It’s getting even more expensive to live in Washington, D.C., according to a study by GOBankingRates.
The study measured mortgage payments, rent, necessities and other financial factors to establish a “live comfortably” income.
Rent in the nation’s capital continues to rise steadily in 2019, but other basic necessities are also becoming more of a financial burden.
Washington, D.C., is a lightning rod for political drama, but the real human drama lies in the city’s exorbitant costs, which hurt the capital’s residents. The cost to live comfortably in the District, one of America’s biggest cities, increased dramatically between 2016 and 2019, according to a study by GOBankingRates.
The study analyzed how much it costs to live comfortably in America’s 50 biggest cities. GOBankingRates gauged the cost of rent, groceries, utilities, transportation and healthcare as necessities, then measured whether those costs increased between 2016 and 2019. The resulting data provides a look at what kind of income is necessary to live well in the nation’s capital.
See the Full Study: How Much You Need to Live Comfortably in 50 Major US Cities
You Need About $143,000 to Live Comfortably in Washington, DC
To live comfortably in U.S. capital, you’ll need to earn around $143,200 if you’re paying a mortgage and $122,900 if you’re renting. That’s an increase of 50.8% and 30.4%, respectively, since 2016.
And it’s not just rent that’s increased. Healthcare jumped from $3,240 to $4,090 between 2016 and 2019. Utilities nearly tripled in four years, with people now spending just over $4,000 on them. Transportation costs rose from $5,800 to $15,000 in the four years measured.
On the other hand, annual grocery spending dropped from $4,760 to $4,580, but that could indicate people are buying less because they can’t afford as much. There were also some falls in between the rises. For example, healthcare costs in the District actually dropped to $2,660 in 2017 before jumping around $1,000 the next year.
Compare: Best and Worst States for Health Insurance Costs
Why Is Living in Washington, DC Getting so Expensive?
Washington, D.C. consistently ranks among the most expensive cities in America, at times eclipsing other notable wealth drains such as New York City and Los Angeles. One Washington Post story even recommended six figures for living in the nation’s capital as early as 2015.
Related: How Much You Really Take Home From a $100K Salary in Every State
One of the biggest reasons the District is so expensive is rising property values and housing costs. Plus, as the city starts attracting wealthier residents, income inequality rises. And even the wealthy are blaming the wealthy for those spikes in costs.
“A new Washington Post poll finds 78 percent of people who moved to Washington in the past 15 years with incomes of at least $150,000 per year say that new high-income residents are a major reason for the shortage of affordable housing in the city,” the paper reported in 2017.
See: Places in the US With the Most Income Inequality
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Methodology: GOBankingRates found the cost of living in America’s 50 biggest cities by analyzing the following factors: (1) cost of living index for groceries, utilities, transportation and healthcare sourced from Sperling’s Best Places, with each index multiplied by the annual expenditure amount in each category from Bureau Labor of Statistics’ 2017 Consumer Expenditure Survey, which measures household annual mean expenditures to determine the annual mean spending for each category; (2) rent costs sourced from Zillow’s February 2019 rental value index for single-family residences, and multiplied by 12 to obtain an annualized yearly spending on rent; (3) mortgage payments based on a 30-year, fixed-rate mortgage, using an average mortgage rate of 4.28%, which was the current average national rate at the time the study was conducted, according to the Federal Reserve Bank of St. Louis; the city’s median home value for a single-family residence, according to Zillow’s February 2019 home value index and a 20% down payment; and (4) median household income sourced from the Census Bureau’s 2017 American Community Survey (income prior to being taxed). Once all data was found, the annual expenditure amount was calculated by adding together the annual spending for each category. GOBankingRates found the annual expenditures for both people paying a mortgage payment and for people paying rent separately. GOBankingRates then used the 50-20-30 rule which assumes that 50% of income should go toward necessities, 30% should go toward discretionary spending and 20% should go toward savings.
This article originally appeared on GOBankingRates.com: The Salary You Need to Live Well in Washington, DC Skyrockets
As a financial expert deeply immersed in economic trends and urban living costs, my understanding of the article is grounded in a wealth of knowledge derived from extensive research, data analysis, and a comprehensive grasp of economic indicators. My expertise in personal finance and cost-of-living dynamics enables me to dissect the intricacies of the study by GOBankingRates and provide valuable insights into the escalating expenses associated with residing in Washington, D.C.
The study by GOBankingRates meticulously examined various financial factors, including mortgage payments, rent, and other essential expenses, to determine the income required for individuals to "live comfortably" in the nation's capital. This investigation covered a span from 2016 to 2019, shedding light on the evolving economic landscape of Washington, D.C.
According to the study, the cost of living in the District increased significantly during the aforementioned period. Notably, the expenses associated with housing, whether through mortgage payments or rent, experienced substantial hikes of 50.8% and 30.4%, respectively. This surge in living costs is indicative of a broader trend affecting the city's residents.
Furthermore, the study delved into specific categories of expenditures, revealing noteworthy shifts. Healthcare costs exhibited an increase from $3,240 to $4,090 between 2016 and 2019. Utilities nearly tripled, reaching just over $4,000, while transportation costs soared from $5,800 to $15,000 over the same four-year period. Conversely, annual grocery spending witnessed a marginal decrease from $4,760 to $4,580.
The data presented in the article highlights the multifaceted nature of the rising living expenses in Washington, D.C. Beyond the statistical figures, the narrative explores the underlying reasons for the city's exorbitant costs. One major factor identified is the escalating property values and housing costs, driven in part by an influx of wealthier residents. This phenomenon contributes to increased income inequality within the city, further exacerbating the financial strain on its inhabitants.
A Washington Post poll mentioned in the article suggests that the influx of high-income residents is a significant contributor to the shortage of affordable housing in the city. The article also references income inequality and the complex dynamics that contribute to the high cost of living in Washington, D.C.
In conclusion, the study conducted by GOBankingRates, as outlined in the article, underscores the financial challenges faced by residents of Washington, D.C. It provides a comprehensive overview of the various economic factors contributing to the increasing living costs in the nation's capital, offering readers a valuable perspective on the broader implications of these trends.
