Unaffordable San Francisco, And Other Urban Misconceptions

The most expensive cities aren't always the most unaffordable.

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A couple weeks ago I wrote a story about how a Michigan economist found San Francisco to have the highest amenity value of any city in the country. That's part of the reason why it's also the most expensive city in which to live. But what my story didn't cover is the bang-to-buck ratio.  Luckily, Forbes just published a story looking at the issue of affordability: In which cities do basic necessities eat up the incomes of families the worst? Which cities get you more bang for your buck?

Again, San Francisco does quite well--coming up fifth on their list. An average budget for a family only consumers 68 percent of income, because the median income is so high.

One implication for urban policy: Taxes really make a difference. New York and San Francisco both have similarly high incomes and high housing costs. But while San Francisco is one of the better cities for affordability, New York is the most unaffordable--the average budget consumes 93 percent of income. Residents of San Francisco have much more disposable income.

The difference is taxes. New Yorkers have the highest monthly taxes in the country, Forbes found, while people in San Francisco and California have relatively low taxes, at least if they're middle-class or lower.

My story on amenity value--where again, San Francisco beats New York--would suggest that New Yorkers are not getting much additional value out of those taxes (or at least, not enough to overcome the quality of life value that San Francisco gets from having such phenomenal weather.)