With a housing market that prices out many middle class families, lots of imported goods, and a distinct lack of competition, Honolulu tied New York City as the most overpriced city in America, reports Erin Carlyle at Forbes.
Carlyle used median housing prices, a cost of living index, and median incomes to figure out which cities were the most expensive relative to what people earn, not just the most expensive overall, but with a few surprises it was still the usual suspects like New York and San Francisco where the high salaries don’t make up for the fact that everyone wants to live in the same place. A few cities had to be left out because of a lack of data, but Gary, Indiana probably wouldn’t have made the top ten.
Hawaii struggles with import costs, limited land
Hawaii is in a unique position because it has to import nearly everything it consumes, and those imports come from thousands of miles away. On top of that, because the market is too small to support lots of different businesses selling the same goods, oligopolies arise fairly naturally (and are legal, unlike monopolies). Even without price collusion, there just isn’t any downward pressure on prices. The result is that groceries cost 55.6% more than the mainland average and utilities cost 67.9%. The median home price in Honolulu is $430,000 compared to a median income of $86,300, and even though Hawaii isn’t known for its enormous population, development is only able to match about half of what the state needs to keep up with population growth, so prices are expected to keep rising.
San Jose beats out San Francisco as most overpriced in California
San Francisco had the most unaffordable housing market in the country, but it’s not the most overpriced city in California. San Jose has slightly lower housing costs but the daily cost of living is significantly more, making it the least affordable city in California and the fourth most overpriced in the US.
California had the highest concentration of overpriced cities, but the Northeast wasn’t far behind with New York, Boston, Cambridge, and Peabody, Massachusetts all scoring in the top ten. Whether it’s a great beach, exciting tech companies, world-class universities, or a decent case for being the cultural capital of the world, all of the country’s most overpriced cities have a clear draw that people are willing to pay more for. But being small and far away puts Honolulu over the top.