Baltimore is cheap -- relatively speaking

The Economy

July 08, 1996|By Jay Hancock

TIRED OF THE high-cost living? Looking for an affordable Shangri-la in which to slow down, retool and buy that 2,000-square-foot Colonial for a ditty?

Look no further than the ACCRA Cost of Living Index, quarterly analysis by the Association for Chamber of Commerce Executives that attempts to measure and compare prices in big U.S. cities.

Particularly attractive on the list is a major-metro burg that was sixth cheapest in the country, below-average in cost for regions of its population and competitive in almost every category.

Clue: It starts with a B, and it's not Bismarck, N.D. Yes, it's Charm City, and if you're surprised about our good score, the BWI Business Partnership wishes you wouldn't be.

The partnership, which helps compile the index, wants everyone to envision Baltimore in the same category as Jackson, Miss., or Dubuque, Iowa. At least as far as prices are concerned. The woodwind section of the Dubuque Symphony doesn't quite measure up to ours.

The survey "clearly shows that the Baltimore area represents a very affordable market for businesses considering expansion, investment or relocation," said Neil M. Shpritz, executive director of the BWI Business Partnership, a nonprofit association of employers near Baltimore-Washington International Airport. "The site selection people really pay attention to this."

The ACCRA index is a shotgun sample of prices on items from homes and newspapers to vegetables, gasoline and electricity. It's intended as a research tool for businesses pondering relocation.

The most recent reading, from samples taken in the first quarter, gives the Baltimore region a score of 98.0 -- 2 percentage points below the national average for metro areas of more than 1.5 million and the sixth lowest of 22 big cities.

That score "is the lowest I can remember," said Shpritz, and he's been keeping score off and on since 1986. "Baltimore's always done pretty well, but not this well." In the 1980s, he said, the region generally was 3 or 5 percentage points above the average cost of living for big cities.

Here's how some of the competition places now: Philadelphia, 27.2 percentage points above the average. Philadelphia gets creamed on housing and utility costs, in particular. Boston is 35.6 points above; New York, 123.6 points above; Kansas City, 4.8 points below; Norfolk, 3.8 points below; St. Louis, 3.0 points below.

How affordable is Baltimore? We have cheap Polysporin, for one thing. A half-ounce tube of the antibiotic ointment costs only $4.05 here, compared with $4.45 in Denver, according to the ACCRA survey. Is this a great town or what? Don't get an infected paper cut in Denver.

A pound of bananas can be had in the Baltimore region for a mere 45 cents. In New York, you'll pay 66 cents; in Raleigh and Denver, 55 cents. Newspapers are cheaper in Denver, more expensive in New York.

Baltimore performs especially well in housing, according to the survey. Monthly mortgage payments for an 1,800-square-foot, three-bedroom house are only $698, it said. That's assuming a 30-year mortgage, no taxes or insurance, 25 percent down and a selling price of $134,416.

Sounds a bit low to me, and a price of $543,000 for the same house in the New York region sounds high.

But Michael Conte, director of the Regional Economic Studies Institute at Towson State University, said that generally the survey "is accurate. Not only are we more affordable" than many areas, he said, "our rate of increase has been less. You have a very powerful story."

Baltimore's appeal, of course, is not just that it's affordable. It offers proximity to Washington without its cost, big-league culture and sports and East Coast convenience.

One trend that has helped the region: its extremely slow recovery from the last recession, which has kept pressure off prices of all kinds.

The index does not measure one relevant expense, however. Taxes of all kinds -- income, property, sales. Add in taxes, many business leaders argue, and Baltimore's affordability score would suffer greatly.

The state does rank poorly in income tax, after municipal income taxes are included. And property taxes are high. But we do relatively well in other areas. Corporate income tax rates are very competitive, for example. Sales taxes are moderate.

"Nothing could be farther from the truth" that Maryland taxes businesses highly, Conte argued. In costs of all kinds, the Baltimore region "is doing very well in many areas that would be absolutely shocking to people."

Pub Date: 7/08/96

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