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The coastal markets are not representative of the nation as a whole, and I say that as a former west coaster.
Santa Monica housing prices aren't even representative of the rest of CA. Spending tons of money on your house doesn't make you not middle class, it just means you are over leveraged on a single asset. It barely even matters if it's real estate vs Magic the Gathering cards or drugs.
The US has serious economic segregation such that few middle class people live in Santa Monica or Manhattan. They live in North Hollywood, Long Beach, etc in LA and in NYC they live in Harlem or Queens.
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Whether a million dollar property is 300 sq. ft. or 3k sq. ft. is irrelevant; it's still not within the reach of middle income earners for the U.S. as a whole.
That's right, and since money is fungible, if the 5000 sq ft home owning person in Oklahoma wanted to live in Manhattan in a million dollar place, they could because they are not middle class.
or the other way a round , lots of new yorkers with nice expensive homes who live a middle class lifestyle here , are relocating at retirement and living the lifestyles of the wealthy in Oklahoma
Thank you for such an excellent example of why these discussions always go sideways. The coastal markets are not representative of the nation as a whole, and I say that as a former west coaster. The middle of the country thinks you are completely out of touch with reality, because, essentially, you are. Whether a million dollar property is 300 sq. ft. or 3k sq. ft. is irrelevant; it's still not within the reach of middle income earners for the U.S. as a whole. This is something we're starting to see in Denver now, and there are far-reaching consequences. We are rapidly becoming affordable only for upper-middle income earners.
Great post.
It always cracks me up when people from Richville USA think they're middle class because they and their neighbors are all wealthy. It's possible for everyone in an area to be upper class. And being upper class isn't a bad thing, despite the stigmas they might have in their heads.
or the other way a round , lots of new yorkers with nice expensive homes who live a middle class lifestyle here , are relocating at retirement and living the lifestyles of the wealthy in Oklahoma
Lots of upper class people live middle class lifestyles. I think it's the prudent way to go, for this exact reason.
except middle class lifestyle is not median income . middle class incomes needed to live middle class lifestyles can be very high , especially in the tristate area .
That article is about people living in a Richville USA. They only realize they're wealthy when they capitalize on their wealth (like moving to a normal cost of living area).
For Manhattan: "I'm not middle class, but I play one on TV".
The median household income is what, $50k? And the average home price in Manhattan, according to your article, is $1.4MM. That's a full 28 times the median household income. That's how far out of touch some people are with reality. They think $1.4MM for a house is middle class.
Then they move to Oklahoma and find out they can buy three brand new 5000 sqft mansions with their Manhattan home money.
Like randomparent pointed out earlier, ultra high COL areas are not the norm in the US, and those that live there are not middle class.
or the other way a round , lots of new yorkers with nice expensive homes who live a middle class lifestyle here , are relocating at retirement and living the lifestyles of the wealthy in Oklahoma
I don't think so. I am not sure about Oklahoma's real estate market but that does not apply in Dallas Texas. Banks in those high cost living areas feel more comfortable giving loans because of the hotter real estate market. People who make less then 200k can get their hands on a 1 million dollar property. I know some young working professionals in the bay area who have bought 1 million dollar properties with a loan in decent neighborhood with good schools and they make like 150k a year.
Banks in Dallas have higher expectations when giving loans. That 150k New York salary is like 110k in Dallas. In Dallas Texas people making 110k live in houses around 350k-500k. if you want good schools in Dallas good luck, the only area with good schools is Highland park and some areas around it which is completely out of the range with someone making 110k (people in highland park have incomes of 300k+). If they wanted good schools you would have to look at suburbs around Dallas which are kind of far from Dallas. Their lives are not as lavish as people think. They drive normal cars and do normal things. They are not loading golf clubs in their Porsches going down to their local country club or taking lavish vacations.
Also I really do not think the repairs and upkeep of a 1 million dollar condo in Manhattan is going to be more expensive then a 1 million dollar house in Dallas. So if someone had 1 million in cash and decides to buy a 1 million dollar large house in non affluent communities in a low cost of living areas then prepare to have an increase in repairs and upkeep. Those large houses are not cheap even with that cheaper labor! The people living in those large 1 million dollar homes in Dallas are very affluent people. I have no idea why people think living lavish lifestyles is easier in low cost of living areas because those areas are cheaper for reasons.
the typical tristater is not buying million dollar homes once they relocate . they are buying regular middle class homes in cheapsville and live very nicely based on selling assets up here . the typical long island home today is 600k and up . westchester can be 700k and up .
400,000 long iland boomers and millennials say that they eventually will sell there expensive long island homes , take the proceeds and relocate to cheaper areas at retirement .
I don't think so. I am not sure about Oklahoma's real estate market but that does not apply in Dallas Texas. Banks in those high cost living areas feel more comfortable giving loans because of the hotter real estate market. People who make less then 200k can get their hands on a 1 million dollar property. I know some young working professionals in the bay area who have bought 1 million dollar properties with a loan in decent neighborhood with good schools and they make like 150k a year.
Banks in Dallas have higher expectations when giving loans. That 150k New York salary is like 110k in Dallas. In Dallas Texas people making 110k live in houses around 350k-500k. if you want good schools in Dallas good luck, the only area with good schools is Highland park and some areas around it which is completely out of the range with someone making 110k (people in highland park have incomes of 300k+). If they wanted good schools you would have to look at suburbs around Dallas which are kind of far from Dallas. Their lives are not as lavish as people think. They drive normal cars and do normal things. They are not loading golf clubs in their Porsches going down to their local country club or taking lavish vacations.
Also I really do not think the repairs and upkeep of a 1 million dollar condo in Manhattan is going to be more expensive then a 1 million dollar house in Dallas. So if someone had 1 million in cash and decides to buy a 1 million dollar large house in non affluent communities in a low cost of living areas then prepare to have an increase in repairs and upkeep. Those large houses are not cheap even with that cheaper labor! The people living in those large 1 million dollar homes in Dallas are very affluent people. I have no idea why people think living lavish lifestyles is easier in low cost of living areas because those areas are cheaper for reasons.
Funny you mention Dallas. That's where we're looking to relocate, so I've been researching all things DFW. During a scouting trip down there last August, my eyes bugged out at how far our money went there vs here in Chicago.
Maybe it doesn't seem like it to the people that live there, but the homes in our price range felt like Lifestyle of the Rich and Famous. All brick homes, 3-4k sqft, gated communities, in-ground heated pools with waterfalls, etc. The same homes here are 2k sqft from the 1960's. If we wanted a Chicago home in that Texas style, we're looking at $800k minimum, but usually in the $1.2-1.4MM range.
With the money we're saving by relocating (works out to almost $2,000/mo), we could live a much more lavish lifestyle. But that's not for us, we'd rather retire earlier. It just opens up more options to relocate.
the typical tristater is not buying million dollar homes once they relocate . they are buying regular middle class homes in cheapsville and live very nicely based on selling assets up here . the typical long island home today is 600k and up . westchester can be 700k and up .
400,000 long iland boomers and millennials say that they eventually will sell there expensive long island homes , take the proceeds and relocate to cheaper areas at retirement .
That's a great way for those upper class folks to accelerate their retirement, especially if they have modest living needs.
Middle class people have fewer and fewer opportunities to do that, since the spread between Richville and Cheapsville can be great for upper class people, but Averageville to Cheapsville for middle class people is marginally cheaper at best.
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