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What happens if you find yourself on the other side of that coin, and needing or wanting to move?
Based on very recent comps, I'd probably have $70k-$80k equity in my property that I bought for ~$100k back in 2019. Do I think that level of run-up is sustainable? Hell no, especially not where I live. There are very few decent jobs here. There are some local factors that have changed (introduction of a new casino and a Hard Rock sponsored resort going in at the current temporary casino site) that have improved values, but I don't see how by that much.
Sure, I have this big pile of equity if I move, but at 37, I haven't seen a worse market for the general buyer in my lifetime. Even with this equity, it's being rolled into the next overpriced property at a much more higher interest than what I currently have.
I feel sort of stuck in this small town because of an artificially low house payment. I want out.
Get a high paid job in a good metro and roll your 80k into a place there?
Ultimately, working in a HCOL area as long as you can get a high paying job for a decade or three is good for most people’s net worth.
Get a high paid job in a good metro and roll your 80k into a place there?
Ultimately, working in a HCOL area as long as you can get a high paying job for a decade or three is good for most people’s net worth.
100%
I moved from very low cost central Illinois about 12 1/2 years ago. My house was worth about $130k at the time, and now it's still only worth maybe $180k or so. Basically hasn't gone up in value when accounting for inflation. I had only a $1,000/mo mortgage payment but I was only making $45k. I wasn't really putting anything away in savings or retirement.
I moved to Phoenix and now Denver. In both cases I paid much more for my homes (my home now is worth approximately $900-925k, bought at $745k in 2021), but I am making far more money. After all bills I save AND invest roughly 20-25% of income and if I sold my home now I'd profit more from it than the entire value of my old home in IL. Well worth the move. Also, there were barely any jobs in my old town that paid much better than what I was making. Here, entry level jobs pay about as well as mid-career professional jobs paid in podunk Illinois.
I moved from very low cost central Illinois about 12 1/2 years ago. My house was worth about $130k at the time, and now it's still only worth maybe $180k or so. Basically hasn't gone up in value when accounting for inflation. I had only a $1,000/mo mortgage payment but I was only making $45k. I wasn't really putting anything away in savings or retirement.
I moved to Phoenix and now Denver. In both cases I paid much more for my homes (my home now is worth approximately $900-925k, bought at $745k in 2021), but I am making far more money. After all bills I save AND invest roughly 20-25% of income and if I sold my home now I'd profit more from it than the entire value of my old home in IL. Well worth the move. Also, there were barely any jobs in my old town that paid much better than what I was making. Here, entry level jobs pay about as well as mid-career professional jobs paid in podunk Illinois.
I moved from a LCOL area to a VHCOL area, partially for job-related reasons. Pay is higher here, and quality of life is overall superior. But the ratio of local housing prices to incomes, is here much larger than in my former locale. To rephrase, yes, prosperity is higher here. But housing is proportionately even higher. For a person cashing-out a Midwestern house and doing such a relocation, to make a jump into comparable housing here, would take, to put it mildly, some spunk, creativity and patience.
Thus it makes perfect sense, why a homeowner would feel "trapped" in a LCOL area. If such a house, fully paid-off, only amounts to a down-payment in the VHCOL area, then it's hard to imagine, as to how the new area is on net a pecuniary benefit. It might be great for one's career, social life, or general enjoyment. But financially? Not so much.
Along those lines, a few years before the pandemic, we wanted to do a major remodel on our vacation home here in Park City, modifying the floorplan and adding square footage - probably about $350,000 in total. We experienced the same phenomenon you describe - we couldn't get general contractors to give us the time of day. More than one told us $350K remodel was just too small for them to get excited about. Eventually, we gave up and just bought another house, spending $2 million more to get what we wanted instead of remodeling.
My girlfriend has water coming into the basement of the house. The basement is partially underground, with the front of the house set into the hill. The hill is "lumpy," with the slope of the hill causing the water to run right into the basement cinderblock in certain locations.
It's been especially rainy this winter, which has aggravated the problem. The water needs to be diverted away from the house.
She's contacted several foundation companies, and all of the estimates were more than what we can afford, or would even realistically pay. She's getting quotes from several people who do this kind of thing "on the side."
It wouldn't be worth the time to even sink that kind of money into this house. We'd be better off to take the equity, and move to a house on level ground elsewhere.
Quote:
Originally Posted by njbiodude
Get a high paid job in a good metro and roll your 80k into a place there?
Ultimately, working in a HCOL area as long as you can get a high paying job for a decade or three is good for most people’s net worth.
Where I'm going is one of the highest, if not THE highest, COL area in NC. Wages, however, do not keep up.
I make in the mid-$80k range and work remotely for a government. The benefits are incredible. It's a great area to live in if you can afford the housing. I might be able to make another $20k or so in the office in Charlotte or Raleigh in the private sector, but I really wouldn't want to go back to full-time RTO. It would need to be a big offer - big enough that it's unlikely to happen.
I'm not going to move from podunk, TN to podunk, NC. I want my next move to be a clear step up.
The issue is that my local department is having a hard time staffing, even with a remote work policy. 30-45 minutes in any direction of the county is still very expensive housing. Yes, you can go an hour or more out for cheaper housing, but then those tiny towns are not typically attractive for white collar IT staff. If you're willing to push the boundary to Charlotte, you can probably find something higher paying.
Last edited by Serious Conversation; 02-07-2024 at 07:10 AM..
I moved from a LCOL area to a VHCOL area, partially for job-related reasons. Pay is higher here, and quality of life is overall superior. But the ratio of local housing prices to incomes, is here much larger than in my former locale. To rephrase, yes, prosperity is higher here. But housing is proportionately even higher. For a person cashing-out a Midwestern house and doing such a relocation, to make a jump into comparable housing here, would take, to put it mildly, some spunk, creativity and patience.
Thus it makes perfect sense, why a homeowner would feel "trapped" in a LCOL area. If such a house, fully paid-off, only amounts to a down-payment in the VHCOL area, then it's hard to imagine, as to how the new area is on net a pecuniary benefit. It might be great for one's career, social life, or general enjoyment. But financially? Not so much.
A lot of people don't seem to understand this.
Small town TN to Charlotte with $80k in the bank is doable. I would be really strained to, say, buy in Boston right now.
If you're coming from a small market like this, you're probably going to be underpaid compared to say a Boston native with a similar job title. If you're making $50k in TN, $90k in Boston sounds good, even if the market rate for the position is $130k.
That's assuming you can even find a job to begin with.
My girlfriend has water coming into the basement of the house. The basement is partially underground, with the front of the house set into the hill. The hill is "lumpy," with the slope of the hill causing the water to run right into the basement cinderblock in certain locations.
It's been especially rainy this winter, which has aggravated the problem. The water needs to be diverted away from the house.
She's contacted several foundation companies, and all of the estimates were more than what we can afford, or would even realistically pay. She's getting quotes from several people who do this kind of thing "on the side."
It wouldn't be worth the time to even sink that kind of money into this house. We'd be better off to take the equity, and move to a house on level ground elsewhere.
Where I'm going is one of the highest, if not THE highest, COL area in NC. Wages, however, do not keep up.
I make in the mid-$80k range and work remotely for a government. The benefits are incredible. It's a great area to live in if you can afford the housing. I might be able to make another $20k or so in the office in Charlotte or Raleigh in the private sector, but I really wouldn't want to go back to full-time RTO. It would need to be a big offer - big enough that it's unlikely to happen.
I'm not going to move from podunk, TN to podunk, NC. I want my next move to be a clear step up.
The issue is that my local department is having a hard time staffing, even with a remote work policy. 30-45 minutes in any direction of the county is still very expensive housing. Yes, you can go an hour or more out for cheaper housing, but then those tiny towns are not typically attractive for white collar IT staff. If you're willing to push the boundary to Charlotte, you can probably find something higher paying.
How about Seattle or NYC or San Jose or some other tier 1 job metro? For 5-10 years at least? Buy a condo then move up rapidly. Most likely you’ll be able to hit the 200k mark eventually. When you’re done at least you’ll have enough for probably an entire house in a LCOL area if that’s what you want and wages don’t matter as much. If you want a lot of land then it’ll be easy to acquire.
The problem is once people get to their later years that only lived in a LCOL area they don’t have enough equity or retirement savings to retire well if they didn’t make enough.
Last edited by njbiodude; 02-07-2024 at 11:46 AM..
How about Seattle or NYC or San Jose or some other tier 1 job metro? For 5-10 years at least? Buy a condo then move up rapidly. Most likely you’ll be able to hit the 200k mark eventually. When you’re done at least you’ll have enough for probably an entire house in a LCOL area if that’s what you want and wages don’t matter as much.
This is doable, under two provisos. First, the incumbent has skill-level, or can rapidly attain it, commensurate with the high-paying jobs. Being a top-10% contributor in East Podunk, might render someone only middling at best, in a tier-1 market. Then the capacity to rise, is muted. Of course, one does not know, until one tries.
Second, I'd not venture into housing-ownership at all, but rent a small apartment. A 5-year stint doesn't offer sufficient upside as an owner, given the high property taxes, the vicissitudes of the market, the transaction costs and so on. Better to ratchet-down one's material standard of living, rent a studio-apartment in the crummy part of town, and save one's nickels, for example in the stock market, or at least in higher-yielding (relatively speaking) low-risk alternatives.
Since we have a particular person in mind, when dispensing such advice, we also have to consider age. At say 27 this is quite doable, but knocking on 40, with a relationship and ailing parents and so on, such drastic and speculative changes may be too much.
This is doable, under two provisos. First, the incumbent has skill-level, or can rapidly attain it, commensurate with the high-paying jobs. Being a top-10% contributor in East Podunk, might render someone only middling at best, in a tier-1 market. Then the capacity to rise, is muted. Of course, one does not know, until one tries.
Second, I'd not venture into housing-ownership at all, but rent a small apartment. A 5-year stint doesn't offer sufficient upside as an owner, given the high property taxes, the vicissitudes of the market, the transaction costs and so on. Better to ratchet-down one's material standard of living, rent a studio-apartment in the crummy part of town, and save one's nickels, for example in the stock market, or at least in higher-yielding (relatively speaking) low-risk alternatives.
Since we have a particular person in mind, when dispensing such advice, we also have to consider age. At say 27 this is quite doable, but knocking on 40, with a relationship and ailing parents and so on, such drastic and speculative changes may be too much.
Yeah, he just wants to whine about it. He needs to just hunker down where he is at and make good financial decisions. The opportunities that are available when you are first starting out in life dwindle when you are locked in place (like you said).
I moved from a LCOL area to a VHCOL area, partially for job-related reasons. Pay is higher here, and quality of life is overall superior. But the ratio of local housing prices to incomes, is here much larger than in my former locale. To rephrase, yes, prosperity is higher here. But housing is proportionately even higher. For a person cashing-out a Midwestern house and doing such a relocation, to make a jump into comparable housing here, would take, to put it mildly, some spunk, creativity and patience.
Thus it makes perfect sense, why a homeowner would feel "trapped" in a LCOL area. If such a house, fully paid-off, only amounts to a down-payment in the VHCOL area, then it's hard to imagine, as to how the new area is on net a pecuniary benefit. It might be great for one's career, social life, or general enjoyment. But financially? Not so much.
At age 30 we moved from the Midwest to a bedroom community north of NYC. Housing costs were double, interest rates were crazy, utilities were twice as much and taxes… it was NY. It did take a leap of faith to do it. Moving to a HCOL area meant higher pay and opportunities not available in the LCOL area though. Short term it made no sense, but long term it did.
The promotions and increased pay we both received means higher social security amounts after retiring. We liked the area, but without work or family holding us there it was an easy choice to move to a different LCOL area with better weather and family nearby again. Financially we are in a much better position because of moving to a HCOL.
Location: By the sea, by the sea, by the beautiful sea
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Quote:
Originally Posted by Serious Conversation
The interest rates combined with the property prices are the killer right now.
One wouldn't be that bad if the other was more reasonable. As it stands, the average buyer's purchasing power has been really hampered by the current climate.
It's also often hampered by the obsessive need to buy the latest and greatest $1,000 phone every year along with a new $80K SUV every other year, a Rolex when their new phone will tell them the time etc., etc., etc..
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