How af­ford­able is liv­ing in South Florida? Not bad

South Florida Sun-Sentinel (Sunday) - - Front Page - By Ron Hurt­ibise | Staff writer

How af­ford­able is life in Palm Beach, Broward and Mi­ami-Dade coun­ties com­pared with the rest of Florida?

You might be sur­prised to find out where fi­nan­cial plan­ning site SmartAs­set.com ranks us on its af­ford­abil­ity scale.

We think of South Florida as a high-cost re­gion be­cause of the at­ten­tion given to pricey man­sions, ritzy restau­rants, bou­tique pocket dogs and lux­ury au­to­mo­biles. But ac­cord­ing to its new study, pur­chas­ing power in each of the three coun­ties com­pared with the state’s 64 other coun­ties is more fa­vor­able than we might as­sume.

In Florida, coun­ties iden­ti­fied as hav­ing the strong­est pur­chas­ing power tended to be smaller coun­ties with wa­ter­front pro­files, in­clud­ing St. Johns, Nas­sau, Santa Rosa, Col­lier and Bre­vard —

all of which were in the top 10.

Palm Beach County was ranked 15th, Broward County ranked 23rd and Mi­ami-Dade County was 41st in pur­chas­ing power.

Yes, rents and home prices are higher here, and South Florida is the na­tion’s 12th most-ex­pen­sive area for home prices, as re­cently pointed out by HSH.com, which sells mort­gage data to the home-sell­ing in­dus­try. But that’s bal­anced by lower prices gen­er­ated by in­creased com­pe­ti­tion from more busi­nesses such as car deal­er­ships, gro­cery stores and home health-care providers, ex­perts say.

The per­sonal fi­nance web­site es­ti­mated how much money it costs to live in each U.S. county — based on costs for hous­ing, food and trans­porta­tion — and com­pared that with me­dian in­comes for those coun­ties to pro­duce a pur­chas­ing power in­dex.

Palm Beach County got the No. 15 spot on the list largely be­cause its me­dian in­come,

$55,277, is com­par­a­tively high com­pared with its es­ti­mated

$38,400 an­nual cost of liv­ing. Even though the county has the sec­ond-high­est cost of liv­ing, its me­dian in­come is ninth­high­est, re­sult­ing in a dif­fer­ence be­tween me­dian in­come and cost of liv­ing of $16,877.

“Coun­ties that rank higher in our study have an in­come that more fa­vor­ably cov­ers that cost of liv­ing,” SmartAs­set se­nior ed­i­tor Ross Urken said. “Coun­ties where the in­verse is true will rank lower.”

In Florida, coun­ties with strong­est pur­chas­ing power tend to have a lot of re­tirees who buy homes with in­come earned out­side the county and can take ad­van­tage of lower over­all prices for goods and ser­vices, said Wil­liam Stronge, econ­o­mist and pro­fes­sor emer­i­tus at Florida At­lantic Uni­ver­sity in Boca Ra­ton.

Broward has a me­dian in­come of $52,954 (12th-high­est) and es­ti­mated cost of liv­ing of

$37,880 (fifth-high­est), while Mi­ami-Dade was 41st be­cause of its more nar­row spread be­tween me­dian in­come,

$44,224, and es­ti­mated cost of liv­ing, $35,087.

Costs are con­trolled in ur­ban coun­ties such as Palm Beach, Broward and Mi­ami-Dade be­cause of what Stronge called “ag­glom­er­a­tion economies” — those are ben­e­fits de­rived be­cause of peo­ple and com­pa­nies lo­cat­ing near each other.

Ex­am­ples in­clude home health-care work­ers who can charge less for their ser­vices be­cause they have to com­mute a short dis­tance to their jobs, com­pared with the same work­ers in ru­ral ar­eas who might have to drive 50 miles, he said. Ship­ping com­pa­nies and restau­rants that open in in­dus­trial parks also ben­e­fit the parks’ ten­ants by trim­ming com­mute costs to ac­cess those ser­vices, he said.

Be­cause they are clus­tered, “then peo­ple meet and dis­cover the lat­est tech­niques for man­ag­ing and do­ing jobs and that im­proves ef­fi­ciency,” he said. “That’s called an ex­ter­nal econ­omy of scale as op­posed to an in­ter­nal econ­omy of scale, such as Henry Ford de­vel­op­ing more ef­fi­cient ways to run his assem­bly line. It’s when you get ben­e­fits from out­side your firm.”

Sim­i­larly, ur­ban ar­eas draw more busi­nesses to com­pete with one an­other, keep­ing prices lower for con­sumers, Stronge said.

Be­cause su­per­mar­kets are both com­pet­ing and serv­ing larger cus­tomer bases, they can com­mand lower prices from sup­pli­ers and pass the sav­ings along.

In SmartAs­set’s rank­ings, coun­ties with the weak­est pur­chas­ing power tend to have small populations, be in­land and de­pen­dent on low-pay­ing agri­cul­ture jobs, in­clud­ing the bot­tom five: 63) Jack­son; 64) Madi­son; 65) Dixie; 66) Glades; and 67) Put­nam.

Na­tion­wide, coun­ties with the low­est pur­chas­ing power rat­ings tended to be con­cen­trated in the Deep South — Ken­tucky, Ge­or­gia, Alabama, Mis­sis­sippi, Louisiana, Arkansas and Mis­souri — as well as New Mex­ico, Ore­gon, Idaho and Mon­tana.

States with high con­cen­tra­tions of coun­ties with high pur­chas­ing power in­clude Texas, Wy­oming, Ne­vada, Utah, North and South Dakota, New Jer­sey, Con­necti­cut, Mas­sachusetts and New Hamp­shire.

Large-pop­u­la­tion states, in­clud­ing Florida, New York, Cal­i­for­nia, Illi­nois, In­di­ana, Ohio and Wis­con­sin, have roughly even dis­tri­bu­tions of coun­ties with high and low pur­chas­ing power rates.

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