The 10 Cheapest Cities in America

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Cheap citiesBy Jill Krasny

Southern metros ruled the Community of Economic Research's top 10 list of cheapest cities this quarter, with Harlingen, Texas being the cheapest of them all.

"It's an area where there's plenty of room," says Dean Frutiger, the project manager and economist who worked on the Cost of Living Index. "If your housing is more expensive, that's going to affect everything."

No wonder the little city scored so well on COLI's survey (81.6 on an index of 100). In Harlingen, a two-bedroom, two-bathroom apartment only costs $642 a month. And the houses there are just as cheap.

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It's hard to answer what makes an area more expensive than another, but "it all comes down to supply and demand," says Frutiger. Even in the downturn, a city like DC with a "built-in infrastructure of demand" didn't feel the pinch. In fact, higher values for D.C. property and homes have driven the metro's prices higher.

That said, it's important to note that "each item on the list is a surrogate for a larger category," says Frutiger, who's analyzed this data for the past five years. "There are so many things people can go out and buy. There's a lot of stuff that we're not covering."

One example is property tax, which can really drive up the cost of homeownership. Though that's not to say housing is only the factor at play. Location matters, too.

"In many places like Honolulu and Alaska, the entire basket price [of consumer goods] will drive whether they make the [most expensive cities] list. There are enormous shipping costs. And their utility costs are high," says Frutiger.

Using COLI's data, we've picked out some prices that show how cheap it is to live (mostly) south of the Mason Dixon line.

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The 10 Cheapest Cities In America
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The 10 Cheapest Cities in America

Price of T-bone steak: $8.98

Cost of orange juice: $2.98

Average monthly utilities: $146.68

Median rental cost: $798

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $223,371


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Photo: Flickr / Sean Loyless

Price of T-bone steak: $9.57

Cost of orange juice: $2.79

Average monthly utilities: $155.62

Median rental cost: $610

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $217,376

Price of T-bone steak: $8.98

Cost of orange juice: $3.36

Average monthly utilities: $143.15

Median rental cost: $640

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $240,000

"When Memphis showed up in the list, I was really surprised," says Frutiger. "Memphis is a major city." 

Price of T-bone steak: $8.82

Cost of orange juice: $3.27

Average monthly utilities: $134.40

Median rental cost: $705

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $198,268


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Photo: Flickr / MiiiSH

Most of the cities on this list, like Fayetteville, are rather small. So are the low-prices a byproduct of a smaller population? Not exactly, says Frutiger.

"Though some of the cheaper cities do have a population issue—more people means more demand and higher prices—[COLI] does have a population requirement. Not just anyone can participate in the Cost of Living Index." 

Price of T-bone steak: $9.96

Cost of orange juice: $3.23

Average monthly utilities: $142.94

Median rental cost: $551

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $241,400


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Photo: Doug Wertman, flickr.com

Price of T-bone steak: $9.48

Cost of orange juice: $3.07

Average monthly utilities: $144.83

Median rental cost: $657

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $230,439


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Price of T-bone steak: $9.65

Cost of orange juice: $3.22

Average monthly utilities: $145.45

Median rental cost: $516

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $206,667


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Photo: jilly~bean, Flickr.com

"Housing prices are very low in Texas, even in the major cities. Houston, Dallas ... Housing there is relatively inexpensive," Frutiger says.

"A lot of it, too, is the housing size. Two thousand and four hundred square feet in New York is a mansion, but in Texas it's a closet."

Price of T-bone steak: $9.49

Cost of orange juice: $2.98

Average monthly utilities: $167.73

Median rental cost: $749

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $213,850


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Frutiger adds, "You're looking at houses in Texas that are way bigger than anything you'll get in a large Northeastern city, and for a relatively cheaper per square foot price." 

Price of T-bone steak: $6.98

Cost of orange juice: $3.08

Average monthly utilities: $145.80

Median rental cost: $565

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $264,000


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"Every time we release this data, Harlingen makes the news," the economist says with a chuckle, "and the people love it."

In Manhattan, the most expensive U.S. city right now, rent is $2,905 more each month than in Harlingen. 

Even a tube of toothpaste costs $1.73 more in Manhattan.

Price of T-bone steak: $8.14

Cost of orange juice: $2.98

Average monthly utilities: $158.65

Median rental cost: $642

Average home price (2,400 sq. foot, 4 bedrooms/2+ bathrooms): $221,486


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Photo: Sadie Hernandez, Flickr.com

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