Location, location, location. You hear it all of the time, but many fail to realize just how true and vital the phrase is. Indeed, it is very applicable to the vacation rental industry: for buyers, suppliers, cleaners, etc. to know how expensive their market is. Although market values usually determine prices naturally, it is important to understand where the demand for short-term rentals is. All parties benefit by having a greater understanding of this:
- Property owners/managers: know what kind of offers and prices to list your property
- Buyers (vacation-goers): know if the offer is reasonable, underpriced, or overpriced
- Cleaners and other service providers: understanding the market you work in will let you know how much your services are worth so that you can offer reasonable prices
So, TurnoverBnB has compiled a list of the Top 5 most expensive cities in the United States based on the cost of living index created by the Council for Community and Economic Research (a list for the most expensive cities in the world will be saved for another time). The cost of living is indicative of the demand for housing and real estate in the city. Therefore, it is a good measure to see if you’re working in a face-paced market or a slow one. Here are the top five most expensive cities to live in the United States.
5. Oakland, CA
Cost of Living – 49.5% above the U.S. average
Oakland is a part of the three cities in the San Francisco Bay Area with sky-high property values. Less expensive than its neighbor across the bay, this city is experiencing gentrification even in some of its unknown neighborhoods. As people get priced out of San Francisco, they move to the surrounding areas, causing demand to skyrocket, and, in turn, prices. Indeed, the median value of a home is $500,000 – 2.7 times the U.S. average.
Oakland is rich in culture. Beyond the close proximity to San Francisco and Silicon Valley, Oakland is a cultural phenomenon that cannot be experienced anywhere else. There, you can find a blend of foods from all over, ideas and perspectives crossing paths where they might get lost in the busy city-life of San Francisco.
4. Washington, D.C.
Cost of Living – 55.7% above the U.S. average
Naturally, the nation’s capital carries with it a big price tag. With median home payments 2.5 times the national average, being close to the inner workings of the country can cause you set aside quite a bit for property alone. Fortunately, other expenses counter these high home values. Taking a trip to the national mall might carry some costs, though.
Nestled between Maryland and Virginia, residents of the District of Columbia may find difficulties in following mandated laws. First, residents do not fall under the normal national legislative voting rights (since the area is technically not a state). Although home to the politicians, lobbyists, and national attractions (such as the Lincoln Memorial), Washington, D.C.’s residents deliver a unique culture from restaurants, nightlife, and other characteristics that make the capital a desirable location.
3. Honolulu, HI
Cost of Living – 88.3% above the U.S. average
When visiting paradise, it is easy to forget about all of the financial worries of everyday life. Indeed, the people of Hawai’i are so hospitable, welcoming, and carry with them an appreciation of what life has to offer. However, when visiting downtown Honolulu, you can quickly be reminded of the cost of living effects on populations. Not only are property values high for the demand of living in paradise, but an island location also calls for high prices in all other expenses. A dozen eggs are about double the price when compared to the mainland U.S., and gas prices are 30% higher. What’s more, the minimum wage for employees (although increasing in recent years) still falls short of those in metropolitan areas such as Los Angeles, San Francisco, and Seattle.
However, there is so much to the experience of Hawai’i – and Honolulu – should you be able to maintain a strong personal financial plan. Not only can you visit the most pristine beaches and water in the world, you can go on breathtaking hikes, experience worldwide events such as the Pipe Masters on North Shore, and try the delicious delicacies that the people have to offer.
2. San Francisco, CA
Cost of Living – 92.9% above the U.S. average
Everyone has heard that San Francisco has been on the rise. Already a world hub for food, ideas, arts, music, perspectives, business, and politics, the developments of technology in the region have made the demand for living in the area skyrocket past some of the most prestigious cities in the past. Not only are home values high (with a median of $858,800), the value of people are high. The Silicon Valley brings in the best talent from around the world as software engineers and executives power up the ladder of influential people worldwide (Tesla’s Elon Musk, for example, is from South Africa).
Beyond this, living in San Francisco gives people access to many other world-famous things. The Golden State Warriors for basketball; the Oakland A’s and SF Giants for baseball; the SF Forty-Niners and Oakland Raiders for American football; Yosemite National Park and Lake Tahoe are a short two to three-hour drive away for mountaineers; an hour north takes you to the famous wine country of Napa Valley; slightly south takes you to Santa Cruz or Monterey Bay. It is easy to see why San Francisco has become one of the most sought-after places to live in the world.
1. Manhattan, NY
Cost of Living – 138.6% above the U.S. average
The Big Apple. The City that Never Sleeps. New York City, and specifically the island of Manhattan is the most expensive city in the U.S. With a median home value a $871,500 and 40% more expensive groceries, residents are willing to pay to live here. Manhattan – and New York City – carries with it culture, business, history, success, hopes and dreams. Everything about Manhattan is iconic and – much like Honolulu – land availability is scarce. The demand for Manhattan blows all other cities out of the water.
It is also the home to one of the world’s biggest financial centers. This is Wall Street – the New York Stock Exchange, Goldman Sachs, Deutsche Bank are all centrally operated here. But beyond that, people have fun in New York: the authentic cuisine, the bustling nightlife, the sightseeing – you can spend a whole day in the central park alone!
When choosing where to have your vacations rental property, where you should offer your cleaning services, and where you choose to visit or even live should take into account the cost of living. These are the places you can charge – or will have to pay – a significant premium.