The Most Expensive Places in America

Housing helps to push New York City, Orange County, and Washington to the top of the list

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There are some economic facts that even a crisis can't change. One is that New York City is very, very expensive.

According to the 2012 Cost of Living Index from the Council for Community and Economic Research (C2ER), three boroughs of New York City are among the 10 most expensive urban areas in the nation. Three cities in California also make the cut, along with the capitals of both Alaska and Hawaii. Many of these cities are perennially among the places where the cost of living is the steepest.

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"By and large, the extremes, I think, remain fairly constant," says Dean Frutiger, the Cost of Living Index project manager at the Center for Regional Economic Competitiveness, parent organization to C2ER.

More than 300 urban areas nationwide participate in the index, which takes into account prices on 60 different items from six different categories—housing, utilities, grocery items, transportation, health care and miscellaneous goods and services. A city's index figure is based around a national average of 100. Manhattan's cost of living is more than twice the national average, at 228.3, making it the only place with a score above 200. All of the other cities in the top 10 are also well above the national average, with scores over 140.

One factor in particular helps to set expensive cities apart from others, says Frutiger.

"Especially with the top 10 most expensive cities, housing is a major player in the overall composite index number." he says.

Of course, that's not all that makes a city expensive. For Alaska and Hawaii, geography is also a major player, making many products more expensive due to the difficulty required getting goods to places so far from the rest of the country.

"It's getting materials up there. It's getting foodstuffs up there. Everything is transported up there," Frutiger says of Alaska. "It's the same with Honolulu," he adds.

Of course, it's not that the most expensive cities never change. In fact, Washington, D.C. is a relatively recent addition to the top 10, due in part to how the recovery from the housing crisis has played out.

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"Maybe the last year, year and a half, suddenly D.C. has been showing up in the top 10, and that is largely due to the housing index number," he says. "With D.C., the last couple of years, the housing market has remained very strong, I mean, relatively speaking. So you've seen D.C.'s housing index numbers rise compared to the rest of the country."

Urban Area COL Index (National Average = 100)
1. New York (Manhattan), N.Y. 228.3
2. New York (Brooklyn), N.Y. 183.1
3. San Francisco, Calif. 166.5
4. Honolulu, Hawaii 165.8
5. San Jose, Calif. 154.3
6. Stamford, Conn. 147.4
7. New York (Queens), N.Y. 145.9
8. Orange County, Calif. 144.7
9. Washington, D.C. 144.6
10. Juneau, Alaska 140.5

Source: Council for Community and Economic Research

Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at dkurtzleben@usnews.com.