The Buffalo Niagara region’s reputation for low-cost living is paying off, in the form of a No. 1 ranking by Forbes.
The magazine named Buffalo the most affordable city in America, using data that included income, housing prices and everyday expenses.
For the cities at the top, it’s a chance to tout their rankings, and to point out that New York City and Honolulu were tied for the most overpriced city. (Lesson: Paradise can be expensive).
Home prices factored heavily into Forbes’ rankings. The magazine used an index from the National Association of Home Builders and Wells Fargo measuring how far residents’ money can go toward buying a place to live.
“With a median family income of $63,500 and a median home sales price of $100,000, home ownership is attainable for 88.5 percent of the local population,” Forbes writer Erin Carlyle wrote. Median indicates half of the homes sold for more, and half sold for less than that amount. The same applies to income: Half earned more than that amount, and half earned less.
Forbes weighed housing heavily in its calculations, but the magazine also used a cost-of-living index developed by Sperling’s Best Places and considered everyday living expenses such as food, utilities, medical expenses, transportation and gasoline.
“Coupled with daily expenses that are about 4 percent below the national median, Buffalo claims the No. 1 spot on our list,” Carlyle wrote.
A No. 1 ranking on a list like this one resonates with Buffalo Niagara Enterprise, which aims to attract new companies, jobs and investment. “It’s an accolade that’s going to go on our website,” said spokesman Paul Pfeiffer.
As business prospects study regions where they might locate a project, one of the issues that comes up is whether the company’s employees can afford to live in a particular place, he said.
“The private sector is investing here for a lot of good reasons, and one of them is the affordability of the community,” he said.
The Buffalo Niagara region has gained a reputation as a region that had neither the run-up in home prices during the boom nor the sharp drop off when the bubble burst.
But low selling prices cut two ways, said Peter Hunt, chief executive officer of Hunt Real Estate Corp.: It’s great news for someone looking to buy a home, but not ideal for a homeowner or investor eager to see home values rise.
Those low prices – not taking into account the property tax bills – serve as a recruiting tool for places like the Buffalo Niagara Medical Campus, he said.
Dottie Gallagher-Cohen, president and chief executive officer of the Buffalo Niagara Partnership, said the Forbes ranking ties into a message economic development officials are trying to spread.
“When we talk about trying to recruit young people to our region, affordability is very attractive,” she said.
“We all look for ways to validate what we know,” Gallagher-Cohen said. So when Forbes’ research puts the region at the top in affordability, “it helps us do our job.”
Richard Deitz, regional economist with the Federal Reserve Bank of New York, said the region’s low housing prices reflect its historical population trend. Home prices in regions with greater population growth tend to rise faster, but many Great Lakes cities have home-price experiences similar to Buffalo’s, he said.
Income is another factor that influenced the Forbes rankings. While the overall cost of living here is low, reflecting the population’s income level, employers may also find they can keep workers’ wages accordingly lower, Deitz said.
Mayor Byron W. Brown said the Forbes top ranking is something that potential investors can “sink their teeth into” as another reason to consider Buffalo.
“I think our strategic focus on making Buffalo a more affordable place for residential and commercial investment is being nationally recognized,” he said.
Andy Reynolds, communications organizer with the Coalition for Economic Justice, said the Forbes list is “encouraging, but it ignores the fact that many people in our community are struggling to make ends meet,” pointing to the City of Buffalo’s high poverty rate.
Reynolds said too many of the jobs being created with support from government incentives are low-wage jobs that are not helping raise income levels.
Carlyle, who wrote the Forbes piece, said most of the reaction she was getting Tuesday was from “happy people from Buffalo.” And she was not surprised Buffalo emerged on top: Her brother attended medical school at the University at Buffalo, and the cost of living here was something he appreciated.