Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

Is Cost of Living overstated?
I do not believe there is a strong correlation between CPI (Consumer Price Index) and housing value appreciation. Take, for example, New York City which has the highest CPI in the US.  A great deal of the CPI number is skewed by Manhattan.  One can live in Brooklyn or Queens and avoid some of NYC's high CPI.  I would say that housing appreciation occurs because of the human activity in the area.  That same human activity is what drives the CPI.  There are other contributing factors, like limits on economies of scale.  You simply cannot set down a Super Walmart in much of NYC, so goods are distributed over a larger number of stores.  (Sure, NYC is a port city, but the goods are distributed within the city by trucks.) The San Francisco Bay Area is another high CPI area in the US.  Here, as well, it is the location that draws people.  While NYC is mostly about economic activity, the SF Bay Area is a mix of the draw of a great location and the economic activity that occurs due to the large number of people living there.  I know of a house in Oakland that sold for approximately $350k, in 2004/05.  It was located not too far from the "Killing Fields," as they were known locally.  It was not the worst neighborhood in Oakland, but it was not very far from it.  This was for a shabby, single-story unit which I believe had 5 (maybe 6) rooms.  That is a lot of money for a house that required a lot of attention and was in a bad neighborhood.  I have no idea how the housing market is after the housing bubble, but the higher value areas had the most room to fall and many of them fell hard. Ultimately, it is supply and demand that determines the CPI and housing values.  This supply and demand is determined by the human activity in the area and some practical considerations regarding the area. A final note: If we are talking about a primary residence, it should not necessarily be looked at as an investment.  First and foremost, it is a necessity.  Second, if you need to hire people for the maintenance and/or upgrades, that will eat into your gains.  Contractors are not cheap, especially where they are in high demand.  Finally, the tax incentive is actually not that great.  Sure, you take what you can get, but its impact is relatively marginal.