A lot of people say that they choose to move to Minneapolis because it’s a nice sized city with an affordable cost of living. Most of the people that I work with are moving to Minnesota from out of state and are often coming from more expensive parts of the country. But not everyone is! Today I want to take a look at the cost of living in the Twin Cities and how it compares to some other areas that I see people coming from as well as other cities in the Midwest.
How is Cost of Living determined?
“Cost of living” is a term used by economists and it’s actually an INDEX, so every place in the US is compared to the national average, which is considered 100%. If a city has a cost of living lower than the national average, it will be expressed as some percentage less than 100 and a higher than the national average cost of living will be a number that expresses HOW MUCH higher than the national average it is as in 100+ x%.
Cost of living in Minneapolis
The magic number for Minneapolis is close to 103% of the national average. This index is broken down into segments like housing, transportation, food, and entertainment and then the number given is the one that consolidates all of these.
Having a cost of living index of 103% of the national average is really a comforting number if you’re looking for an affordable city! I’m going to give you the current COL #’s for other cities in the US as well as cities specifically in the Midwest so you can see how we stack up. Remember that this is looking at ALL areas of the country and typically urban areas are much more expensive.
Housing is the most expensive part of nearly everyone’s budget. Minneapolis is at 117% of the national average. If you’ve ever seen one of my market update videos you’ll understand what drives that, but its a combination of low housing supply, low interest rates and a big bubble of first time buyers that are hitting the market right now.
Here in Minneapolis we are right near the national average for food pricing, sitting at 101% of the national average.
For transportation costs, Minneapolis sits higher than the national average at 108%. This includes an average of cost of gasoline, car insurance and maintenance expenses, and mass transit fare for the area. I was a little surprised by this one because I just returned from a trip to NE Ohio and gas prices were consistently higher than what I have paid in MN everywhere east of us. According to AAA, auto fuel prices in MN are LOWER than the national average.
Healthcare is at a wonderful 75% of the national average! The past couple of years have shown us all how important this piece is for everyone, and not only are our costs lower here, but we also have access to some of the best healthcare in the world with the Mayo Clinic being located within easy driving distance of Minneapolis and many high quality hospital systems within the twin cities area itself.
Miscellaneous costs come in at 108% these include those goods and services not included in the other cost of living categories, including clothing, restaurants, repairs, entertainment, and other services.
Compared to other large metros across the US
If we compare Minneapolis to large metro areas like New York, San Diego, or Chicago we see that, no surprise, it’s more affordable here.
Housing in NYC is 441% HIGHER than Minneapolis, and cost of living there is 141% higher, San Diego is 35% higher overall with housing 110% higher, and Chicago – where I came from – is 15% higher overall but housing in particular is 54% higher than Minneapolis.
Housing is the biggest driver of whether an area is affordable or not – we all need a roof over our heads!
Coming from Texas
I see a lot of people coming to Minneapolis from Texas, most commonly the Austin area, but definitely from all over and Austin is actually coming in at 4% less expensive than Minneapolis. Rents are higher in Austin, but median price to purchase a home is slightly lower there.
Other Midwestern Cities
Looking closer to home, at smaller cities in the Midwest, Madison WI is actually MORE expensive to live in than Minneapolis – housing is 8% higher, food 3% more expensive and healthcare a whopping 19% more expensive.
Minnesotans will definitely question why anyone would pay MORE to live in Wisconsin. I mean. It just doesn’t make sense.
Milwaukee WI (if you love your Pabst!) is the bargain area with overall costs being 2% less, but still getting you where it hurts if you need to go to the dr.
Bargain Cities of the Midwest
Saint Louis has a 17% lower cost of living index than Minneapolis. Everything from housing, transportation, entertainment is lower – they do come in slightly higher on food and Des Moines Iowa is also a bargain, coming in with a lower cost of living on every metric and the net saving is 24%!
If you have questions about living in or moving to Minneapolis or the twin cities reach out! I’m happy to help! If you’re curious about different neighborhoods or suburbs, check out my playlist on my YouTube channel where I talk about exactly that!