Wednesday, September 23, 2009

We get $226K for living in Nashville,

In the text, we use the example of house prices in Nashville vs. San Diego to demonstrate the indifference principle: "If labor is mobile, people will move from Nashville to San Diego. This migration will increase the demand for housing in San Diego, driving up San Diego house prices while simultaneously reducing Nashville house prices. The process will continue until the higher price of housing makes San Diego just as unattractive as Nashville." At this point, people are indifferent between living in the two cities.

Here's some evidence that quantifies the lower house price benefit a Nashvillian receives for putting up with lousy weather. The info compares the prices charged for a 2,200-square-foot, 4 bedroom, 2.5 bath, single-family homes in more than 300 markets around the nation. The price in Nashville is $235,336 while the price in San Diego is $461,432. Obviously, these are city-wide averages, and prices vary quite a bit in particular areas (and surrounding communities; for example, the price in La Jolla, CA is $2,125,000).

1 comment:

  1. That’s a beautiful thing you got here. I must say that living in Nashville is like a dream come true for me. I have been reading about Nashville since a long time and always wonder to spend some time in there for relaxation. I am going to spend my summer vacation in there can you recommend some good mortgage place in Nashville I will be glad to know that.
    Mortgage Nashville