HCOL vs LCOL: Should You Move to a Top 10 High Cost City?

HCOL vs LCOL: Should You Move to a Top 10 High Cost City?

HCOL vs LCOL: Should You Move to a Top 10 High Cost City? was written by Courtney Luke and originally appeared on Arrest Your Debt. It has been republished with permission.

What is the difference between a high cost of living (HCOL) area and low cost of living (LCOL) area? What does it mean to live in a high or low cost of living area? A high cost of living means that housing prices are higher than average compared to other areas.

This usually happens because of a lack of supply. Low cost of living means that the cost of living is lower than average compared to other places. This usually happens because there is a surplus of supply.

High Cost Of Living (HCOL)

Are you planning to relocate to a different city soon? Then, you might want to pause a bit and think about the underlying costs involved. Whether for a job transfer, attending college, or acquiring a second home, the cost of living will prominently come into play in your move.

Keenly evaluating your new cost of living or using a cost of living calculator before moving will help you gain important insights into the overall lifestyle upgrades, savings rate, transportation cost, student loans, credit card minimum payments, grocery costs, and housing market, among other essential price differences with your current location.

The analysis will also paint a vivid picture for you in terms of the tax exemptions, relief payments, family allowances, insurance benefits, as well as minimum wages you can expect to encounter once you settle down in the new city.

So, where do you start? Start by understanding what a high cost of living (HCOL) area is and how it compares to the low cost of living (LCOL) and medium cost of living (MCOL) areas. Then, armed with this knowledge, you can safely narrow down the wide range of top cities that suit your style of living.

HCOL Definition

A high cost of living area describes an area that is generally expensive to live in. That means the cost of goods and services in such an area is at its peak.

Therefore, you will need extra money to cover your basic and biggest household expenses such as food, housing, taxes, and healthcare in these areas. In addition, they represent most large cities such as New York, San Francisco, Boston, Honolulu, and Oakland, to name a few.

Typically, HCOL areas come with higher salaries to help you afford living there.

LCOL Definition

A low cost of living area refers to areas or cities whose average costs are below the national average. As a result, the purchase price of goods and services in LCOL areas is less than in MCOL and HCOL areas. This price range could significantly affect your lifestyle choices in LCOL areas.

MCOL Definition

A medium cost of living area describes an area that is neither too expensive nor too affordable to live in. Such areas avoid both extremes, and the living expenses and median incomes here are moderately close to the national average. In simpler terms, think of MCOL as the in-between of HCOL and LCOL areas.

HCOL vs LCOL Why The Price Difference?

The price differences in HCOL and LCOL cities stem mainly from the forces of demand and supply in the market. Of course, this is accentuated by the population in an area.

For example, if you are house-hunting in an HCOL city, such as San Fran or San Diego expect to run into a hot market situation. A house in such a city can be priced as high as $1.6 million yet attract many interested buyers. Unfortunately, that means less living space is available compared to the number of people moving into HCOL areas. This naturally drives up the price of housing in HCOL cities.

On the flip side, you can easily get a house from as low as $60,000 in an LCOL area because the supply of living spaces exceeds the demand. In addition, people are more spread out in such areas, allowing you to find your own breathing space for way less.

With that in mind, you can adequately plan, anticipate, and adjust your lifestyle, especially if you plan on moving from an LCOL to an HCOL area. You’ll be glad you did.

What To Consider When Choosing Where To Live

Before leaping into a new city, whether an HCOL or LCOL area, you should brainstorm several factors that may ultimately dictate your overall quality of life in your newly found home, for clarity of your moving goals, you can narrow down your considerations into personal factors and financial factors.

Financial factors are easily quantifiable. The key economic factors to look into when moving include taxes, income, and living expenses. That said, your income level carries the most weight.

Do you want to maintain your LCOL area financial independence, for instance? When moving to an HCOL area, make sure the job you are after pays more than your current one. Higher paying jobs are a smart way to offset the hefty living expenses in HCOL cities. In addition, the more you can maximize your salary, the more your purchasing power strengthens.

Alternatively, you can move from an HCOL to an LCOL area to save more. However, that will significantly affect your lifestyle for things like entertainment.

On the other hand, personal factors cannot be quantified yet are increasingly important in your decision-making. These factors may include proximity to family, education standards, and overall quality of life. For example, it would be pointless to move to an LCOL area to save up more, yet the area erodes your happiness day by day.

Cost Of Living Varies Within Cities

Whether you are researching the housing market or simply comparing different grocery costs, it is possible to experience price differences within a given state or city. Moreover, the more you move around the state or city, the sharper the variable costs become.

There are several reasons for such variations, the major one being to what extent an area or location, or neighborhood within the state or city is considered urban or rural. Towns and urban areas tend to have a higher living cost than rural areas.

The prices of different commodities may vary within a state or city because of the proximity of your living area to natural resources. For instance, you might find yourself enjoying lower energy costs if your neighborhood or town is situated within reach of natural gas or oil.

Similarly, it is not uncommon for people living close to farms and food production hubs to enjoy subsidized or discounted food prices. State and local taxes may also largely impact the cost of living of an area because they influence public services such as public transportation, public schools, and health benefits that all translate to lower living expenses.

At the center of it all, are your needs. What matters to you most, and what kind of neighborhood would satisfy your needs best. Whether the neighborhood is in an HCOL or LCOL city, you can easily find what you are looking for if you do your homework well.

For example, you can locate a neighborhood in an LCOL area with a better quality of life than its surrounding areas.

The Top 10 HCOL Cities

Moving to HCOL cities means you are willing to pay an additional cost for housing, food, and gas in exchange for that great weather or cosmopolitan living you are after. Ready to move?

Well, according to Kiplinger, here are the top 10 HCOL cities in the US you can consider:

1.  Manhattan, NY

Cost of Living: 7% above US average

Median house price: $1,013,400   

2. Honolulu, HI

Cost of Living: 6% above US average

Median house price: $705,400

3. San Francisco, CA

Cost of Living: 7% above US average

Median house price: $1,195,700

4. Brooklyn, NY

Cost of Living: 5% above US average

Median house price: $759,400

5. Washington, DC

Cost of Living: 7% above US average

Median house price: $617,900

6. Seattle, WA

Cost of Living: 7% above US average

Median house price: $758,200

7. Oakland, CA

Cost of Living: 9% above US average

Median house price: $717,700

8. Arlington, VA

Cost of Living: 5% above US average

Median house price: $707,000

9. Orange County, CA

Cost of Living: 2% above US average

Median house price: $580,100

10. Boston, MA

Cost of Living: 8% above US average

Median house price: $575,200

The Top 10 LCOL Cities

The high cost of living in many big cities sometimes forces people to relocate to smaller cities and towns that are more lenient in terms of cost of living. Moreover, most people would rather work from a quieter, peaceful location in an affordable city somewhere and work remotely from home.

Some of these LCOL cities, according to Yahoo Finance, include:

1. McAllen, TX

Cost of Living: 24% below US average

Median house price: $216,875

2. Knoxville, TN

Cost of Living: 18% below US average

Median house price: $249,146

3. Wichita Fall, TX

Cost of Living: 16% below US average

Median house price: $249,146

4. Augusta, GA

Cost of Living: 13% below US average

Median house price: $236,307

5. Temple, TX

Cost of Living: 13% below US average

Median house price: $246,717

6. Florence, AL

Cost of Living: 12% below US average

Median house price: $239,777

7. Fort Wayne, IN

Cost of Living: 12% below US average

Median house price: $242,206

8. Springfield, MO

Cost of Living: 12% below US average

Median house price: $243,247

9. Tulsa, OK

Cost of Living: 8% below US average

Median house price: $225,203

10. Petersburg, FL

Cost of Living: 7% below US average

Median house price: $245,358

HCOL vs. LCOL Areas The Pros And Cons Of Each

Before finalizing your moving plans, it is wise to take a moment and weigh some of the benefits and drawbacks of living in HCOL and LCOL areas.


Living in HCOL areas is typically associated with:

  • Higher Paying Jobs

To correspond with the increased living expenses in HCOL areas, incomes tend to be higher for all job calibers. So if you are fortunate to find a job that pays you more than enough to cover all your expenses and still have money left over to put into savings, then an HCOL area is worth moving to. The more money you end up saving, the faster you can build an emergency fund for yourself if you lose your job and need to move again.

  • Quality education

Better schools can be found in HCOL cities, where the job market places a higher premium on skilled workers. In addition, most of the skilled workers in HCOL cities are college graduates and tend to give their children a superior life. That includes sending them to the best schools in relation to other areas.

  • More engagement

HCOL areas generally abound in opportunities. They are a beehive of steady career opportunities, entertainment, sporting, cultural, and historical activities that will keep your time mostly occupied with productive things to do. What’s more, all these opportunities are high-end, almost promising a better quality of life. From the finest restaurants and health care providers and facilities to the most seamless transportation services, you are bound to enjoy your day-to-day living.

  • Better job market

The jobs in HCOL areas are not only high paying, but they are also plentiful, and the job market itself is relatively solid. Most top-tier companies like to set up shop here to attract a large pool of skilled workforce.


On the flip side, life in HCOL areas may be undesirable because of:

  • Potential Lack of Jobs

With a higher population in larger HCOL cities, competition for well-paying jobs may be stiff. If you miss the usually high threshold set by most employers, you are more likely to be locked out of decent employment to offset your galloping living expenses.

  • Potential Lack of Amenities

An overcrowded HCOL area significantly affects your access to necessary amenities such as hospitals, libraries, public transportation, cinemas, utilities, and even clean air. If the high population does not hinder you from these amenities, the price definitely will.

  • High Costs

Everything in HCOL areas comes at a hefty cost, with housing topping the charts. Even with higher pay, you might still find it hard to save enough.

  • Not Always Offset by Income

High-paying jobs in HCOL areas are not always readily available to everyone. Without a high income to cover the high cost of living and not being able to optimize some of the biggest household expenses such as housing, transportation, and food you will strain more and even reduce your savings.

Pros Of LCOL

If your personal preferences drive you to an LCOL area, here is what you should expect to find:

  • Low Costs

Living expenses, including housing, are extremely low in LCOL areas. That means you can afford more for less. This gives you a better window to save more and build your emergency fund while maintaining your peace of mind.

  • Potential to Maintain Earning Power

Moving from an HCOL city to an LCOL area gives you the ability to maintain your earning power by taking advantage of the low cost of living. If you work remotely from an LCOL area and maintain a high salary, your net savings will increase, and arriving at financial independence will take a shorter time.

  • Can Find Hidden Gems

An LCOL area, while undesirable to live in, can turn out to be your hidden gem if you find one that fits all your needs and lifestyle. A hidden gem could take the form of anything from proximity to your extended family or an LCOL area that’s perfect for retreating from a busy routine.

  • Lower taxes

From property taxes to income taxes, many LCOL cities tend to have lower taxes compared to bigger cities. This significantly reduces the cost of living when considering relocating here. However, it would help to compare the tax rates with your current location’s taxes.

  • Slower life pace

Living in an LCOL area automatically translates to a slower-paced life hardly found in larger cities. However, with a slow-moving lifestyle, you can find more breathing space just to step back and take a broader perspective of your life.

Cons Of LCOL

No matter how cost-friendly LCOL areas might be, they still carry certain drawbacks, including:

  • Lack of high paying jobs

LCOL areas come with more income limitations compared to bigger cities. This is because there aren’t as many jobs, especially high-paying jobs, which might hinder your earning potential and ability to save for more significant financial moves. In other words, reaching your financial goals in an LCOL area might take a lot longer.

  • Fewer opportunities

From fewer restaurants to limited access to essential amenities, life in LCOL areas can quickly become boring and monotonous. As a result, you may find yourself running out of options of things to do or new places to hang out. Besides, fewer things are usually happening in LCOL areas like sports, entertainment, or tourism. Therefore, traveling to the airport alone will take you quite some time.

How To Choose HCOL vs. LCOL

You do not want to make this delicate decision arbitrarily. Several considerations must go into your decision-making, including financial concerns and lifestyle considerations.

From a financial standpoint, you must factor your net savings into your decision. That is, whether you relocate to an HCOL or LCOL, how much will you be saving monthly or yearly? You can get this figure by deducting all your expenses from your income.

Calculating your net savings accounts for both the cost of living and your earning power proves to be a more comprehensive analysis. In a way, that tells you there is no financial significance in moving to an LCOL if your income simultaneously drops.

In addition to that, you must analyze how much your decision will meddle with or benefit your lifestyle. That essentially means if by moving to an LCOL area, you are saving $20,000, but you are sacrificing a fancier and creative life in an HCOL area, you need to pause first. Ask yourself whether the $20,000 is worth all the HCOL area amenities and opportunities you have given up.

Your lifestyle will suffer a huge blow, for instance, if you sacrifice a core habit of yours like routinely accessing the ocean in exchange for some extra cash in net savings. Similarly, staying away from your precious family and friends all year long for the sake of netting more might affect your lifelong relationships.

The point is, it all boils down to the personal trade-offs you are willing to make for the sake of moving to your desired LCOL city. That said, combining both the financial implications and lifestyle interference can help you decide better.

What Is The Reality Of Moving From A HCOL To An LCOL City In Terms Of Savings?

The whole essence of relocating from a high cost of living area to a low cost of living area is to save more for most people. But is that always the case? Do people end up saving more in the long run?

The truth is, the reality can vary based on the timing of your decision as well as the decision you end up making, whether to stay or leave. If you stay, be prepared to live extremely frugally to save as much as possible.

If you leave, you can’t run away from the budget comparison of the two locations. You might be celebrating a promotion and a higher-paying job in a different city from your current one but wait until you start reading the fine print of the financial implication.

For example, moving from an HCOL area like Boston to an LCOL area like Rochester, NY, for a 10% salary increment, say from $110,000 to $120,000 might not be an intelligent decision. Why? Not only is the increment less significant, but it also blends indifferently with the cost of living varies in the two locations.

Using a cost of living calculator, we can predict that a person earning $120,000 in Boston is almost equivalent to a person earning $180,000 in Rochester. That means if they pay a monthly rent of $2,000 in Boston, moving to Rochester, they will be paying about $1,200 to $1,500 a month. Every year, that amounts to a net savings of about $6,000 to $10,000. 

The sad fact is that the person will only be saving in one area. What about the rest of the areas? Of course, food savings are insignificant. If you consider what other household spending expenses stay the same such as the car insurance, cell phone plan, internet plan, and other subscriptions, your net savings are almost insignificant.

Besides, you would have to significantly reduce your spending on entertainment or weekend activities in a bid to save more. But, would the sacrifice of those lifestyle choices be worth it?

Therefore, when analyzing your net savings, it is essential to look at all the aspects of your expenditures and see how much each would contribute to your net savings.

How Do Low-To Middle-Income People Survive In HCOL Areas In The US?

Most such calibers of people survive on the principle of frugal living. A frugal living will open a broader window to save and invest in an effort to boost your earning power. Essentially, frugal living revolves around wise spending and not necessarily stingy living.

First off, you must learn how to break down your expenses into fixed, variable, investment, and recreational costs. 

Your fixed costs typically entail expenses like insurance payments, rent or mortgage, and car payments. They are constant each month and have to be paid. On the other hand, variable costs cover your monthly necessities and are likely to fluctuate based on the need at hand. They include grocery, power, water, and gas costs.

Investment and recreational costs are not mandatory and depend on your personal preferences.

Spending frugally will primarily affect your variable costs because you have no control over your fixed costs. Based on this understanding, most low and middle-income people survive in HCOL areas by:

  • Sparing enough money to cover fixed expenses
  • Investing consistently
  • Saving into their emergency fund for future use like paying off student loans

In other words, developing a frugal mindset means you:

  • Never buy anything unless you need it
  • Avoid getting caught up in lifestyle inflation
  • Always get the best value for your money
  • Become a master at DIY fixes at home
  • Stay away from subscriptions as much as possible
  • Consider a cheaper rental
  • Stick to that old car

How Much Of A Cost Of Living Adjustment Is Reasonable For HCOL vs. MCOL vs. LCOL?

A cost of living adjustment (COLA) simply represents a rise in social security benefits to counter inflation as you move to a new area. For the year 2022, the COLA has been set at 5.9% compared to 1.3% in 2021. That means if your 2021 social security benefits amounted to $20,000, in 2022, you should expect to receive $20,590.

This will then help cushion you from the rising cost of goods and services in the different regions. In addition, because COLA depends on the consumer price index (CPI) of the various cities, you can determine a reasonable COLA for different HCOL, MCOL, and LCOL areas by mapping out your annual expenses for each of the towns under consideration using local prices.

Then, compare these expenses with the expected increase in your earnings based on the set COLA for the year.

How Do You Determine If You’re In A HCOL, LCOL, Or MCOL City?

There are different ways to calculate the cost of living of various cities but the US Bureau of Labor Statistics uses the Consumer Price Index (CPI). The CPI is what qualifies a city as HCOL, MCOL, or LCOL by telling how much of a cost of living adjustment one needs to make when relocating to a different location.

The CPI shows the weighted average of different consumer goods and services such as food, energy, clothing, medical care, housing, and transportation. These prices vary monthly from state to state and from city to city, and that’s what determines the cost of living in those areas.

You can determine your city’s cost of living by running a Google search of ‘cost of living index + city.’ The average cost of living index in the US is set at 100. Check how your city’s index compares to that under different categories. You can consider anything above 100 as a high cost of living and anything below as a low cost of living.

Remote Work: Earn Large And Live Small

If you can work remotely for an HCOL company, you should consider moving to an LCOL city. Such large city companies typically pay correspondingly large paychecks, a privilege you’d hardly enjoy from LCOL employers.

This becomes a win-win for you. You are maintaining a high earning power while at the same time minimizing your living expenses.

Frequently Asked Questions:

What Cities Are MCOL?

In comparison with HCOL cities in the 2021 cost of living index, some of the cities with a medium-cost of living according to the GoingConcern include:

  • Atlanta
  • Chicago
  • Dallas
  • Denver
  • Portland
  • Miami
  • Philadelphia
  • Phoenix

However, the MCOL cities may be more according to the variables you prioritize in your cost of living index analysis.

Is Charlotte A HCOL?

Charlotte has a cost of living of 98.9%, only 1.1% less expensive than the US average COL. So that makes the city an MCOL.

Is Atlanta A HCOL Or LCOL?

Atlanta leans more toward the MCOL and HCOL side than the LCOL side, with a current COL of 107.5%, slightly higher than the US average. That figure rose from 76.89% in 2021.

Is Orlando A HCOL?

The current cost of living in Orlando is 104.1% and might be considered a medium-to-high cost of living area. However, in mid-2021, that index stood at 67.03%, denoting a sharp rise.

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