In Texas, it's not all oil wells and rodeos. Despite this state's great wealth and culture, plenty of folks are living a hardscrabble existence. Harlingen, a developing city in the heart of the Rio Grande Valley, has one of the lowest income levels in the U.S. Fortunately for residents of this hot, dry city in the state's southern tip, it is also the cheapest place in the country to live.
The cost of living in Harlingen is about 18 percent below the national average, the lowest level in the U.S., according to price data from more than 340 urban areas provided by the Council of Community & Economic Research, a research organization in Arlington, Va. The statistics cover the period from the first quarter of 2010 to the first quarter of 2011. Harlingen was followed by the urban areas of Pueblo, Colo., Pryor Creek, Okla., McAllen, Tex., and Cookeville, Tenn. The most expensive areas were Manhattan, N.Y., with a cost of living more than twice the national average, Brooklyn, N.Y., Honolulu, San Francisco, and Queens, N.Y.
"We have relatively low income in the [Rio Grande] Valley, including in Harlingen. We have fewer college educated folks" and hardly any high end retailers, says Harlingen Mayor Chris Boswell. Still, the area is growing, Boswell says, and as it develops from an agricultural area into an economy based on light manufacturing and health care, prices may increase somewhat.
Housing, grocery, and transport costs are exceptionally low in Harlingen: over the year, monthly principal and interest payments for homes averaged only $847, a loaf of bread about 90¢, and a gallon of gas $2.65, reports the Council for Community & Economic Research (C2ER). In Manhattan, the most expensive area, monthly house payments averaged $4,686 (more than five times as much), bread about $2.23 (about 150 percent more), and gas $3.148 (about 19 percent more).
C2ER collects quarterly data on such costs as housing, groceries, transportation, utilities, health care, and other basic goods and services. To calculate the cost of living, the council put the greatest weights on housing and gasoline, as items representing the greatest amount of spending were considered more important. "Housing is the biggest piece of living costs everywhere," says Howard Wial, a fellow for the Metropolitan Policy Program at the Brookings Institution. "They depend on how attractive a place is to people."
Lower costs do not necessarily mean more people can afford a high standard of living: The average annual wage in the Brownsville-Harlingen metro area was only $31,720 in 2010, compared with a U.S. average of $44,410, according to the U.S. Bureau of Labor Statistics. So while Harlingen's cost of living may be 18 percent lower than the U.S. average, area income is about 28 percent lower.
Harlingen also has one of the country's highest poverty rates, about 30 percent of individuals, compared with 13.5 percent nationally, according to U.S. Census Bureau's 2005 to 2009 estimates. The city's unemployment rate in April was 9.4 percent. Several other low-cost areas also had low income and high poverty rates, including nearby Brownsville, Tex., McAllen, Tex., and Cookeville, Tenn.
"What the local market can bear would have an impact [on prices]," says Dean Frutiger, project manager for C2ER. "There aren't many Nordstroms or Saks Fifth Avenues in that list of lowest-price areas."
Of course, regional variations in price result from supply and demand. High home prices in Manhattan, for example, result in part from the low level of supply relative to demand. In Harlingen, the average home price is between $100,000 and $150,000, according to data from the Real Estate Center at Texas A&M University.
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