What is Cost of Living?
Simply put, the cost of living is the amount of money one needs in order to sustain a particular standard of living. It is a useful measurement, especially to those who are considering moving to another city, state, or country, as it allows you to compare the cost of basic expenses between locations and over time. It is important to keep in mind that as an index, the cost of living indicated for your current location might be higher or lower than your actual expenses. But nonetheless, these cost of living estimates are useful tools for comparison.
When agencies calculate the cost of living in a certain location, they start by finding prices for a representative sample of goods and services. Then, they take into account how each of these items would affect a person’s budget within a year. Essentially, the price for each item is weighted according to its importance to a typical family’s budget. For example, while the price of a gallon of milk costs less than that of a pair of jeans, our frequent consumption of milk would consequently lead to a total annual cost that is higher than that of a pair of jeans.
The cost of living index indicates the percentage difference in the cost of living between the primary location, which is your current location, and the other location/s that you are comparing against it. As this is an index, the cost of living in your present location is always 100, and the values for the other location/s would be higher or lower, depending on whether the expenses there are more expensive or cheaper.
2019 Cost of Living Index in Houston, TX
If you are considering moving to Houston, TX, knowledge of the cost of living index in this city would help you assess how the relocation would affect your budget. The table below compares the cost of living in Houston with the rest of the state of Texas and the United States. In this table, the primary location is the United States, so all of the values under this is set at 100, and the values under Houston and Texas would vary, based on the actual values of the basic expenses in these locations.
From the table above, you can see that the overall cost of living index in Houston, TX is 105 – just 3 points lower than the state’s index and 5 points higher than that of the nation. Looking at each index, you’ll see that transportation costs are significantly higher in this city compared to the state and rest of the country, at 141. Good news to homebuyers, the housing index in Houston is relatively low at 94. The median home cost in this city is $175,700, while the state level is $184,900 and the national level is $216,200.
Cost of Goods and Services in Houston, TX
A regular haircut in Houston costs around $18.56, 15.4% higher than the national average of $16.09, while a treatment at a beauty salon would cost you $49.70, 33.1% higher than the national average of $37.33. A ticket to the movies would be $11.17, 8.7% higher than the national average of $10.28. If you would like to enroll at a fitness club, the average monthly fee for gym membership here is $36.43. For basic grooming items, toothpaste here would cost $2.24, 8.3% lower than the national average of $2.45; a bottle of shampoo is also cheaper by 21.4% at $0.79, while the national average is $1.00.
Houston, TX Housing Costs
Compared to other cities in Texas, like Dallas and Austin, Houston’s median home price is very low, at $175,700. The median price for houses in Dallas is $187,700, and $346,500 for Austin homes. For those who prefer to rent, the average monthly rent in Houston is $1,341.52 for a 1-bedroom apartment and $2,542.16 for a 3-bedroom apartment in the city center; $883.06 for a 1-bedroom apartment and $1,637.62 for a 3-bedroom apartment outside of the center.
Utility Costs in Houston, TX
A basic utilities package for a 915 square foot apartment in Houston, Texas costs around $157.07 per month, $0.16 below the national average. This includes electricity, heating, water and garbage. If you want to add internet to your monthly utility bill, you will be paying an additional $44.09, which is about 8% below the national average.
Cost of Food and Groceries in Houston, TX
Having a meal at an inexpensive restaurant in Houston would cost around $15, while a three-course meal for two people at a mid-range restaurant would be $65. If you are ordering a combo meal at a fast food restaurant, the average price would be $7.29. Grocery items are relatively cheaper in Houston compared to the state and national averages, at an index of 92.9. For kitchen staples, a liter of milk is priced at $0.78; a loaf of fresh white bread, $2.21; a dozen eggs, $2.16; a kilo of skinless chicken breast fillet, $7.34; a kilo of beef round, $10.10; and a kilo of apples, $2.94.
Transportation Costs in Houston, TX
From the cost of living index table above, you’ll see that Houston has a very high transportation cost index, at 141. A 30-day unlimited pass on Houston’s METRO public transportation system costs $90. Texas residents also have to pay 10th-highest car insurance rates in the country. The car insurance rates in Harris County, Houston’s home, are 11% above the Texas average. To counter the high transportation costs, car owners in Houston go into “slugging”, an informal ride-sharing among strangers. On weekdays, at Houston’s park-and-ride hubs, commuters line up and accept rides from strangers. The drivers benefit from using the High-Occupancy Vehicle (HOV) lane and beat traffic, while the passengers get a free ride, which is a win-win situation for everybody.
The maximum surtax for Texas is 8.25%, and the sales tax in the state 6.25%. Combining state, county, and city rates, Houston residents pay a sales tax of 8.25%. On the other hand, there is no income tax in Texas. However, the average effective property tax rate for Harris County, Texas is 2.29%, one of the highest in the nation. While, it is common to have higher property taxes in places that do not charge an income tax, the property taxes paid by Houston residents are double the national average as it incorporates the county tax, the Houston City rate, and the Houston School District rate for that total average rate of around 2.3%.
Moving to Houston, TX
If you are planning to move to Houston, TX, we highly recommend that you compare the cost of living in your current city with that of Houston, as this would help you assess how your relocation would affect your budget. And, if you are considering buying a new home in Houston, I can help. Please feel free to give me a call at (832) 244-0029 or email me at [email protected].