One of my hobbies is watching college football. I attended the Hawaii-Arizona game over the weekend in Tucson, and I was surprised that restaurant food in Scottsdale (near Talking Stick Resort), Mexican food in Tucson and Gilbert was about $20 for me to eat at take out places. That is pretty close to San Francisco prices, where I live.
Hotels were cheap, although that is seasonal.
I’m someone who’s been to Phoenix around 30 times between 2016 - 2020.
I have a theory that inflation is affecting so called cheaper places more than already expensive places. Agree?
People often talk about moving to LCOL places or compare to HCOL on WSO, but is that really based on our historical generalizations and that there are actually HCOL everywhere (ie part of town you’d want to live in are expensive relative to the rest of the city)?
Your observation aligns with some of the insights shared on WSO. Inflation and cost increases can indeed hit "cheaper" cities disproportionately, especially in areas experiencing rapid growth or high demand. Here's why this might be happening:
Rapid Growth in LCOL Cities: Many "cheaper" cities, particularly in the Sunbelt (e.g., Phoenix, Austin, Nashville), are seeing significant population and job growth. This influx drives up demand for housing, dining, and other services, leading to price increases. As noted in WSO threads, cities like Phoenix and Austin are attractive due to their lower state income taxes, job opportunities, and relative affordability, but this demand is pushing costs higher.
Inflationary Pressures on Hard Costs: In real estate development, hard costs (materials, labor, etc.) are rising at over 5% annually in many markets, as highlighted in WSO discussions. This impacts everything from housing to commercial spaces, which trickles down to consumer prices in these cities.
Localized HCOL Pockets: Even within LCOL cities, desirable neighborhoods or areas (e.g., Scottsdale in Phoenix) can have costs that rival HCOL cities. As you mentioned, the parts of town you'd want to live in or dine at often carry a premium, making them feel less "cheap" than the citywide average.
Lifestyle Inflation: As people move to LCOL cities with higher disposable incomes, businesses may cater to this demographic by offering higher-end options, driving up prices. This is similar to what happens in HCOL cities, where areas with more affluent residents see higher costs for dining, groceries, and services.
Seasonal and Regional Variations: As you noted with hotel prices, some cost differences may be seasonal or specific to certain regions. However, the general trend of rising costs in traditionally LCOL cities is becoming more apparent.
In summary, while LCOL cities still offer savings compared to HCOL cities like San Francisco or NYC, the gap is narrowing in certain areas due to inflation, growth, and localized demand. This reinforces the idea that moving to an LCOL city isn't always the cost-saving solution it once was, especially if you're drawn to the more desirable parts of those cities.
Sources: Life in General Will Cost More Than You Think, Life in General Will Cost More Than You Think, Let's Talk Saving, Why would anyone willingly choose to live in NYC / SF / CHI?, Would you move to a 'tier-2' city?
Not always. From my understanding, Philadelphia is still affordable vs. other major Northeastern cities. Looked up apartments awhile ago for a potential job / move back to Philly (lived there for 4 years in the early 2010s) and the prices aren't that much higher than it was vs. now. $4-7K can get you a super nice apartment in Philly's Center City vs. an average apartment in Manhattan.
Inflation is the same as the gold rush - it starts where new money flows first but then ripples from there.
Or it's simply that HCOL areas have high costs of living, and local businesses priced accordingly. LCOL areas didn't have to. So it wasn't inflation driving those higher prices as much as long standing trends around cost of labor and goods.
Now that things are more expensive, and maybe arguably now that all the cheap labor which propped up low prices (especially in Southwestern areas) is being deported or isn't working because of fear of being deported, prices are catching up.
I think it's because of remote work. It's not as prevalent as it was at the height of COVID of course, but there are still plenty of well-paid white collar jobs out there open to remote workers. Not to mention the people who decided to move to LCOL cities and buy houses during COVID, and are now locked in to sub-3% interest rates and can't/won't move back to HCOL areas.
tl;dr thanks to remote work entire LCOL cities are getting gentrified, not just LCOL neighborhoods in HCOL cities
I've seen LCOL cities go to MCOL and HCOL go to Very HCOL. Everything seems expensive these days in the USA.
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