The Tri Cities is No Longer a Screaming Buy

By Dr. Patrick Jones

It is this writer’s hunch that the self-image of the greater Tri Cities includes a family-friendly culture. Good wages, too. And a low cost of living.

The first two attributes seem uncontestable. The third not so much.

Living in Benton and Franklin Counties now isn’t any cheaper than the U.S. metropolitan average. Trends indicator 3.2.9 Regional Price Parity (RPP) make this clear. For 2021, the most recent calculation from the U.S. Bureau of Economic Analysis (Bureau), the value stood at 100.5 This implies that living in the greater Tri Cities metro area carries an overall price tag that is about average.

Regional Price Parities provides the only measure of cost-of-living for most of the metropolitan statistical areas (MSAs) in the country. Measurements for the Consumer Price Index (CPI) are conducted by the U.S. of Labor Statistics in only the 23 largest MSAs. The closest is the Seattle-Tacoma-Bellevue MSA. Before the inauguration of the RPPs by the Bureau, one had little idea about a broad-based assessment of the cost of living in the other 365 MSAs in the U.S.

By design, RPPs are relative to the overall average of MSAs. The total of all MSAs covers about 87% of the U.S. population, so the Kennewick-Pasco-Richland MSA RPP closely mirrors a comparison to the entire U.S.

By design, however, the Price Parity is not equivalent to a local CPI. First, there is no local data price checking, with one significant exception. Second, because of the construction of the Price Parities, one cannot compare the values over time to each other, as is typically done with the CPI. Consequently, regard the values for each year as a snapshot of comparisons.

The exception to the absence of price collection is housing. The Bureau uses annual estimates from the American Community Survey by the U.S. Census for location-specific costs of both rental & owner-occupied units. Other prices are imputed statistically from the prices of the nearest MSA with its own CPI, in this case, the Seattle-Tacoma-Bellevue MSA. This doesn’t imply that these prices are simply adopted; rather, they are modified (downwards) by a factor that the Bureau’s algorithm has determined.

The Bureau also provides some high-level detail, or sub-RPPs, behind the overall price parity. For example, in 2021, when the overall value for the greater Tri Cities was 100.5, the housing component was 95.7. Yes, apartment rents and sales prices of owner-occupied units have climbed dramatically in the last five years, as Trends 7.3.1 illustrates. But with a value below 100, housing costs here were little less than housing costs in all metro areas in 2021.

The highest component of the local RPP in 2021 can be found in “Goods.” Its sub-RPP value was 106.4. In other words, the stuff that Tri Citians buy was higher priced, on average, than the stuff purchased in all the other U.S. metro areas.

The lowest component of the local RPP – utilities. Its value was 89.3. In other words, Tri Citians paid about 10% less in electricity and fuel than did the resident in the average MSA.

A five-year perspective shows that utilities expenditures in the Greater Tri Cities have always shown relative values less than 100, making it the least expensive of the components. Goods & non-utilities services, on the other hand, have shown values at or greater than 100, making them the most expensive components. The RPP value for housing has typically claimed a spot in the relative middle.

Note that the RPP values for the chosen benchmarks in Trends indicator 3.2.9, Spokane and Boise. Both were lower. This relative standing was true for each year over the entire period of 2010-2021. It is true that the RPP values for the Portland-Vancouver and the Seattle area metros were higher in 2021, coming in at 105.3 and 114.6, respectively. That won’t surprise too many people.

All in all, however, the bill for goods & services paid by residents of the greater Tri Cities now does not amount to a screaming buy, relative to the rest of the U.S.