Cost of Living in Lexington, MA

An Overview of Cost of Living in Lexington, MA

Knowing the cost of living in Lexington allows individuals to create a realistic budget. This helps them understand how their income will cover expenses and whether they need to make financial adjustments. The cost of living in any region can fluctuate due to various factors. To assess the cost of living consistently across different areas, a national average of 100 serves as the basis for the cost of living index. The cost of living in Lexington stands at 213, marking it 113% higher than the national average.

If affordability is among your top priorities when searching for a new place to live, this area may not be the ideal fit, as the cost of living in Lexington is among the most expensive in the United States. Just a minority of areas exhibit a cost of living at least 20% higher than the national average, and unfortunately, Lexington falls into this category, which may not align with your goal of finding a budget-friendly living environment.

Housing costs are a major factor in the Lexington cost of living index, and they often eat up a big chunk of your take-home pay. Unfortunately, in this area, housing expenses for both homeownership and rentals were 330.8% higher than what's typical in an average city. That includes the prices of homes and rents, as well as mortgage rates and insurance.

The things you purchase regularly, like clothes, haircuts, movie tickets and gym memberships, can make a big dent in your budget and make up 33% of the cost of living index. Unfortunately in Lexington, these items will cost you 21.6% more than what's considered the norm, making it a more expensive place to call home.

Is Lexington Affordable?

Is Lexington affordable? It's a key consideration when pondering a move, as affordability often shapes your choices. The cost of living index (we discussed it earlier), coupled with housing costs and income levels, serves as the cornerstone for determining a location's affordability. Take Lexington, for instance, where the median home price falls 405.6% higher than the national average, and monthly rent rates are 156.2% higher than usual. Additionally, median income levels contribute to the equation, with Lexington flaunting a median household income of $185,686, 235.6% higher than the national norm.

What Factors can Influence the Cost of Living in Lexington?

Housing: A sought-after location with high housing demand often leads to increased property values and rental rates, which can significantly inflate the overall cost of living. Conversely, areas with low housing demand, particularly in less desirable locales, tend to experience the opposite effect, causing prices to drop and contributing to a more affordable cost of living. In Lexington, the housing index stands at 330.8% higher than the national average.

Taxes: Regions that impose higher taxes, including sales and income taxes, can contribute to an increased cost of living. Higher taxes for everyday necessities such as clothing, utilities and food inevitably leads to higher expenditures. Additionally, a higher income tax rate can also play a role in elevating the overall cost of living. In Lexington, the prevailing sales tax rate starts at 6.25%, and income tax rates kick off at 5%.

Urbanization: Larger, urban hubs brimming with ample amenities and robust employment opportunities often showcase a heightened cost of living. This surge is primarily attributed to the amplified demand for services and increased residential migration, culminating in elevated home prices and elevated rental rates. Conversely, less densely populated rural locales or regions characterized by reduced demand tend to offer a more limited array of amenities and undergo slower job market growth, ultimately yielding a more affordable cost of living.

Where is the Data From?

The Lexington cost of living data displayed above is derived from the C2ER cost of living index to provide a useful and reasonably accurate measure of living cost differences in urban areas. Published on a quarterly basis, it compiles data from more than 300 independent researchers, encompassing over 60 goods and services. These items have been meticulously selected to represent various consumer expenditure categories, in 6 categories. Weightings assigned to cost differentials draw from government survey data tracking spending patterns among professional and executive households. While the C2ER index excludes data on sales or income tax rates, AreaVibes incorporates tax rates into the overall cost of living score for each region.