pre-1860 Russian Literature. Until that changes, I don't think your prediction is likely to come to pass.


Oh I have no hopes for the US


> Oh I have no hopes for the US

That sounds like a value judgement. What difference does it make?


She has to work because most women work. Property is the bottleneck in the system, prices and rents rise to consume any surplus. If most women work, then prices and rents rise to the level only affordable for dual incomes. If one half of every couple stopped working, prices and rents would have to fall back to single-income affordable levels.


It's a better way to rend in places where that's affordable ;)


Not on a single income, though.


I'm from Indiana. The price difference between a 1br and 2br is sometimes small. Sometimes you can get a 2br cheaper than a 1br, and sometimes both of these options run the same as a small studio in an apartment complex.

There are slightly fewer 3br apartments there, so sometimes those prices are higher. Of course, in many small-to-midsize towns there was the options of renting a trailer for the same price as the 1-2 bedroom apartments.

One city was an exception: A college town I lived in. It was fairly common for rent to go up with each inhabitant because they were accustomed to making separate leases for each student. Mighty expensive when renting to a family, but made sense for their normal renters.


I think the person above you is literally saying that in places where it’s cheap enough a single income earner can easily get a 2br. I don’t know how true that is but I believe that’s what they were saying.


Definitely doable if you're not in places where real estate has gone completely bonkers. There are lots of places where it isn't unreasonable to rent an entire house on a single income, even though most incomes there are fractions of a Bay Area salary.


I live 10 minutes from downtown Kansas City. I rent an entire house with an acre backyard for 700$ a month. I could have got more for less if I wanted to live slightly further away from family.


2BR units are used for rent price comparisons in the US because they are the most common size unit nationwide, and are the easiest to collect data on. They're what HUD uses in their Fair Market Rent analyses and many organizations follow their lead.


I've got a 2BR in Chicago on a single income and I am certainly the outlier in my friend group. TBH most of my friends have roommates.


What is the norm? Fewer, or more bedrooms than two?


If you are a family or couple renting a 2BR, you probably have more than one income earner. Exception to this case would be a single parent with children, but that rate is not especially high. And smaller households (i.e., just a couple, or a single mother and one child, etc.) are not especially likely to get a 2BR.

If you are a single person with a single income, you are not renting a 2BR. You might have a roommate, but in that case you are a two income household splitting the rent on a 2BR.

Single income for 2BR is such an odd case to base an entire statistic around.


If you're in a major city, this is probably a safe assumption, but there are plenty of areas where an extra bedroom is a pretty modest expense. A few years ago I had a nice 2 bedroom apartment right off the campus of a major midwest college for $900 a month - I had a nice king sized bed in the bedroom, and a man cave room with a gaming rig and music gear. It's one of the advantages of living outside of the biggest cities.


Or if you live in an outer neighborhood of a big city.

I have a 2br in Chicago and its very affordable on one income


Indeed, an SF salary and an East Bay apartment is what allows me to afford my 2BR.


>Single income for 2BR is such an odd case to base an entire statistic around.

It may be the wrong choice for this analysis but it's not some weird outlier in many places in the country. Over the years, I've known many single people renting 2BR apartments and even buying houses.


> If you are a single person with a single income, you are not renting a 2BR. You might have a roommate, but in that case you are a two income household splitting the rent on a 2BR.

Hi, I'm a single person on a single income renting a 2BR townhouse.

I've lived in my current home for just over a decade (since November 2007), and during this time I've only had roommates for two very short periods. Both of those times were when I temporarily took in friends who were suffering from long-term unemployment and had nowhere else to go. One of them, in 2008, got a new job and moved out a few months after he moved in with me, and the other, in 2011, lived with me for two weeks before he mended fences with his parents and decided to move back to his hometown.

I think I might have had a roommate for a grand total of six months in the nearly 11 years I've lived here.

I like my space.

(edit: Oh, and my best friend just bought a huge house in an exurb. He's single and has no roommates.)


Same here. I lived in 2BR apartments by myself until I moved in with my girlfriend. One office, one bedroom. Life is better when you can literally sprawl out on the floor.

We live in a 4BR with a basement, with two roommates who will be (slowly) transitioning out of the house over the next couple years. And with two dogs. It's literally basically Just Enough House to feel comfortable for us.


> If you are a family or couple renting a 2BR, you probably have more than one income earner. Exception to this case would be a single parent with children

Or a married couple with children and a stay at home parent. Or a working adult and their non-SS-eligible (e.g., immigrated too late in life to get the needed work credits) elderly parent that they care for. Or...

> If you are a single person with a single income, you are not renting a 2BR.

You might for a home office, especially if you do a kind of work from home that involves substantial paperwork and reference material, not just a simple workstation.


Two parents, one working, seems pretty common to me.


While it is common, it's more common to have both parents working, 61.9% are dual-income. [1]

[1] https://www.bls.gov/news.release/pdf/famee.pdf


Should add in the single parents, no?


From my experience, this is incredibly uncommon in the northeast. I only know one couple like that in NY, and she has a large enough trust fund that neither one of them really needs to work at all. Every other couple with children that I know actually living in the cities are 2 income households. The same holds for everyone I know in Boston.


> The same holds for everyone I know

It is a mistake to assume that this justifies conclusions about the general population.


> seems pretty common to me.

> From my experience

> the general population.

I've already qualified my comment, and both of us were discussing personal experiences.

If you'd prefer to discuss the general population instead of trading personal experiences, here is some historical data from pew, as well as the most recent report from the BLS:

http://www.pewresearch.org/ft_dual-income-households-1960-20...

https://www.bls.gov/news.release/pdf/famee.pdf

This shows that my experience is closer to the general population than the experience I responded to. I'd venture a guess that the distribution of that ~62% isn't uniform across the country and is likely weighted by cost of living (which is likely why our experiences differ).


It's quite the norm.


While that would be much more useful, factoring in state/federal/city taxes including brackets is going to be very high effort in comparison to what was done here.


Even factoring in an approximation of federal tax would have made the comparison much better. Adding in an approximation of state tax would give a pretty decent boost to cities in states with no income tax (although you have to watch out for sales taxes in that case).


What would also be nice is a comparison of rentals vs. purchasing a home including property tax considerations with our new deduction limits.


True. That would probably knock all of the Bay Area cities down quite a bit.


Absolutely. It's completely worthless in it's current state.

Also, the rent jungle numbers look a bit conservative for palo alto. In PA a 220 sq ft loft costs nearly 2000$/mo to rent. I think the 3900$/mo figure they have is a bit conservative for PA.

Furthermore, they compared 2BD as their normalization factor, rather than $/sq foot. I would imagine the more expensive areas get less Square footage for a given 2BD apartment.

And, notice how they conveniently didn't even mention any comparisons of salary to housing Buy costs.


The housing numbers look poorly researched in general. Sunnyvale for example is not that hard to find a 2 bedroom apartment for under $3k - I'm paying $2700 a month myself for one with over 1k sqft and modern appliances.


“You can find one for less” isn’t a counterargument when shown an aggregate.


The analysis comparing cities is just (mean salary - mean rent), which is going to make places with high income inequality look better than they are for most people.

I'd like to see the 10%, 50% (median), and 90% quantiles for (after-tax salary - housing cost). I bet the rankings would be quite different depending on which of these you chose.


Absolutely this.

We know that income is generally power-law distributed, so we also know that the majority of incomes will be below the mean. An analysis like this is bordering on nonsensical. It's too sensitive to outliers to be useful, in my opinion.

A worked example: the median income per capita in Boston is $37,288[1] and there are 685,094 residents. The total income of people in Boston is then 685094*$37288 = $25,545,785,072. According to [2], Tim Cook's total compensation was $377 million in 2013. If Tim Cook moved to Boston, the mean per capita income would rise from $37,288 to ((25545785072+377000000)/(685094+1)) = $37,838. One person moving can make a 2% difference in mean income by moving to a top 25 city in the US, nevermind any of the smaller cities on that list.

1 = https://www.census.gov/quickfacts/fact/table/bostoncitymassa...

2 = https://www.therichest.com/rich-list/world/top-10-people-wit...


FWIW they mentioned the highest salary was $187k


For large, sprawling cities like Denver, Orlando, Nashville, Omaha, etc etc mean rent is almost useless.

In Denver $1800 will get you a studio in desirable places to live, and will only get you a 2 BR out in deep suburbia or developments that come with 45 minute commutes. You're also going to have widely varying incomes between those two areas... i'd be willing to bet the after rent take home in the fringes of Denver sprawl is much worse than downtown due to ridiculous prices pushing low income workers farther and farther away from the city center while rent decreases at a much slower rate.

Also did they get their salary data from BusinessStudent or from Indeed? And where did they get their real estate data from?


I think Minneapolis is an interesting data point on there, since I've been told (and the data here reflects) that housing in Minneapolis is on par with Chicago right now, but the salaries haven't caught up. Minneapolis ranks as one of the worst Annual Salary After Rent cities, even behind LA and Seattle, which comes as a surprise.

Also one thing I've found as I work through a move from an expensive city (SF) to a less expensive one (Minneapolis) is that the things you're getting for the prices shown here are drastically different. I've found 1500sqft 2br/2ba apartments with two parking spots in the Twin Cities for $2300, while that same thing in SF would easily cost $7000. I paid $4500 for a 2br/1ba that was a little under 1000sqft with a single parking space.


Tech salaries in Minneapolis and the surrounding area aren't terrible if you're reasonably qualified and do some digging- think low $100k and up. The rents seem absurd to me- $1300 for a one bedroom apartment? - but that's because I grew up in a town where a two bedroom apartment above a quiet store would cost $450 a month, tops.


$1300 for a one bedroom apartment? I'm paying $1360 for a two bedroom and I'm in the heart of Uptown in a nice apartment.


Yeah, I think it was near the twins stadium, and was brand new, so it was probably inflated a bit compared to what you would get if you looked around.

Regardless, I now have a 2k mortgage for multiple acres, waterfront, and no congestion, city noise, smells or lights. It's bliss if you don't mind the occasional snake or bear.


"The rents seem absurd to me- $1300 for a one bedroom apartment?"

I think these numbers are unduly skewed by the relatively very large build-out of condo buildings that has occurred in Minneapolis in the past 4-5 years.

Prior to 2005 (or so) Minneapolis was a very, very white-flighted downtown area with only a very few condo buildings extant. The notion of living in downtown minneapolis, to most metro area residents, was a weird and wild one.

So now, there is a huge influx of supply but it is all made up of "luxury" units that I believe are going online, in the market, with very optimistic rent numbers. I believe those newly online rental units are skewing the number upwards...


I think that build out has been going on since at least 2004, at least around the University. Plenty of luxury student apartments around there with even more inflated prices for the value.

Even in the suburbs, sketchy one bedrooms were 900-1000 last I had looked, though I was limited in options because I had a small dog. I ended up going way out to savage to get one for 700 / month back in 2010


I mean, just look at the North Loop. When I worked there in 2000 there were no condos at all, just drug dealers and prostitutes on corners.

Now they can't build condos there fast enough, and the rent on them is insane.


Expand that to the entire Twin Cities area and prices fall even more. I bought a two bedroom condo in a suburb 20 minutes from downtown Minneapolis for $80k last year. When I was renting a three bedroom two bathroom house house in a nice area of South Minneapolis was $1500 a month. And developer salaries here are pretty good. Not Bay Area levels, obviously, but mid-level developers should be making over $100k in base salary.


What would the equivalent house have cost you?


I live in a nice but not upscale neighborhood in South Minneapolis (Longfellow, just north of Minnehaha Park, a few blocks from the famed Minnehaha Falls from Song of Hiawatha). My block is basically 100 year old bungalows in the 1200-1800sqf range, mostly three bedroom (two main floor plus a finished attic). The house next door to mine and the house next to it have sold in the $325k range in the past year. They're both pretty nice - a couple more sold farther down the block that were a little smaller and not as sweet, for around $300k.

fwiw, one of the new neighbors came from the East Bay area, and they were boggled at being able to get a beautiful 3br in a great neighborhood for that price.


Just to throw some anecdotal data on the pile - when I was looking for an apartment in Minneapolis (South MPLS and ~two years ago) I was able to find decent one-bedrooms for around $1000 and currently rent a two bedroom in a triplex for $1100.


Ah yes I suppose it's important that I was looking at places that are in supposedly very desirable neighborhoods - North Loop, Northeast, Uptown, etc. If you go into S Minneapolis (which is also a nice place to live) you can find much cheaper apartments.


Really surprised to see Detroit that high on the list. I kind of wonder what the relative availability of jobs in Detroit is vs, say, Dallas or Chicago (which offer some significant lifestyle advantages over Detroit). It would also have been a much better comparison if some approximation of state and local income taxes were factored in.


A booster's 2 cents:

Yes, Texas's lack of income tax (and Detroit's city income tax) would certainly catapult Dallas ahead of Detroit on this list if taxes were properly factored in.

Detroit is sort of a well-known "sleeper" city that "might be nice to live in someday", but I think word will get out sooner than later that it's got a lot of livability advantages right now. Great arts/food/drink scenes, 4 major sports teams, a surplus of cheap, high quality housing, a first class research university in close proximity, and mild traffic that's about what you'd expect in a city with a AAA baseball team. It has it's flaws, but I'm really not familiar with anywhere else that offers a lot of those amenities without hell traffic or impossibly expensive housing (usually both).

Unless global warming radically reverses, I'd even make the argument that Detroit's weather is becoming a draw - a mild winter is a small price to pay for breezy summers with highs in the low 80's.


> I'm really not familiar with anywhere else that offers a lot of those amenities without hell traffic or impossibly expensive housing

You pretty much described most non-coastal, decently-sized metros. Maybe missing a sports team here and there, but if these are your general requirements, you'll find lots of places.


I used to live pretty near Detroit, and, honestly, most of those things don't ring true to me. As far as housing goes, if you work in Detroit, you can easily live in between Detroit and Ann Arbor and get a much better deal on housing. Speaking of Ann Arbor, why not just live there, if proximity to the university is important? And I'm not sure how you can count the Lions as a "major sports team." ;) (kidding on that one.)

I can't really comment much on the current culture and food scene in Detroit, but I don't recall it being all that great when I was there.

The weather must be significantly different now than when I was there. Michigan was hot and extremely humid in the summers (which makes sense for a state that literally has 11,000 lakes, not to mention the Great Lakes), and the winters bitter cold and snowy for the most part.


As someone who grew up in Michigan, left, and visits familiy regularly throughout the year...I can't imagine anyone thinking the weather is desirable. Like pmiller2 said, summers are humid af, 80-90%, on a regular basis with 80-95 temps just isn't enjoyable.

The winters are rather cold, with quite a lot of snow and gray skies for months. Winter bleeds so far into spring. I remember years as a kid, where we'd get a foot of snow in Mid April. We lived just outside Metro Detroit, and I grew up there in the 90's/Early 00's...


While in Michigan, over a period of years, I saw snow come out of the sky in literally every month except July. Granted, sometimes it did not stick, but that's saying something. I've seen those giant piles of snow in huge parking lots still melting well into summer.


I remember those giant piles of snow, fading to black over the course of months, while never seeming to melt until well into summer.

What a gross and weird sight.


Houston averages 9⁰ F higher than Detroit in the summer, with higher humidity.

I would call the Houston weather "too hot" for about 6 months of the year, vs parts of July and August for Detroit.


Detroit is in a hype bubble, I think (sauce: lived there for a bit). You can absolutely pay $2,000 for an apartment in a part of town with some blown-out buildings nearby and nothing much to walk to. Why you’d do that, I don’t know, but you can. There are jobs if you wanna work for GM or Quicken Loans, but that’s about it.

There are affordable rents there, but what you save in rent you pay in car insurance. Michigan has the highest in the nation, and Detroit has the highest in the state. I paid almost $500 per month for mine. The legislature keeps trying to change policy to fix this (as it is ultimately a policy issue), but it usually gets shot down by the GOP who think it goes too far and Democrats who don’t think it goes far enough.


Is the $2000 amount the monthly rent, or the total purchase price of an apartment in Detroit?


Heh. Monthly rent if you want walls and running water, purchase price if you don’t (be sure to leave extra for the back taxes).


The confluence or random circumstance and intentional lobbying that have allowed SF area landlords to ensure that a low stock of housing is maintained in the face of skyrocketing demand is truly fascinating.


Everything always seems behind. When I lived in mountain view, local papers were full of old school residents complaining about nearly finished new housing on Castro that a bunch of googlers would move into. Like... The time to preserve your small town setting passed about 20 years ago lol. It's no longer apricot field town, it's silicon valley, it's staying silicon valley. Why not profit off the rising land values?


But Silicon Valley was already dead 25 years ago!

https://groups.google.com/forum/#!original/alt.folklore.comp...

  Newsgroups: alt.folklore.computers
  Path: sparky!uunet!stanford.edu!nntp.Stanford.EDU!abercrombie.Stanford.EDU!paulf
  From: pa...@abercrombie.Stanford.EDU (Paul Flaherty)
  Subject: Re: Sillycon Valley history
  Message-ID: <paulf.731874319@abercrombie.Stanford.EDU>
  Sender: ne...@leland.Stanford.EDU (Mr News)
  Organization: DSO, Stanford University
  References: <C3p1B1.EDE@csulb.edu>
  Date: 11 Mar 93 18:25:19 GMT
  Lines: 20
  
  dpa...@csulb.edu (Dave Palmer) writes:
  >From what I understand, the shine is rubbing off. The cost of housing is
  >ludicrous, and companies are fleeing to places like Arizona. But you
  >still can't throw a silicon wafer in Cupertino without hitting an Apple
  >facility.
  
  I think it's fair to say that Silicon Valley is dead.  Cheap venture capital,
  minimal startup cost, access to university researchers, and good inter
  business communications fueled an engine which turned ideas into products.
  You can now find venture capital elsewhere, with the discount rate being
  what it is.  The cost of housing and office space has spiraled out of
  control, thanks to the environmentalists and Prop 13.  The trade secrets
  and intellectual property mania have pretty much destroyed open cooperation.
  The universities remain, but aren't the driving force they used to be.
  
  The place has a much different, more ossified feel to it than it did seven
  years ago.
  
  -=Paul Flaherty, N9FZX | "My boy, we are pilgrims in an unholy land."
  ->pa...@Stanford.EDU   |                                -- Dr. Henry Jones Sr.


And then that guy invented AltaVista, in Silicon Valley: https://en.m.wikipedia.org/wiki/Paul_Flaherty


It’s not just SF, it’s every community. I’ve spoken with developers (like, housing) and they face difficulties in every community in America. NIMBYism is running rampant, and disenfranchised voters are unable to fight, or don’t care enough to get involved. This is why local elections matter. My city just elected a NIMBY city council, which means we’re screwed for years, but we won’t stop fighting. People deserve to have places to live, and people deserve sane cities.


Where the heck do they get $2800 for a 2BR in Seattle from? That seems high to me. A year ago I was renting a 3BR for $2100.

Well, ok, "average" across all 2BR in the city. That doesn't really tell the full story and will be drawn up by high outliers.

There are a lot of methodology problems here.


Capitol Hill last year I was paying $3200/mo for a mediocre 1br. These prices seem accurate.

Studios downtown are pushing $2000. 2br are pushing $4000. Check Zillow.

I now live 9ish miles outside of the city and pay $2000 less for a 1br rental condo with an actual yard I can garden in, and patio.


I find it highly improbable that your 1br was mediocre for $3200/month. The only place you can even find 1br rents that high is in brand-spanking-new buildings with tons of amenities and huge unit sizes.

For another data point, I have rented a respectable (1985+ wood frame building) 2br for the past two years for $1595/month total in Capitol Hill. You can find many places for cheap during the December-February time period.


It was pretty mediocre for $3200. It was a newer building that had a movie room that was always broken, and a small gym, but nothing crazy; most complexes have these now. No balcony, no AC, on Broadway with all kinds of crime.

My 1br condo by the airport is larger, comes with a large storage room, built in the 60's but remodeled in 2017, yard, patio, and I'm paying only $1000.

You can probably find 1br for $2000 in Cap Hill if you want to live in an older building.


Cap Hill (or maybe downtown) is the most expensive neighborhood in the city. It is not representative.


I had a similar though but thought it was too low (funny how that is). Take a look at apartments < $2830 within a mile of 98101 (124 apartments) [1] and the same for > $2830 (365 apartments) [2] using craigslist counts data (which should optimally contain more duplicates for higher priced apartments). Assuming not too janky data, this tells us that it's a skewed distribution (removing the distance filter changes the skew direction as well).

[1]: https://seattle.craigslist.org/search/apa?search_distance=1&... [2]: https://seattle.craigslist.org/search/apa?search_distance=1&...

Edit: $2499 seems to be about the (craigslist data) median within 10 miles of 98101 [3]

[3]: https://seattle.craigslist.org/search/apa?search_distance=10...


Another way to think about Craigslist listings is that those are the prices that buyers haven't paid. (The inexpensive apartments fill quickly while the overpriced ones can stay on the market forever.) So listings will skew higher than actual purchase prices.

(And as your edit suggests, Seattle is much larger than a 1 mile radius from the center of 98101.)


I'm interested to know how one could arrive at a more reasonable number for a 2br apartment. Obviously, what you say is true: a luxury 2 BR with a doorman, gym, pool, onsite parking, and pets allowed is going to be vastly more expensive than your basic 2BR with none of that included. How do you tease them apart?


Median is a good place to start. You might also try to factor in how relative income affects relative rental spend choices. I.e., (on average) someone making $50k and someone making $100k in the same town are looking at different parts of the rental market. If there's a rental market floor at $2800/mo, that's extremely relevant but the average rental price definitely doesn't capture that.


Median instead of mean?

Though it's not clear here which they used for the calculations.


The easiest way is taking the median instead of the mean. For more info and other methods, search for “robust estimators”.


I guess I wasn't clear enough. Using the median certainly works better if you're looking at the population of "all 2BR apartments." But, I would contend that's a mistake, as luxury apartments are really fundamentally different from non-luxury apartments. And, among luxury apartments, individual amenities matter. A pool is likely to be less relevant than a doorman, for instance.

Statistically, I don't see any good way around this other than doing a really gnarly ANOVA to tease out the prices of individual amenities.


2BR just happens to be the category the article chose. It's a reasonable assumption that e.g. families with a kid are going to rent at least a 2BR — of any age and luxury — if they can afford to.


Sshhh. Nobody move to Seattle. Its too expensive - you're looking for Austin or Minneapolis. ;)


Ah, right, I forgot. Also: it rains all the time, San Francisco is barely any more expensive, etc etc.


Interesting how many of the salaries in these samples are tied to college towns. Cambridge, College Station, Knoxville, & Chapel Hill just to name a few that I saw.


In the case of Chapel Hill (and I'm sure others as well), it's a bit odd to see it singled out when it's really part of a larger metropolitan area.

If I were living in Chapel Hill, I could also be reasonably working in Raleigh or Durham.


Data Source: BusinessStudent.com

Makes sense that college towns would be over-represented.


70% of rentable units in San Francisco are rent-controlled. I know many very high paid people who pay well below “market rate” for their apartments. If you do it right you can live in SF for less than many “cheaper” cities and yet make much more money.


How do you "do it right?"


Make sure you already live in San Francisco and use the government to cap out your rent to the detriment of literally everyone else.


Exactly.

Use the laws supposedly made for poor people, and use them at your advantage (like most of the wealthy do).

Also yell and pretend high and clear that you want to help the poor.


Get there first


Agreed. I just left my apartment in SF, 1BR/1BA for 1900$, now whomever is gonna take it will rent at 2200$. I think you can outperform buying house by renting for a longterm in the bay area.


Stay 5+ years in your rent controlled apartment.


Have true rent control rather than what SF does.


Rent controlled or rent stabilized? Because those are two very different things and I can find no evidence of the former being true.


California rent control is what New York would call "rent stabilized."


The rents look a bit off, $3,700 is not the average 2BR apartment in NYC. Same for Miami, $2,400 is way too low. Maybe they're including too many apartments in the outer areas of these cities, but if you want to keep your commute <30 minutes in the cities, NYC would be closer to 4.5k and Miami would be hitting 3k.


This list makes me very surprised that Amazon dropped Detroit, MI from the finalists on their HQ2 search. Rent there is half of what it is in Seattle. A few AMZN shares would go a lot further to keeping people happy in Detroit than in many other cities.

Detroit has a bad reputation because their economy failed. But put 50,000 high paying tech jobs there, that problem would look very different.


It's interesting that some of the highest and lowest after-rent salaries are in the Bay area. That's a pretty clear indicator of SF's constrained housing supply in particular. It's also interesting so many low ranked after-rent cities are in Florida, which might reflect a strong desire to live there despite the lack of job opportunity.


It's also relevant that SF is only 47 square miles, compared to the metro area's 3.5k square miles. In many of our cities, people commute to work in different cities (hence the horrible traffic). You can end up with different salary:rent ratios comparing jobs in a city to rent in a city than you'd get looking at salary:rent ratios of jobs of people living in a city to rent in a city. Both are interesting statistics in their own right.

I'd bet the difference in those two statistics indicates uneven housing supply (residential areas aren't the same as business areas) and small cities (residential areas are counted differently than business areas).


Tourism and service jobs just don’t pay well in general, which is why Florida gets dinged in these surveys.


It could also be that Florida has no personal income tax and the sales tax rates are reasonably low. I think property tax is about average.


In any place where incumbent landlords are protected from competition, rents will naturally rise to consume all available money.


Henry George was right all along! It's amazing to see how similar income levels are after taking rent into account.


I don't think the issue is that landlords are protected from competition. No matter what they do they're competing with the rest of the country. The issue is that there's massive demand for housing in one particular area. As such, the price of housing will increase in that area until the market will no longer bear it.


Salary after rent is not necessarily an optimal metric. It works when looking at things like vacations and national products, but when you’re looking at local spend, that rent gets passed through everything that requires local land and labor. Food (especially prepared food) and entertainment tend to be priced in local dollars.


I agree with this. I figure I probably have the same number of dollars after paying for housing in Atlanta as I would working the same job in SF. But I can buy food, entertainment, etc. at Atlanta prices.


They're skewing the data to fit their narrative by only looking at medium rent for a 2 bedroom apartment.


And they're not actually rating by how much of your salary proportionally is going to rent, but how much of your salary is left over after rent, in absolute dollars. So in College Station, TX, you're paying about 20% of your salary in rent, which is not really a terrible burden, but it's no. 1 on their list.


Furthermore, those looking for a 2br are very likely to be dual-income, at which point high cost areas begin to make a lot of sense even if the rent is insane.


Likely true, but I would point out that there are significant advantages to having a 2BR if you work from home at all. I use the smaller BR at my place as the bedroom and the larger one as my office, and it's fantastic.


It may be almost unthinkable in high cost of living areas but it's pretty common for even fairly young people to rent a 2BR and use the spare room as an office/hobby room/etc. I know I did after grad school.

It's another problem with this type of comparison though. What's a "typical" apartment for a young professional to rent in a relatively low cost suburb or small city is likely going to be very different from what the same young professional would rent in Manhattan--even if they're paid more in the latter.


This might skew the data in terms of "How much money will you actually have left after paying rent" but personally I feel it's still a decent analysis on cost of living. I assume (with no evidence to back it up, granted) that you can find the approximate price of a 1br apartment by taking some percentage from the 2 bedroom.

Do you see skew in some other way?


If I ever found another startup, I'll do it somewhere with significantly lower rents but proximity to a startup hub. For example, the Santa Rosa area fits the bill in SF, and there are areas of New York that are significantly outside of Manhattan or Williamsburg. It's just not worth the runway hit, and those locations force you to try for a certain kind of funding that might not actually fit the startup (or its stage) well. Cities like SF have enormous value to a startup but not so much that you have to be in them day in, day out. There was a time that this was the optimal thing to do, but I think it's passed.


$650 a month is all you need to pay me for my spare bedroom 1 hour outside NYC with brand new appliances and central air and hardwood floors and high ceilings, etc.

For friends, I even let it go for $500. Only catch is that a monthly commuter pass to NYC is $350, but you dont need a car. This room is perfect for anyone who wants to work remotely without leaving the comforts of the USA.


The median home price in Santa Rosa is astronomical. Perhaps you meant Chico, or Corvallis, or something like that.


It's pretty high, I'll grant you - but 1/3 that of San Francisco. And the rent is correspondingly lower. Chico etc are significantly lower than that, of course, but they're a longer drive away - Santa Rosa is just an hour on the 101 from SF.


I'm not convinced it's really just an hour during commute hours.


It's not, not even close. It's 2H typically, with very high variance.


Not to mention it's completely inaccessible by public transportation, and more or less an undoable commute from most of the East Bay, South Bay, or Peninsula. Bay Area commuting in general is a shit show; it's bad enough that I'm basically locked out of any jobs in the South Bay or Peninsula, just because I choose to live in the East Bay to save on housing costs.


Are all the charts loading for most people? I could only get the first one to show up.


I had to disable Privacy Badger to get the other charts to show up. Disabling uBlock Origin didn't help (or hurt).


When I see CFO/CTO with salaries of 171k, I do not know what to think. Is the term CFO/CTO overused? For me a CTO/CFO is someone in a publicly traded company, and in those scenario they usually make in the millions.


I agree. These kind of reports are the about as useless as they get. I have no idea why anyone would ever use indeed for anything. We get custom made reports with salary ranges in the bay area and LA and our numbers look nothing like these. Nothing in that report even resembles reality, but it's wayyyyy off on CTO and other jobs at that level.


Most companies are not publicly traded. Is the job/life of a CTO of a 15 person company different from one of a 15000 person company? Yes. But they are still a CTO, and it's not necessarily overuse to call them that.


I think it is, but I guess its a matter of opinion. I see someone using the CEO/CTO title of a 15 people operation as disconnected from reality, makes it seems like these people care about titles more than anything.


Rent isn't everything. The cost of living in Detroit is absurdly lower than Silicon Valley. I was in SF this winter and everything little thing I bought felt like it was 20% more than in Michigan. When on vacation I can get two weeks in Florida for what one week in SF costs me.


The one thing that none of these analysis would ever unearth is how much money you can make through real estate in California. That can rarely matched by the incremental savings you get in a low cost area.


Why do we have a system that financially discourages dense concentrations of smart, productive, inventive people?

It seems the market encourages people to avoid doing anything that would make their community attractive.


I think it has more to do with how we build cities. If you think about it all cities just start off as a collection of single story buildings in the central business district (CBD). As the city grows the CBD slowly gets replaced with bigger and bigger buildings. Under normal market forces high rents should be reduced because builders will build more units in the area to meet demand. However, the major factor that prevents this is government planning that restricts market forces from occurring. The end result is there is not enough supply to meet demand which ends up in bidding wars. The rent rises to absurd rates until it meets demand.

Also cities are more likely to build high-density commercial since those companies are generally bigger taxpayers and consume less government resources compared to residential.


This fits with anecdotes from people who live in the bay area that they have roughly double the take home pay after rent etc...


Whomever is a CTO and making $140k a year...really needs to rethink their path in life. That is ridiculous. The amount of responsibility a CTO has at a company of almost any size, is a lot. I don't even know why a company would bother having a CTO if that's all they think it's worth.


In many, probably most, companies a CTO is not necessarily someone coming from a software developer background but instead essentially an IT manager. And most companies are not headquartered in SF/Seattle/NYC, so $140k/year goes a lot farther there. That $140k figure also does not account for equity/bonuses


Maybe, but that's avg. So, some CTO's make 350-1M+ a year and so I'm supposed to believe many CTO's make less than 140k, maybe a lot less? Maybe indeed should slice the data in ways that make sense, but company size, or area only. As someone that manages 120+ people...I know a lot about what engineers and other tech workers make. These numbers are straight silliness.


Well there are biases also, first and foremost that this data is from Indeed.com and I doubt most high quality CTO positions are posted there. It would definitely make sense to separate based on company size for executive positions.


For sure. It's possible I'm just too sensitive to this stuff, but if you work at company of any size..say over 100, and you manage a lot of people...having your HR dept not understand how region, market, company size, etc effect how you should pay, is a huge pain point. These kind of "studies" just make that a lot harder.

Even the custom reports we get are "wrong" if you don't slice the statistics correctly. And a lot of people have no idea what's going on with compensation (salary, bonus and equity) right now, in competitive markets and competitive fields.

Our company is only 700 people and it's been a huge challenge.


This is a silly comment. What if you're a 5 person bootstrapped company and not making much revenue yet?


Then, just like YC would teach you, you don't need a CTO.




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