Frugal living for a family in California? (Fresno, Riverside: to rent, credit)
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I think it depends on what you do. There are some professions where you pretty much get paid the same where ever you live. In that case, moving to a place with a lower cost of housing probably is a good idea. But in general incomes in Sacramento are probably lower than incomes along the coast.
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I image the same is true for moving to Colorado. If the housing is cheaper who cares if your income drops as well?
Yes, this definately does vary from profession to profession. As a software engineer working with the DoD income doesn't change that much at all for me. So moving to CO for us was not only a chance to save $$, pay off debt and also to buy a nice, newer home, etc... So from a purely financial standpoint it was a no brainer.
However there are other expenses when one has children and the majority of family in CA. Travel is costly. And then more importantly there are 'human element' factors beyond that of the pocket book. Like if a family really enjoys living near the coast and milder climates CA offers certain sacrifices are made. If one enjoys living in an area with more diversity of culture that will be missed. And there are other things as well. So it really boils down to a quality of life issue with different criteria for different ppl/families.
We have come to realize that no place is perfect. But rather each area is a trade off of a unique set of pros and cons. Do the pros outweigh the cons for you where you are or where you plan to go? That is the real question. And many times that question can only be answered after making a move somewhere to discover what life is like from the inside. Just look at all the Californians that moved to Kentucky, Texas, Colorado, Florida, Las Vegas, New England, etc... that decide the grass 'isn't' necessarily greener even though the cost of living is 'much' lower. But since I believe life is an adventure I encourage ppl to get out and explore. For us we enjoyed living in CO. The Rocky Mountains are beautiful! It also helped us to really appreciate our home state of CA.
Derek
Last edited by MtnSurfer; 02-08-2009 at 04:43 PM..
[quote=MtnSurfer;7378233]One really does pay more for live here. It is the cost of the 'lifestyle.' For some it is not worth it. But for many others it is. Hence the prices remain relatively high. Being CA natives we knew what we were in for in moving back from CO. We counted the cost and so are not surprised. It just is what it is. Most of our family is here and we really love living near the coast as well as the other things that the state offers. If we didn't have relatives here we probably would have moved to Portland next. But the job market there is really weak now especially in this down turn.[quote]
Plus, you are probably going to save money because you won't have to travel to see your family in CA since they already live there.
Over the years we have spent a small fortune visiting relatives in CA. Plane tickets for a family of 5 from the PacNorthwest to CA isn't cheap.
One of the ideas we have had to live frugally with regards to housing is to buy a lot (perhaps in Marin, we've seen lots for $199K) and have a modern, green prefab house built on it. We've done our homework though and by the time you are done, it usually ends up being between $300-$400 a sq ft which completely defeats the purpose.
I keep reading articles about how rents are coming down all over the country because of the increase in inventory. People are moving in with each other to save money (frugal living!) We're looking at rentals in Scotts Valley right now and I am not seeing this downward trend (perhaps it will never happen since there is limited housing anyway). In fact, I am not seeing much of anything and it is quite discouraging. We are making our move back to California in 23 days so I am really trying hard to figure out where we are going to live. Our options are limited because we are looking for something less than $2K a month so that we can save money to buy a home again one day.
frugal living for us included moving OUT of California to a lower cost of living area, Colorado. My husband made a budget, and we planned very carefully. We're doing ok. We bought a smaller house here than we had in CA. Also made sure it was newer and more energy efficient; and didn't need any immediate updating. Since we moved here in 2007 we have sold a car and bought another with cash, so no monthly payment. Like I said, we are doing ok, but every time I think we are going to get ahead, and add to our savings, something comes up - usually a car repair or a medical bill. Make sure you account for that kind of thing in your budget.
I keep reading articles about how rents are coming down all over the country because of the increase in inventory. People are moving in with each other to save money (frugal living!) We're looking at rentals in Scotts Valley right now and I am not seeing this downward trend (perhaps it will never happen since there is limited housing anyway). In fact, I am not seeing much of anything and it is quite discouraging. We are making our move back to California in 23 days so I am really trying hard to figure out where we are going to live. Our options are limited because we are looking for something less than $2K a month so that we can save money to buy a home again one day.
I've also not seen rental prices coming down in our area either- there are so many people who lost their homes and now have to rent that there seems to be a high demand for rentals right now. In addition, a lot of the foreclosures were or could be rentals, but are just sitting on the market now, empty, while people are looking for homes. It would be fantastic if some of the banks realized that property values are terrible right now and just rented out the empty foreclosures instead of waiting for them to sell. It would decrease the amount of inventory on the market, would increase the number of rentals available, and would enable them to start making some money off of these properties. Basically it would be a win-win-win (the communities, the renters, and the banks!). Now how can we make this happen.....?
I've also not seen rental prices coming down in our area either- there are so many people who lost their homes and now have to rent that there seems to be a high demand for rentals right now. In addition, a lot of the foreclosures were or could be rentals, but are just sitting on the market now, empty, while people are looking for homes. It would be fantastic if some of the banks realized that property values are terrible right now and just rented out the empty foreclosures instead of waiting for them to sell. It would decrease the amount of inventory on the market, would increase the number of rentals available, and would enable them to start making some money off of these properties. Basically it would be a win-win-win (the communities, the renters, and the banks!). Now how can we make this happen.....?
Yeah, I don't see rents coming down either. I think you are right in that demand has gone up as foreclosures have increased along with fewer loans being offered.
With regards to your win/win idea of the banks renting these homes out I don't think it will ever happen. I used to work for a large bank (WaMu) as a real estate appraiser. And when we had a foreclosure their goal was to off load it as quickly as possible. "Banks are not in the property management business" was the mantra. While there may be some exceptions to this rule I don't think things will change much for banks. That is also why banks don't take a run down foreclosure property and try to fix it up first. "We are not in the remodeling business." I think you get the idea.
Yeah, I don't see rents coming down either. I think you are right in that demand has gone up as foreclosures have increased along with fewer loans being offered.
With regards to your win/win idea of the banks renting these homes out I don't think it will ever happen. I used to work for a large bank (WaMu) as a real estate appraiser. And when we had a foreclosure their goal was to off load it as quickly as possible. "Banks are not in the property management business" was the mantra. While there may be some exceptions to this rule I don't think things will change much for banks. That is also why banks don't take a run down foreclosure property and try to fix it up first. "We are not in the remodeling business." I think you get the idea.
Yeah, it's that "well, this is the way we've always done it" mentality that makes me crazy. Better ways of doing things are the American way! They could hire a property management company just as easy as they can hire a realtor, and start some cash flowing right away, as opposed to holding onto the property for so long, incrementally lowering the price while it sits there vacant. I'm sure in the past, if they lowered the price "below market", a foreclosure would sell very quickly (even for all cash on the courthouse steps, as it used to be) but these days in this area, there is not a house for sale that isn't a foreclosure or short sale. Who's to say what "below market" is anymore? Any bank that gets wise to this and thinks outside the box a little will weather this storm a whole lot better than those who are so stuck in their ways that they'd rather just keep the house on the books with no income than keep it on the books with some income. Honestly, those are pretty much the choices these days, especially with the smaller, starter, fixer-uppers or condos. Those would be absolutely perfect rentals- too small for people to want to "chain themselves to" but big enough that someone would be willing to live there for the short term. It's just frustrating to see so many vacant perfectly decent homes going to waste while renal prices stay high and folks are stuck in apartments....
"Banks are not in the property management business" was the mantra.
Still makes me wonder why people who are in the property management business aren't buying these homes (relatively cheap) and renting them out (at high rents). Seems like the economics are there for that.
Of course, maybe this is happening in the $200K -$300K range.
Foreclosures bump up Inland Empire home sales | L.A. Land | Los Angeles Times (http://latimesblogs.latimes.com/laland/2008/07/southern-cali-1.html - broken link)
Still makes me wonder why people who are in the property management business aren't buying these homes (relatively cheap) and renting them out (at high rents). Seems like the economics are there for that.
Of course, maybe this is happening in the $200K -$300K range.
Foreclosures bump up Inland Empire home sales | L.A. Land | Los Angeles Times (http://latimesblogs.latimes.com/laland/2008/07/southern-cali-1.html - broken link)
Hey Charles!
Yeah I think you are right on with with your assesment. Based on current circumstances income proprties look attractive. Rents have remained relatively high while prices have dropped. I am sure there are investors running the numbers and waiting to snatch some of these properties up. Usually positive cash flow or at least breaking even is the goal. If a property is self sustaining - decent tenants who pay there rent and a property mgmt that is affordable, then it can be a very good long term investment.
I think though with the forecasted drop for 2009 investors are still erroring on the side of caution. But I am sure that more of these properties will be purchased in the not too distant future.
Derek
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