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Old 11-21-2006, 08:59 AM
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 13,740,022 times
Reputation: 1026


Because of this disparity, some people debate or even argue that their location/town/city/area/state is cheap and others argue that it is not cheap! I consider Texas, for the most part extremely cheap but some of you disagree. What would be a fair apples to apples comparsion? Equal house size, equal lot size, equal location, equally good(or questionable) neighboorhood. This is hard to do because there may be some other variable that makes the comparsion a little unfair. For example, the condition of the house may not be known, mentioned or apparent. Another variable is you cant always tell if its in a good/bad location, a cheap house in one state could be in an undesirable location while a more expensive house in another state may also because its in a desirable location. Even median house prices dont tell the full story. How do I know how much house you are getting for the median price in a given area?

Take Texas for example, there are houses as cheap as $10000 and in Dallas theres 200+ houses priced below $50k! You will be hard pressed to find a house below $150k in south Florida! The cheapest house in TX is several times cheaper than the cheapest in south Florida for the same "ugly" house. Yet a nice house in both areas isnt cheap, but TX is the less expensive of the two. The gap is much larger in the cheap house sector but much smaller in the expensive house sector.

There also is a huge gap in condo prices, I can get a 1/1, 2/1 or even 2/2 condo in a metro city in Texas as cheap as $10000 and theres dozens to choose from for $15k, $20k, $25k price points. Good luck finding any(excluding 55+) condos for less than about $99k in south Florida! Yet for $200k in south Florida, you can get a nice 1/1 up to 2/2 condo in an upscale area! Half the price and your looking at an old 1/1 condo in a questionable neighboorhood! But in Texas, you have to pay five times the price for a nice 2/2 condo! Yet a cheaper condo can be had for just $20k! I know theres an $80k difference vs. $100k difference but I think of it as exponential difference, not amount difference. Its not "only" $80k difference, its 400% or 5x difference(20k vs. 100k) If the same was true of south Florida, the 5x difference would be the same, but the amount difference would be $400k!

It may be justifable to spend 5x more if you want to look at it as an $80k difference instead(and if you have lots of money that apperently 5x more is no object) But when the same 5x more is between $100k and $500k or more extreme $500k and $2.5m, suddenly you are looking at an incredable $2m difference and this difference becomes staggering even though its the same exponential difference. I kinda answered my own question on this one. $20k is like "way cheap" and even at 5x more, $100k is "still kinda cheap" and in this scinerio, most people look at it as "only" $80k more, nevermind the fact its 5x more expensive. Take $100k "still kinda cheap" and compare it to $500k, even $300k and it becomes "whoa expensive!" The multiplier has not changed, just the difference and by alot, even with a 3x multiplier.

$20k cheap Texas condo
$100k expensive Texas condo
$100k cheap Florida condo
$200k expensive Florida condo

*countinued next post*
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Old 11-21-2006, 09:00 AM
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 13,740,022 times
Reputation: 1026
The common ground is $100k. Some people compare a cheap Texas condo to a cheap Florida condo(can compare house vs. house too) and they go "whoa Texas is so much cheaper by 5 times! or whoa, Florida costs quintriple!" Others compare the best with the best and say "well Florida is more expensive but not that much more, its only twice the price"

What I do is take the average of the two extremes to assess relative real estate value/price. Texas's average is $60k, Florida's average is $150k then the difference becomes 2.5x instead of 5x(or some other large multiplier)
California has an even smaller multiplier, the two extremes is quite small. It appears that the more expensive a city is, the less of an extreme there is between cheapest and most expensive for a similar house or condo. Im thinking maybe when a location is so desirable, people pay good money even for an old house needing TLC in a questionable neighboorhood. But in a cheap area, a much larger percentage of people can afford "better" so they do exactly that. A $20k condo is too cheap/affordable for many people when they have more than enough money for the average $60k condo or even a more expensive $100k condo. But when were talking about say $200k vs. $400k, the number of people that can afford $400k is far, far smaller than $200k. Even though its only 2x "twice" as expensive, the price difference is still $200k. From $20k to $100k is a whopping 5x difference, but the price difference is much smaller at $80k and theres alot more people that can afford $100k than $200k and especially $400k!

This raises a very important question worthy of discussion: is a cheap house in a "desirable" city really worth as much as an expensive house in a "cheap, less desirable" city? Both are good locations and bad locations at the same time! Lets use one of the popular metro cities in CA. Say you have $400k or can afford a $400k mortgage. This wont get you much of a house in any popular metro cities in CA. Youd be looking at an old 2 bedroom house that might need a little TLC on a zero lot in a questionable neighboorhood. But...you could get a huge stately grand house thatll take your breath away, its such a beautiful piece of art on several acres of land in an upscale area in a smaller city in Ohio! If you wanted to compare apples to apples, a similar house to the $400k one in CA may be just $20k in OH! You dont have to live in such an extremely cheap city, you could live comfortably in an upscale area in a midrange city with the $400k you can afford.

Its amazing how much location matters! The cheapest land in America is under $1000/acre(I know someone who says $500/acre) The most expensive land is over $10m/acre, although theres two tiny lots in SF CA, one for 1.9m, the other for 5.5m that come out to $32m+ and $110m+ an acre respectivately! Neither is even oceanfront! The smaller lots usually have a higher cost per acre because if only one house is allowed, of course a few small lots is worth more than one bigger lot, more houses can be built per acre if each lot is smaller. I wonder if theres any lots in the world that hit the $1b/acre mark! The disparity between cheapest and most expensive is over 100,000x(under $1000 vs. over $100m) As to the cost per square feet for house+lot cheapest is under $10, most expensive is over $5000, a difference of as much as 1000x! Of course most of the difference is due to lot/land cost. Construction costs as well as age, location and condition of house are other factors.

That was a long interesting post! Feel free to share your comments and opinions.
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Old 11-21-2006, 05:00 PM
Location: Scottsdale, AZ
4,472 posts, read 17,032,048 times
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I skimmed over it and you do make some good points but your question
is a cheap house in a "desirable" city really worth as much as an expensive house in a "cheap, less desirable" city?
. I think the majority will say YES. I'd much rather have a tiny condo in a city like San Fran/ NYC than a grand estate in rural Podunk, Idaho. How much time do you really spend in a home? I mean seriously think about it.

On average I leave for work at 6:30 a.m. and get back around 5- 5:30 p.m. Then I usually stay at home unless I feel like eating out. I usually get to bed around 11:30 p.m. So on average I am in my home for 6 hours (not counting the hours in which I'm asleep). I'd much rather have a great city to explore than a place where I AM confined to my home because there is nothing to do.

I grew up on a farm in Iowa. I love my farm but there is just nothing to do and the nearest large city is 2 hours away. I hated it back then and could never live there permanently. I need a thriving city and it's one of the reasons I love Scottsdale and to a lesser extent Phoenix. I can drive 5 minutes and be at a mall, resturant, theater, etc etc.
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Old 11-22-2006, 01:40 AM
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 13,740,022 times
Reputation: 1026
Well that depends on your needs. Do you need alot of space? If not a 1/1 condo or studio might be big enough if you dont collect anything and just have the basics like food, cloth and a small TV. But what about that $100k condo in WPB vs. that $100k condo in Dallas? Both are the same size but bad neighboorhood in WPB, upscale neighboorhood in Dallas. What is better about WPB that youll be willing to live in a bad area in that city?

Because you are out alot, you dont need as big a house as I do. Ill be staying home almost all day, only going out for shopping, fishing, hiking, visit friends and family or driving out of town to a big city to have fun all day. Ill be self employeed with a home business which means staying home. Therefore I can live anywhere and I want the best home I can afford. Oil city is high on my list. The crime is half the national average and a tenth of many metro cities! With 11k(plus thousands more in nearby towns) theres plenty of people to make friends with and Theres a super Walmart among other stores, enough for my basic needs plus I can commute to nearby towns/cities for more shopping.

2 hours away from the nearest city? Wow that is rural! Where ill be living, ill be in a small city plus a short commute from the nearby cities and towns with many cities an hour away in all directions!
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Old 11-22-2006, 01:08 PM
Location: Anne Arundel County MD
262 posts, read 1,978,614 times
Reputation: 523
The cardinal rule of real estate:

The three most important factors in the value of a home are location, location, and location.

NAH, sorry, prepare to be grilled, but please don't take it the wrong way - as I've mentioned I think you're smart to invest in a house at a young age. But you're really in the minority with most of your thinking. Can you name anything about Oil City PA that you like besides the fact that it has cheap houses? Have you ever been to the Pittsburgh suburbs? If it fits your needs, fantastic and I wish you the best of luck. But you've been sold on Texas, WV, and Ohio in the past few weeks and change at the drop of a hat. It's clear you can find a cheap house in a lot of places... what kind of LOCATION would you like???

Also keep in mind that if you are a freelance graphic designer, you're really only going to get clients that are a) personal contacts/friends, b) referrals, or c) in your immediate area. I don't care how good your website or advertising is, with all of the competition out there, you won't score many accounts that can't meet with you in person and discuss projects unless you have a really good track record. My father is probably in the top .001% of graphic designers in the USA (he's been the man responsible for presidential inaugurations & banquets, television awards shows, the MLB All Star game, wine labels, etc) and HE had a hard time doing freelance work - why? Because he wasn't out and about meeting contacts and building relationships. Not to turn this into "business 101", but you're not just a graphic designer, you're ultimately a salesperson. And if you don't have the audience in the Pittsburgh area that is willing to pay accordingly for a graphic designer, well... don't count on making more than a few grand here and there.

I'd actually be really interested to hear about your home business... I considered dabbling in that for a while since I have some experience with programs like Quark XPress and Photoshop and some older, more advanced applications like Ray Dream Designer and Virtus.
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Old 11-22-2006, 09:51 PM
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 13,740,022 times
Reputation: 1026
Of course! As for young age, ill be 25 when I move out. Most people move out by 18, they go to college and rent a dorm. After college, they find a job to pay their rent or mortgage. I want to move out so I have my own house, my own rules, my freedom and my parents deserve the house all for themselves. I can name several things I like about Oil city. Low crime(half national average) Nice cool summers(wont need a/c) Experiencing 4 seasons which makes for a change of life, low costs of living(not just houses) low taxes(36th ranking) Not alot of traffic, easy to navigate small cities unlike metro cities where theres more streets than I can name and I can easily get lost! Im not good with directions! Nice friendly people in towns and small cities where everyone knows everyone. Beautiful hills and trees and several other things I can name.

Yes I keep finding new places that are good and cheap and I drop some places off my list. Texas is low on my list now, the crime is high there, the traffic terrible, the summers hot enough to melt you and a good nice big house(like 5 bedrooms) is around $150k, something I cant really afford without being house poor.

Why would freelance graphics designing be limited locallly? With the internet, I can get clients worldwide. Personal contacts is just a small market share compared to the WWW. Why would they need to meet me in person? There is email and instant messenger for that. All they have to do is tell me what they want in email, messenger or submit an order form by filling the blanks for what criteria they want. I will then make what(initial design) they want and do any changes/edits till the final project satisfies them. Your dad is in the top 100,000? That is totally amazing! It sounds like he is famous! He wouldnt need to freelance, he could be vice president of a huge prestigious company and make $200k easy! I am an amature and no company wants me. I would work for a company if they paid enough so I can actually afford a nice house in a given location. Take Texas for example(lower costs of living than most other metro city-states) In Dallas, a nice big house thatll satisfy me would cost $175k! I would need a $70k gross annual salary to afford that house without "pushing" things and risking debt. I would need over $100k in many other places! Ill have to be "elite" to pull such big money. Starting salary appears to be about $35k and that arent enough for a house in those metro cities where those companies are located(unless you can find a big company in a small town, but then houses wouldnt be cheap in that town!) I have to face the facts, house prices are not in line with fundamentals in many places. Oil city is cheap because theres no good high paying jobs so I will just have to be self employeed.

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Old 11-22-2006, 09:54 PM
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 13,740,022 times
Reputation: 1026
I may make a little less freelancing than working for a big company but the costs of living is so much less, my money will go alot further. I recon say $30k a year salary is very reasonable as a freelancer. Even if I could make double that or $60k working for a company, houses in my neck of the woods are $400k for my dream house.(I could have a 1/1 condo for $150k, but too small) My choices would be a nice mobile home, a 1/1 condo or rent a small house(no equity, all money gone) Even if I own a 1/1 condo, the property taxes, hurricane insurance ans HOAs arent cheap! In a place like Oil city, freelancing for $30k a year, I could get a very nice house for as little as $20k and the smaller, simpler houses can be had for near/under $10k(yes thats 4 figures!) $30k goes much, much, much further than $60k in a metro city plus I can enjoy alot more house in Oil city on a $30k salary where a $60k salary will never get me more than a small 1/1 condo in a metro city! I know theres more fun/entertainment to do in a metro city, but it comes with a very high price, ill feel poor overall due to extremely high costs of living, ya understand.

In Oil city, homestead is $30k in the state of PA. I will self insure(no point paying insurance companies on a cheap house) Ill have zero property taxes(if I buy a house up to $30k, even if not, itll only be a few dozen dollars a year) ill have zero insurance, ill have zero mortgage and interests, will buy with 100% down(can always "upgrade" to a bigger, better house or buy a second house when I save more money) Other costs of living is very low. Utililies should be $50-100 a month, cost of car, insurance and gas another $100 a month. Food will be my biggest expense I can think of at $300-$400 a month!

Theres thousands of home businesses possibilities. Ebay alone provides income to thousands of people. I see people sell almost anything you can imagine on ebay! I can offer my graphics design services on ebay as well as on my website(cheap, only $10/month to host and another few dollars a month to advertize, wont be near the top of the list but a few pages down but much, much cheaper that way, people pay big money to be on the front page or the very top. Not only that, lots of fradulant clicking.) If for some reason, freelance graphics alone doesnt make me enough, say I cant find enough customers/clients I can take on a second business such as being a reseller of a popular product like yankee candles! Ill buy wholesale from a company and sell them individually for a healthy profit margin, simple as that.
How much money a year do I really need to live comfortabily in Oil city with its very low costs of living?
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Old 11-23-2006, 10:56 AM
79 posts, read 349,641 times
Reputation: 59
affordable home, I think you have the right basic idea, "Low cost" rural area w/ free lance better paying job thats not "Local" I am surprised that more people don't do this. I have done this and have been in business for over 30 years, no offense to you but I think your doing some creative accounting. The graphic arts business is very competive your 30 k freelance income won't be easy in a rural area. Your cost estimates are way low!!! All things are about the same except for real estate prices ( supply and demand) & local taxes. Food, insurance, most other goods and services are about the same area to area. Have you looked @ a 30k house in Oil city? its rough and will need a lot of work. a piece of plywood is the same $ in oil city as it is in S.F. CA, and what are you going to have when your done 10 or 20 years from now? just somthing to consider. I think life is much better in rural areas but be carefull of being "too cheap" best of luck to you.
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Old 11-24-2006, 12:31 AM
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 13,740,022 times
Reputation: 1026
To be honest I dont know how much ill make, but considering how cheap the houses are, any reasonable amount of money will make living affordable. If I can make $30k a year, ill get one of those nice big $50k houses. If I dont make nearly as much, theres some pretty much OK houses for less than $25k.

http://homepics.realtor.com/image9/http/alleghenyvalley/listings/large/040/134298.jpg (broken link)

That beauty above is just $16k!
3 Bed, 1 Bath
1,846 Sq. Ft.
0.17 Acres
The lot looks alot bigger than the .17 acres too!

Food is still going to be cheaper up there, lots of farmland, can get produce and poultry cheap. Taxes will be zero for property. Insurance will be zero on everything except driving(required by law) and health insurance(bad idea to go without!)

Ill buy a house that does not need alot of TLC because its expensive and time consuming. I have seen pictures and virtual tours of houses in Johnstown and they had no problems except for minor cosmetic blemishes like a crack in the wall(no big deal) or some peeling paint(new paint is cheap) or maybe a few pieces of rotten wood(pocket change to replace)

If I was rich, I would possibily buy in Houston:

http://homepics.realtor.com/image1/http/houston/listings/large/008/9264749_0.jpg (broken link)
Wow!!!!!!!!! That is fantanstic!
5 Bed, 5 Bath, 3 garage
4,231 Sq. Ft.
0.23 Acres

But I dont have that kind of money plus costs of living is much higher in Houston than Oil city! My topic for this thread was "There is a huge disparity in house prices in some areas!" and to stay true to the topic, look how insane Los Angeles house prices are!

http://homepics.realtor.com/image8/http/mrmls/listings/large/017/m602706_1.jpg (broken link)
1 Bed, 1 Bath
572 Sq. Ft.
0.03 Acres

http://homepics.realtor.com/image8/http/mrmls/listings/large/042/h613233_1.jpg (broken link)

3 Bed, 2 Bath
1,000 Sq. Ft.
0.07 Acres

http://homepics.realtor.com/image2/http/crisnet/submit/large/015/r2046822a.jpg (broken link)

3 Bed, 1 Bath
1,213 Sq. Ft.
0.13 Acres

More than half million for a small house! Granted its very nice and looks new on the inside(saw other pics) But thats $429/foot! Houston is much more reasonable with an average cost of $80/foot(in fact you can get many houses for less than that) and in Oil city, theres many houses for just $20 to $40 a square foot!(some in fact for under $10/foot!)
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Old 11-26-2006, 10:30 PM
Location: Heartland Florida
9,324 posts, read 25,828,978 times
Reputation: 5029
There is no location on earth good enough for me to live in an apartment or condo. As for LA it's ok but the air is filthy and there's no water. Who wants to live in a cramped space unless they are living in a city like a tourist and only comming home to sleep. For those of us with a home based business or a creative spirit would benefit from more room.

Iam one of those who thinks that suburbs are becomming obsolete. The internet allows more freedom of location and less commute. I alredy use Asterisk PBX to work from home a day or two a week. Another benefit is getting away from overpriced cities with so many refugees willing to live in poverty. Imagine raising a family in a place not like the ghetto. Anyone who buys those tiny overpriced houses needs mental help.
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