It's no secret that Nashville has experienced rapid growth over the last several years as more and more people and businesses continue to plant their roots in Music City. With its robust job market, generally affordable cost of living, plentiful outdoor spaces and world-class dining and entertainment venues, Nashville strikes an appealing balance between small-town, family-friendly community and up-and-coming cosmopolitan hub.The Nashville real estate market is ranked as the 4th best market in the U.S. According to a recent LinkedIn survey, Nashville ranked third among U.S. cities that received the most new residents in 2020 and U-Haul ranked Tennessee the No. 1 state for growth in 2020, with a significant number of Tennessee's new residents coming from California.
If you're thinking about relocating from Los Angeles to Nashville, there are several key elements you'll want to consider before you pack your bags. In this first part of our Los Angeles v. Nashville blog series, we're breaking down a few differences in the overall cost of living in Nashville compared to the cost of living in Los Angeles.
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GENERAL POPULATION STATISTICS FOR LOS ANGELES V. NASHVILLE (from censusreporter.org):
Los Angeles County, CA
- Population: 10,039,107
- Square miles: 4,058.7 (473.5 people per square mile)
- Median age: 37 (65% of the population in Los Angeles County is between the ages of 18-64)
- Per capita income: $36,044
- Median household income: $72,797
- Median commute time: 32.8 minutes
- Median value of owner-occupied housing units: $644,100
- Average number of persons per household: 3
Nashville-Davidson--Murfreesboro--Franklin, TN Metro Area
- Population: 1,933,860
- Square miles: 5,689.4 (339.9 people per square mile)
- Median age: 36.7 (64% of the population in Los Angeles County is between the ages of 18-64)
- Per capita income: $37,696
- Median household income: $70,262
- Median commute time: 28.5 minutes
- Median value of owner-occupied housing units: $285,100
- Average number of persons per household: 2.6
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OVERALL COST OF LIVING IN LOS ANGELES V. NASHVILLE:
According to salary.com, the average cost of living in Los Angeles is 41.1% higher than the national average cost of living, whereas the average cost of living in Nashville is 4.8% lower than the national average cost of living. Prices in the Los Angeles area have increased by 3.2% in 2021, particularly in the categories of transportation, food and housing, whereas prices in Nashville have increased by 1.3% in 2021 in the same categories.
On average, the cost of living in Nashville is approximately 32.5% lower than the cost of living in Los Angeles.
A person earning an annual salary of $60,000 in Los Angeles would need to earn an annual salary of $40,475 in Nashville to maintain a similar standard of living, according to salary.com. However, it is important to consider that employers in Nashville typically pay approximately 17.8% less than employers in Los Angeles for comparable jobs, so a job that typically earns $60,000 per year in Los Angeles will earn approximately $49,303 per year at a comparable company in Nashville. This may not always be the case, but it is something to consider when job-hunting in the area.
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INCOME TAX AND SALES TAX
According to smartasset.com, California has some of the highest taxes in the nation. Sales and income taxes are generally high, although property tax rates are generally below the national average. California's progressive income tax is similar to the federal income tax system, in that rates are lower for lower earners and higher for higher earners. There are 10 official income tax brackets in California with rates ranging from 1% up to 13.3%.
Tennessee does not have an income tax on wages, although the state does have a 1% tax on income earned from interest and dividends. However, sales tax rates in Tennessee are the highest in the nation, with rates ranging from 8.5% or 9.75% depending on where you live (smartasset.com). In Nashville, the combined state and county sales tax rate is currently 9.25%.
On average, the median property tax rate is around 0.68% of a home's value in Tennessee compared to 0.74% in California (tax-rates.org). While Tennessee has some of the lowest property tax rates in the country, both states have lower property tax rates than the national average, which is around 1.07%.
In Los Angeles County, the median home value is approximately $543,400 with an average effective property tax rate of 0.72% according to smartasset.com. The median homeowner in Los Angeles County pays approximately $3,938 annually in property taxes; however homeowners pay different local rates depending on the city or district in which they live.
The median home value in the Nashville Metro area (Davidson County) is approximately $219,900 with an average effective property tax rate of 0.82%, which means that the median homeowner in the Nashville Metro area pays approximately $1,799 annually in property taxes according to smartasset.com. There's a lot of competition right now for single-family homes across the U.S or specifically for houses for sale in Nashville. Nashville's real estate market doesn't leave many options for houses for sale because it is so hot. Homes within the Urban Services District pay a rate of $4.221 per $100 of assessed home value and homes within the General Services District pay a rate of $3.788 per $100 of assessed home value. In 2020, property taxes in the Nashville Metro area increased by 34% across both districts.
Thanks to their relatively close proximity and commutability to Nashville, counties adjacent to Davidson County but still within the Nashville-Davidson-Murfreesboro-Franklin Metro area have seen an influx of new and prospective homeowners in recent years. The average effective property tax rates for each of the counties adjacent to Davidson County are:
- Cheatham County: 0.65% with a median home value of $176,400
- Robertson County: 0.72% with a median home value of $176,300
- Rutherford County: 0.71% with a median home value of $190,200
- Sumner County: 0.66% with a median home value of $212,100
- Williamson County: 0.55% with a median home value of $417,700
- Wilson County: 0.57% with a median home value of $243,400
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Overall, the cost of living or owning a home in Nashville is quite a bit lower than the cost of living or owning a home in Los Angeles. The Nashville real estate market is booming and trends say it might be a while before it slows down. If you are looking at houses for sale in Nashville, now is the time to buy. However, the cost of living isn't the only factor to consider if you're thinking about relocating to Music City.
Stay tuned for the next installment of our Los Angeles v. Nashville series to see how certain essential services and amenities from hospitals and schools to dining and entertainment options stack up between these two popular cities!