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Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,694 posts, read 58,012,579 times
Reputation: 46171
Quote:
Originally Posted by twinkletwinkle22
The hardest part about wanting to live in a HCOL area is saving enough money to buy a home there. ...If you want to stay in HCOL you better own a home to make that possible, even then you can't control RE taxes and other costs.
Why would you ever want to own a home in a HCOL area?
Usually rents in HCOL region are far better use of funds.
Stick that RE investment into a 12% NNN cash flowing region and live off the income.
Buy a tire / auto shop building in Reno or Atlanta and use the $10,000/ month rental income check to pay $3000 - $5000/ month rent in HCOL area. (One elderly friend in WA has owned a commercial building in Atlanta for over 20 yrs. He's never been to Atlanta!, just send the dough each month). He has 7 yr lease with Japanese business who pays 3 months in advance, does all maint, pays ins & taxes, utilities, repairs, improvements...
Why tie up equity in an underperforming liability in a HCOL area? (which typically will become a heavier burden on cash flows and non-liquid equity doing NOTHING for your wealth.)
My home is assessed at 10x my cost basis, yet it is a terrible performing iliquid asset that COSTS me dearly in opportunity costs each and every year. And... may at some point be impossible to sell. (High interest, high crime, city decline, recession, lost jobs, urban exodus...) Sounds real risky to me. (I'll take the monthly income check, please.) All the way to the bank, each and every month.
Eventually I may want to buy a house in a reasonable place, but my experience is HCOL areas always have nice bargains on unique rents. (and you can change often if you like... no transaction costs!)
Why would you ever want to own a home in a HCOL area?
Usually rents in HCOL region are far better use of funds.
Not when rentals are hard to come by, and more & more of them end up being converted to short term rentals. Very unsettling and hard to make long term plans in a market like this. I don't want to rent forever...would you?
And in my case, this wasn't a particularly HCOL area when I moved here. Only in the past 3 years or so (post Covid) has the housing situation exploded. If I was researching my town currently as a potential place to move to, I would definitely pass based on the housing situation alone.
I can relate. I am a native San Franciscan, so don't need to say more than that. I haven't lived in my home town since the 1980s, so this is nothing new as many others here have pointed out.
I can relate too. Native Orange Countian and left in the 80s. Our little starter home in Mission Viejo is now a million bucks.
Upon retirement, we realized we couldn't afford a "nice" retirement in the U.S. So we did the ultimate bail-out and moved to So. America where we can live in luxury, lol. Now we can afford to return for a couple months every year, and get our dose of Amazon, Trader Joe's, whale-watches and other civilization.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,694 posts, read 58,012,579 times
Reputation: 46171
Quote:
Originally Posted by heavymind
Not when rentals are hard to come by, and more & more of them end up being converted to short term rentals. I don't want to rent forever...would you?
....
Sure, I plan to rent throughout my old age.
BTDT with over 40 properties myself.
All my areas 'turned-into' HCOL housing, and it's sad the STR market has been so disruptive to valuations and rental availability in popular locations.
I envision much of my retirement being spent outside the USA, renting a furnished LT flat in a rural village near a hub city.
If I were to be able to stay in USA,*. I would live in a CCRC or a senior housing co-op (owner of the aggregate property, not individual RE)
*(Lack of affordable / available medical and LTC - coming social ills)
It's just common sense that if you can't afford to live in the area that is your first choice, you find some place where you can afford to live. Or else, you figure out how to increase your income to cover the higher cost of living.
The best trick for living in a high cost area is to have purchased a reasonable home in a decent neighborhood at the time that you moved there. High cost of living is mostly the cost of real estate and if you can get a fixed rate mortgage, your house payment doesn't go up like rent does and the price of housing going up does not affect you. I'm siting in a house right now that I could not afford to buy today. But it was bought when the price was about $1 million less than it would sell for today, and so here I am, living in a nice clean neighborhood in an area I love.
But if you can't afford to live there, live somewhere else. And do not pack up and move to an area you can't afford. Myself, I'd love to have a condo right on the sands at Waikiki, but my budget won't stretch that far, so I don't try to do it anyway, hoping that it will all work out somehow. If you can't afford to live in Seattle, don't move to Seattle. If you can't afford to live in NYC, do not move to NYC.
Certainly moving to avail yourself of lower housing costs is a likely strategy, but that must be balanced against possible lower income. Or the commute may be longer. Alex Kotlikoff notes how he saved a fortune moving from Boston to Providence, just a tran ride away. Of course, if you can work mostly remotely, the savings can be even greater.
Our quality of life improved immensely after we left CA and moved to SC. We bought a beautiful home for a fraction of what we were spending on rent. I went back to work for the same corporation and the pay was actually higher than in CA. Most of our family followed us and have purchased nice homes to raise their families.
Like others have said, families have moved for a better life throughout history. There's no reason to feel locked into a location if you have an opportunity to build a better life in another town.
We've found there are nice people everywhere. We've loved every place we've lived.
I had to move out of the USA In order to not have to move to the street.
Better weather, great fruits and veggies and much cheaper.
And forced to become fluent In Spanish also
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,550 posts, read 81,103,317 times
Reputation: 57750
We moved to a different state but for different reasons than financial. Now after 30 years here in Sammamish WA I'm getting ready to retire. With property tax at $11,000 now and homeowner insurance at $2,900 we would struggle to stay here. Plus with over$1 million in equity now it makes sense to move to a less expensive are and downsize, paying cash, and keep our same lifestyle on our retirement income. We will actually end up closer to some family, farther from others.
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