HOUSTON — A newly released financial study looked at what it takes to live comfortably in major cities around the country, ranking the top 100 places, which included major Texas cities from Dallas to Houston.
“The cost of living is starting to get outrageous right now, especially being born and raised in Houston. To see the prices skylimit to where it is now, it’s kind of unfathomable,” said Marvin Wilson, a Houston native.
Inflation and rising costs are driving up the cost of living in Houston.
“Comparatively, I feel like Houston is a lot cheaper that like Seattle where I’m originally from,” said Kevin Lei, a Rice University student.
Saskia De Jong and Marten Hogeweg were visiting from California and shared Lei’s sentiment, saying young people can no longer afford to enter the housing market.
“The rental market is strong, of course, but young people pay as much rent as they would pay in mortgage,” said Hogeweg.
A recent SmartAsset study ranked the top 100 U.S. cities by the highest to the lowest salaries needed to live comfortably, based on the 50-30-20 rule. The rule is that after taxes, 50% of your income should go toward needs, 30% to wants and 20% for savings. Rice University economist John Diamond said that is not always feasible.
“Half the people in this country can’t even save $400 for an emergency fund, much less 20% of their income in their year, so is it a great goal to shoot for? Absolutely,” Diamond said.
Based on the study, New York City requires the highest individual salary of about $159,000. In Texas, the cities of Frisco, McKinney and Plano all ranked at 29, with a salary of just over $109,000. Several other Texas cities made the top 100, but the incomes fall well below a comfortable salary.
The study shows a single adult in Houston requires nearly $90,000 to live comfortably. In Irving, you would need about $97,000.
But why the high cost of living in North Texas cities like Frisco?
“The cause is growth,” said Diamond. “Headquarters have made their corporations flowing in. There’s relatively nice housing. You’ve got A+ rated schools. Everybody wants to move there, and that pushes prices way up.”
So where is this total cost-of-living situation headed?
“This is gonna depend, can the Fed get inflation under control and keep it under control,” he said.
Also, what will incomes look like?
“It’s gonna depend on AI,” Diamond said. “Does AI make us more productive and we earn more money, or does it take our jobs and we earn less money?”
Wilson said businesses and corporations should be part of the solution.
“Everybody needs to start paying more, just to make sure everybody has enough just to start living comfortably,” he said.