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“Owning a home is a keystone of wealth, both financial affluence and emotional security.”
Real estate has been part of my life for as long as I can remember. On Sundays we’d pile into the car to look at properties my parents’ company owned or to preview homes for sale. One of my first jobs out of college was in real estate sales, and I began investing in my twenties. I still work for a real estate holding company.
This past summer, El Carino and I relocated and bought a short-sale condo. Our house is two stories, about 1,800 square feet, with four small bedrooms. A comparable home in New York City would sell for two to three million dollars, yet our purchase price was nowhere near that.
My interest goes beyond property investment — I love home decorating. For that fix I watch HGTV, and “House Hunters” is a favorite. The show always reminds me of one obvious truth: the exact same house can sell for $200,000 in one place and $2,000,000 in another, simply because of location.
We moved from a very low cost-of-living area to a pricier region (not New York City). The house we sold had more square feet and cost less than the new place we bought. Those kinds of differences are common: choose a big city like Los Angeles, Chicago, New York, or San Francisco and you should expect to pay 100% to 400% more for a home than you would in a place like St. Louis.
When El Carino was job hunting, I used a cost-of-living calculator every time he had an interview to figure out what salary would make sense for that city. Early in our lives we deliberately chose lower-cost areas so we could maximize our lifestyle and savings. Those choices paid off. We still enjoy the arts and theater with occasional trips to bigger cities, then happily return to our more affordable home.
If you’re young, mobile, and trying to build a nest egg, think carefully about where you live. Choosing a less expensive area can save you tens of thousands of dollars a year. Live in middle America and you can afford what looks like a million-dollar home by New York standards for a fraction of the price.
Would you trade the buzz of a big city for the long-term wealth that comes from living somewhere cheaper?
