patrick.net

DennisN says

The state itself is basically another California without a seacoast: deserts, mountains, river, lakes, and agricultural land.

From what I understand, even the skiing there is quite good. There are even some tech jobs there besides Micron/Crucial/Lexar -- I remember getting my RAM from Crucial Technology shipped from Meridian (and being slightly annoyed because it took longer to get it via UPS).

edvard2 says

Tude says

The Bay Area can be as cheap or expensive as you want it to be. I chose to not work in SV and restrict my jobs to SF/Oakland/WC/Concord and live in West Contra Costa County. You can buy a house in this area from 200-400k easy - 200k if you live small, 400k for 1800sf++ newer home in a nicer area.

Where are you finding 200k homes in the Bay Area? Wern’t you the person who put an offer on a house for 260k only to be outbid by an all-cash investor? I have to see anything in that price range that has a reasonable commute to SV or SF.

There are homes all over Concord, Pinole, Hercules, Martinez, Oakland, Castro Valley, all are a reasonable commute into SF/Oakland/Dublin/Pleasanton.

I even have a friend that has a cute little house they paid less than 300k for in East Palo Alto on a nice street. Once again...people are looking for specific area codes and city names. East Palo Alto scares people away.

And btw, I was wrong about the house I put an offer in on, the listing agent was fired from the Bank and the house is still on the market. And it is a VERY unique property, for just a regular 3 bedroom home you wont have a lot of competition.

Tude says

We have dozens of friends that live comfortably in lovely homes in lovely neighborhoods on working and middle class salaries. We have active lifestyles and enjoy all the things the Bay Area has to offer including owning a horse, boating most weekends, and enjoying the city and Napa Valley.

sorry, not happening on middle class salaries, last i checked owning a horse and boat weren't exactly cheap.

and it's not just the commute, do your friends have or plan on having children? it's not always about a fancy home in an "exclusive" neighborhood, for most people, it's usually about wanting the best you can afford for your children and that unfortunately starts with looking at public schools.

danacebi says

Rents have been skyrocketing

Where? I just checked and it looks like rents in my area might be down $100-200/mo on Craigslist over the last year or so.

The outlier appears to be someone who overpaid for a house built in 2005 and is desperately trying to rent the house for above-market rent. They paid about $200K more than even the most expensive houses in the neighborhood is currently selling for (and that's with a $100K+ discount from the original listing price). The previous owner in 2005 paid about $140K more than the current owner. I wonder if a NOD has been issued.

I was born in California in 1949. You people in this discussion are for the most part far younger than I. But I "escaped" as a native born Californian in my late 30's and I like to tell people "There is life after California!"

No, there is nowhere with the same wonderful weather. There is an abundance of scenery changes within a short distance within California. There is the green grass and flowers which start sometimes in February in California and not until June up north. The foothills of the Sierra, which I grew up looking at before all the smog obliterated them, are magical and I miss them to this day.

What I don't miss are the tales of daily drive-by shootings; the congestion; the shoddy pavement on all major roads; the constant politcal wrangle; the exhoribant fees for everything. I don't miss how everyone there seems to be about keeping up, on whatever treadmill they are on.

I moved to Oregon for 20 years+ and am now in Arizona. Either state has given me personal freedoms never allowed in California. I can't speak to your standard of living in terms of jobs in the BA since I usually went through there as fast as my car would travel, thinking the entire time--who would possibly want to live here?

Believe me, I understand the allure of money. But finding the perfect place to live is often much more than that. I applaud you who are seaching your souls to discover the nirvana which will help make your life complete. When one is caught up in that culture and that environment, which the BA breeds, it's like there is nothing beyond that. Personally, I think there is.

For 13 years I have lived in many states as a fulltime RVer as my husband and I have followed constructiion. I have been amazed and delighted at the experience. There is no ONE best place, excepting where your heart finds its home. No one can tell anyone else what is really best for them. Frankly, I have found I could probably live in a lot of them except one. I will never return to California.

The same goes to northen virginia right next to washington DC. Two of the wealthiest counties in whole US. Can't really complain about the weather too. Quite nice places here and there arround the city. Jobs, shopping, dinning, education, hospital etc is pretty good too. Pretty much everything is available if you know what I mean.

My wife grew up in here, and I am living here since 1999. So, do we like this place so far? Hell no. We're quite people and this is not the kind of place we could love. Too busy, too expensive, too rude, and too messed up. We'd be long gone and never looked back if our careers were not tied in this area. But knowing that we have no option but staying here for another decade or so, we're going to stay put till, we saved enough money to retire. I'll probabaly go to upstate NY or western PA for the peace of mind and friendly people, or to small town in east FL by the sea for the laid back life style... when the wife agrees on that idea. She had little different idea about where to live. She'd like to retire to asian countries, not decided which one though, she want to see how life is like in those places. Gotta break my back, earn lot of money by then. lol.

Life after CA has an interesting story. My friend has a similar story, he sold his house in Berkeley a few years ago and retired from being a guard at San Quentin. He spent his worknights reading while the convicts slept. He and his wife are both under 60, retired, and drive around with an SUV pulling a small airstream trailer to places all over. Right now I believe they are in the Gulf coast. He's about the mellowest and most interesting guys I know. I think the only thing I would truly miss in California is the coast. I've hiked around south of Carmel and from a hillside watched whales in the blue Pacific. But, our daily existence is not enjoying scenery all of the time, and going deeply into debt to buy into it may just not be worth it for people who like the idea of being able to make a change.
Imagine those who left Holland and England hundreds of years ago when there were just colonies here, it boggles my mind sometimes.

corntrollio says

danacebi says

Rents have been skyrocketing

Where? I just checked and it looks like rents in my area might be down $100-200/mo on Craigslist over the last year or so.
The outlier appears to be someone who overpaid for a house built in 2005 and is desperately trying to rent the house for above-market rent. They paid about $200K more than even the most expensive houses in the neighborhood is currently selling for (and that’s with a $100K+ discount from the original listing price). The previous owner in 2005 paid about $140K more than the current owner. I wonder if a NOD has been issued.

San Jose to San Francisco. I live in the peninsula and its absolutely sickening. Look for any house or apartment and they are averaging $200+ per month over last year, which was already $100 over the year before.

Foreclosures are happening left and right here too; but the banks do a much better job of hiding it as they stand to loose far more for their precious walked chicken shacks in the $Real Bay Area$. Redwood city/Daily City and S. San Francisco are the outliers in the price climb; but rents are not going down their either.

Actually living around here can be reasonably priced compared to other urban areas of the world. What IS overpriced is the whole "package" of living in a Fortress enrollment area of a top-API, with an oversized SFH. Most people in most urban places in the world don't have such large homes.

This is a terrific thread! Long time reader, first time commenter...

Sorry to be late to comment, but it really hits home because my wife and I are trying to figure out what to do, although the circumstances are somewhat different. We met in grad school at Stanford, but after graduation we moved to Boston to start our careers (mine as a professor; hers as a doctor) and recently had a baby. We loved our time in the bay area, and always dreamed of coming back, but when the opportunity presented itself we stumbled onto the same concerns that many of you have raised (e.g., cost, traffic, etc.) -- even if we ignored the overpricing of SFH, it is simply stunning how little house you can get within a 20 minute commute (on a professor+doctor salary).... We never had to think about it in grad school (read: subsidized grad housing + rently cheaply in Menlo Park :), but were shocked to realize that we've been priced out of most SFH within a 20 minute commute to school. ...I can only guess that all the rich Google and Facebook folks want to live close to campus...

(BTW, Stanford has chronic trouble hiring professors because of this problem -- their most recent "solution" to the problem is to build "high-rise" town-house style "homes" for faculty on campus. If you're interested, take a drive down El Camino in PA and turn right/west on Stanford Avenue...looks like track housing to me, and sells for ~700+ if you have a tenure-track offer from Stanford (i.e., still subsidized). If you're interested, compare this to the old "faculty getto" homes on "the hill" by taking another right onto Raimundo...some beautiful old homes that are mostly occupied by faculty widows and/or emeritus Stanford professors...but I digress.)

So now we live in Boston, and are facing a very similar choice. The good school districts here are in Brookline and Newton (think Menlo Park and Los Altos) and Wellesley (think Atherton), but the prices are not much better (although you can find a few things for under a million, so not precisely as bad as Atherton, but still pretty challenging if you don't want to completely leverage your life).

so, while I'm really sympathetic to clambo's statement...

clambo says

A few years ago I was in a gorgeous little New England town for a year. The seasons were all different, and the only bummer was the transition between fall and winter. Snow makes any place beautiful in my opinion. This of course was an exceptional case, since the town was prosperous. I would live there again no problem.

...the "gorgeous little New England town" probably has a tough commute to Boston (where your jobs are if you an academic/doctor family like mine) and the school districts may not be so hot. Parts of New England *are* gorgeous (e.g., we've substituted Vermont trips for Half Moon Bay trips), but you're basically looking at Boston/Cambridge or Route-128 for the best paying jobs...

If you're interested, there is a little sister site to patrick.net called www.bostonbubble.com where these issues are debated frequently. :)

so, anyhow, we're left with a very similar decision that many of you are facing. My wife is from Texas, so Austin comes up in our conversations a lot. We also like Chapel Hill, NC, so the triangle is top of mind too. I also wanted to give a shoutout to ih8alameda2....

ih8alameda2 says

I love love love chicago, are the winters bad and the summers bad? Sure, it’s got seasons, some people actually enjoy that. If you lived in a downtown high-rise and you looked down over downtown chicago and the lake as snow is falling beneath you, it’s actually pretty bad-ass.

...because we've been seriously considering Chicago as well. I've been on the 40th floor of one of those high-rises in the winter, and I agree it is beautiful, especially if you have a view of the lake. I think the Northern suburbs are more our speed given our growing family, but in general I've been pretty impressed with the lifestyle aspects of Chicago. People love the lake in the summer...and the restaurants are great...feels like a city of great size/scope like New York, but unlike Boston (which feels like "a small town" city at times). Of course, Chicago is cold...but I think I can deal with that for an affordable house, nice neighborhood, reasonable commute, and happy family. Honestly, if you would have told me 3 years ago that I'd be angling to move from Boston to somewhere even colder (!) -- or someplace not the Bay Area -- I'd have laughed in your face.

It's amazing what a few years and a new family can do to your perspective on these issues...

Life aftter CA says

I was born in California in 1949. You people in this discussion are for the most part far younger than I. But I “escaped” as a native born Californian in my late 30’s and I like to tell people “There is life after California!” .... I moved to Oregon for 20 years+ and am now in Arizona. Either state has given me personal freedoms never allowed in California. ....

Really an amazing post by Life after LA...wish I could quote it all. I hope that someday we can say we lived in place as nice as Oregon, or even Arizona for 20+ years! I wish my job could bring me there... 'Life' is right that there is no ONE best place, so maybe you can only "have it all" over long stretches of time, and only if you're willing to be flexible and move.

We're happy we had our time in the Bay Area. Probably what I didn't share is that I've lived in LA, Utah, Oregon, while my wife has lived in Dallas and Chapel Hill, NC. ...so somewhere like Chicago sounds great in principle, but we're reluctant to pull the trigger because I still long for the mountains and desserts of the West, and my wife longs for the South. Ugh...seems like we're doomed to be unsatisfied along some dimension no matter what; oh well, I guess that's life. :/

Maybe we'll just RV around the country when the kids are off to college...really like that idea! :)

It's ironic that we end up discussing shelter so often in an area where you barely need it. There's fundamental value to mammals living in a place where the weather won't kill you.

I have lived in Chicago Area, Cincinnati, Virginia (Workplace DC) and of course Bay Area. I think every city has its own beauty and thank God for that. I missed Chicago when I left Chicago, I missed DC/Virginia when I left East Coast but I missed Bay Area the most when I left the Bay Area... may be I came back because of the friends but as I said, every place has its own beauty and charm. If I move, it will be to experience a new place.

If you like your job, and as you mention "we" several times - I assume your spouse or partner likes their job and you both are making good money, I would advise that you stick here for another 5-10 years while saving at the rate that you are. What I have heard from friends living in Raleigh, Austin etc are that there are jobs over there but not as many choices as in the bay area. So, if you intend job hopping, it is better in the bay area than elsewhere.
After living in the bay area for a long time, I like the diversity as well as the opportunities here - but they are not worth the aggravation of the astronomical cost of living and the low living standards as compared to other areas (e.g. a $100K salary will buy you a poor lifestyle here).
I suggest that in the next 5-10 years that you narrow down the place of choice and your retirement strategy and even buy your house in that area and rent it out before you move out there.
Good luck, you are not alone.

ih8alameda2 says

for most people, it’s usually about wanting the best you can afford for your children and that unfortunately starts with looking at public schools.

What is "best"?

Is an elite-API school of like-minded grade grubbers staffed by educators and administrators who take all of the credit for academic scores from the TigerMom ethic of the Entitlement students what's "best" for your kids?

If that's "best" then I agree the housing is overpriced.

A friend of our family moved out to Austin a few years back, owns a huge house there for around 180, pays no state income tax since TX doesn’t charge any. Weather is not as good as in CA, gets very humid in the summer, but jobs are there. It’s a fun little techie college town.

No offense, but this is the going canard. Our local Chamber of Commerce couldn't have drafted it better.

It could be your friend actually did buy a huge place for a buck eighty, but if it was in the past 5-7 years, he was either lying to make you feel like a schmuck for staying in CA, or he bought way the hell out in Round Rock ~ 20-30 minutes outside of Central Austin.

If you work in IT you will find all pay rates severely depressed because the college and post college students ALL want to live/work in hip cool austin (and its cheap!) - so wages are depressed big time.

Another canard. I realize this is anecdotal, but my wife is in IT (not a salesperson, either) and makes more than she would make in California -- this is based upon two offers she's turned down in the past 18 mos from companies based in Sunnyvale. The total compensation was either break-even or less. Besides, I don't want to live in Sunnyvale.

Having typed that, Austin is not the hotbed of high-paying tech-jobs that some believe -- despite that Austin essentially buys jobs by throwing juicy taxpayer funded grants/tax breaks combined with low interest loans at companies so they'll move their operations here. What ends up happening is that a good chunk of the workforce relocates along with the company.

It's also not cheap! At least not especially so. I guess it might seem that way to folks who are used to being gouged, but hey...it ain't Toledo.

I like Austin a lot, but I've lived all over, and love a lot of different cities for different reasons, and most of them are one cheap SouthWest flight away. That's how I feel about California. It's cheaper to visit, and I'm usually out there about two or three times a year, which is plenty. Point being, no matter where you end up, it's not the Bermuda Triangle. You CAN go back.

Anyway, Edvard -- good luck with your quandary. I think a lot of savers feel your frustration. Sometimes I think an Airstream setup outside the Joshua Tree National Park would be just about IT.

Austin,
I remember I met a Texan who looked and talked like Hank on King of the Hill, Hank plus several stones. He told me that "we" (I think "we" meant his family) don't like Austin because they tolerate homosexuals. He told me that where he lived if "we" saw that "we'd pull over the truck and beat their ass."

Hey Austin, thanks for your post, that's useful. Could you give us some perspective on whether you think Austin housing prices are in a "bubble"? (I assumed so given your screenname.) I've heard from other people in Austin that there is an expectation that housing will continue to decline there...I'm sure a lot of Bay Area folks would be more reluctant to jump in if that were the case. Also, I'm still a little confused about the tax structure, and how that figures in. Are there any "austinbubble" related resources you could pass along? Or even just your perspective, and a few anecdotes you think are typical? thanks.

sybrib says

ih8alameda2 says

for most people, it’s usually about wanting the best you can afford for your children and that unfortunately starts with looking at public schools.

What is “best”?

Is an elite-API school of like-minded grade grubbers staffed by educators and administrators who take all of the credit for academic scores from the TigerMom ethic of the Entitlement students what’s “best” for your kids?

If that’s “best” then I agree the housing is overpriced.

We could do a whole other thread on whether the premium school districts are worth it -- my experience in trying to understand Boston school districts is that it's all relative to the alternatives. Some Boston public schools really do stink (e.g., gangs, meth, fights...+ low test scores), which makes the drive to snooty Brookline or Newton school districts even more intense. Not sure how this works in the Bay Area...maybe the Fremont and San Jose schools are not much worse than Palo Alto and Menlo-Atherton, but I doubt it...

Like sybrib, I don't relish being surrounded by grade-grubbing Tigermom-families...I agree this is a real, and dispiriting phenomena that is making our schools a less friendly place. (For those who are interested, I recommend seeing http://www.racetonowhere.com/.)

But I think what ih8alameda2 is saying is that it's pretty natural to make education a top priority when house-hunting. It's a sad but true fact that educational attainment is becoming an even bigger influence on future income and satisfaction than it was in the past, etc. And educational attainment is one of those things that accumulates slowly over time: kids in good middle schools do well in and are in good secondary schools, and these kids end up in best colleges, etc. While it's popular to talk about the dotcom millionaire who dropped out of Harvard (and so argue that graduating from college doesn't matter), or imagine that the elite colleges are filled with smart kids who rise above their mediocre middleschool and highschool educations, those are pretty clearly the exceptions that prove the rule.

I can tell you from personal experience: I was one of these exceptions -- a graduate from a mediocre and underfunded school system in rural Utah who attended MIT. But virtually all my classmates in college were from the the top private schools like Exeter or Andover; the top math/science public schools like Stuyvesant, Thomas Jefferson or Bronx Science; OR top public school districts more broadly. For example, I knew about Paly and Menlo-Atherton (and other elite school districts in Chicago, New York, etc.) long before I ever visited the bay area. ...these are the kids who overwhelmingly end up at the top colleges.

I'm not saying I condone it, but its a fact of life these days. I grew up poor, and don't blame my parents for that (in fact, I have them to thank for helping me thrive in spite of few resources), but as a parent with some greater capacity to affect my child's destiny, and knowing what I know, how could I not be looking for "the best" school district for my kids?

jpd says

Some Boston public schools really do stink (e.g., gangs, meth, fights…+ low test scores), which makes the drive to snooty Brookline or Newton school districts even more intense. Not sure how this works in the Bay Area…maybe the Fremont and San Jose schools are not much worse than Palo Alto and Menlo-Atherton.
....
it’s pretty natural to make education a top priority when house-hunting. It’s a sad but true fact that educational attainment is becoming an even bigger influence on future income and satisfaction than it was in the past, etc.

This is true probably very much like Boston. But there is a whole continuum of possibilities between Menlo-Atherton kinda places and somewhere that's dangerous and awful for your kids. Besides, academic is part of the education, a big part, an important part, maybe the most important part, but not the only part. It's just that there's so many families, particularly ones who moved here from somewhere else who are beholden to the API, and for them, it's top tier API or nothing.

Kinda ironic when you think of it. Professionals in tech and finance who use data at work all of the time but don't get it about some simple concept of API, mean, median, distribution.

You know, Jerry Yang the founder of Yahoo came from one of the East Side of San Jose public high schools; those public high schools have many alumnis in Stanford, UC's, ivories. It's just not the "typical" alums that get in.

Then there's like my friend's ABC sibling: consumed the wad on a residence in The Fortress because immigrant Tiger-mom wanted her kids to have that appellation. But alas, second generation ABC assimilated kid did not get accepted to a top-tier UC, nor an ivy. So, Tufts will have to do. Tufts with financial aid because, well, a couple of decades of housing consumption in The Fortress for access to Fortress K-12 exhausted the reserves, so to speak. At least in her own mind the Tigress can save her face in her social circle with a kid going to Tufts. Funny though, when ABC uncle told us about this at a dinner party, I think I was the only one Bay Arean who had even ever heard of Tufts.

sybrib says

At least in her own mind the Tigress can save her face in her social circle with a kid going to Tufts. Funny though, when ABC uncle told us about this at a dinner party, I think I was the only one Bay Arean who had even ever heard of Tufts.

Oh no, their kid had to go to Tufts! :) I wonder what they think about their return on investment now?

Of course, you're so right with everything you said. I agree with all of it. But still doesn't change the general trends. It just means that the Tigermom strategy has a huge social cost in that not every Tigerkid will get into Harvard, even with all the "advantages" of The Fortress.

and I agree, these top API schools aren't the only places to go...but this data is nonetheless very interesting:

http://api.cde.ca.gov/Acnt2011/2010Base_Co.aspx?cYear=&cSelect=43,SANTA,CLARA

This is what is interesting to me: From a purely strategic standpoint, there are potential arbitrage opportunities that exist in these rankings from the perspective of "maximizing returns" that most ABC parents probably haven't considered because they don't know how the college-admissions game is played.

Let me provide an example: I have a professor friend who had twins in their junior year at Gunn high school in Palo Alto which I see from that link has a 918 API (extremely high for a High School). the kids were smart and well educated given that they'd been in palo alto school district for 10+ years, but with the immense competition (remember: the kids in this school are professor and tech-millionaire kids) they were roughly in middle of their class with solid B+/A- averages. From prior years experience, Professor-dad and kids knew that graduates in the middle of their class at Gunn end up at a Tufts or UCLA-level type of school.

this family knows how the college admissions game is played: part of the evaluation process is relative to others from your school and state, and particularly where you graduate from. They know it is particularly competitive to get into a top school being from California, Mass, Illinois, New Jersey in particular. Colleges want to be diverse with students spread more evenly across all states.

so what does this family do? Professor-dad takes his sabbatical next year in Montana (which is beautiful by the way). Kids enroll in high school, which is "easy" for them, and become the "stars" of their school on paper, and end up getting into a bunch of ivy league schools, and matriculating at Princeton.

I have incredibly mixed feelings about this example. Hard to fault the individual actions of the parents: kids *did* get a superior education, and *did* get into top colleges that'll set them up for life....not to mention an enjoyable year as a family in beautiful Montana. Not sure the kids could have been at Princeton otherwise, although I guess we'll never know...

But what's the social cost of such a story? Elite family uses human and financial capital to ensure that their children remain in the elite. Not exactly "the American story," right?

Now, not every rich parent is saavy enough or daring enough to game the system this much. Frankly, many parents talk a good game about "doing everything for the kids" but when it comes down to it, many parents (even those in The Fortress) settle for "good enough" and aren't willing to take it the extra mile. For now, you don't hear too many stories like this, but as education becomes even more important (which it will)...I fear that you'll hear less and less of the classic "American story" of rags to riches as these arbitrage opportunities are identified and used by the elite.

I too have same problem. After living in San Diego for past 4 years, I was offered a new job in Santa Clara. Since bay area is even MORE expensive than southern California, I negotiated a higher salary to compensate for the much higher cost of living. When the senior VP asked if I bought a home, I replied that would need a CEO income to buy one. My plan is to bank the $$$ and expat to South America where living cost if less and weather just as good as California.

Hi jpd:

I do see the central Austin market as being bubbly, with the disconnect from fundamentals (rent v buy ratios/local salaries/price histories, etc) being the most readily perceptible evidence

It's actually difficult to formulate a good picture of the Austin market. Just for starters, the non-disclosure laws in Texas serve as an added layer of subterfuge for any buyer trying to do their homework. I've kept a running list of some homes across the city that actually do have transaction histories available and the data shows appreciation levels well beyond inflation, with enough instances of prices doubling in less than ten years to elicit a resounding WTF from anyone paying close enough attention. There was an article just today in our community newspaper citing an increase in the cost of living in downtown and the paucity of affordable housing in the urban core areas. According to TCAD data, Austin's average overall home values rose 91% from 2000 to 2010.

I blame speculation combined with the numerous government price supports currently in place. FWIW, I lived for a brief time in one of the sand states at the outset of the RE bubble and I'm witnessing many similarities playing out here in the Austin market -- from the growing number of For Sale signs on streets within eye shot of one another, to the numerous condo developments/conversions all over town, to the ambitious gentrification efforts where hastily constructed cubist mcmansions are still popping up on tiny lots on the East side where once sat small tract houses (if you keep one wall of the original structure, you can get an Historical preservation tax break from the city). It also seems like almost everyone I bump into these days wears some kind of RE hat, be it a broker or part-time agent or a guy with five different mortgages and some spreadsheet software who fancies himself the next Warren Buffet.

The local NAR spin goes like this: since Central Texas largely avoided the run-up in prices that other cities experienced between 2000-2006, the market here is *different.* There were even billboards around town up until recently proclaiming "Central Texas Real Estate Really IS Different."

I really don't think it's that different.

Austin,

I remember I met a Texan who looked and talked like Hank on King of the Hill, Hank plus several stones. He told me that “we” (I think “we” meant his family) don’t like Austin because they tolerate homosexuals.

Yeah, Austin remains something of a redheaded hippy stepchild to much of the rest of Texas.

He told me that where he lived if “we” saw that “we’d pull over the truck and beat their ass.”

Really? Isn't that a rather curious subject to be so near the forefront of such a manly man's mind? Call me crazy, but as a heterosexual male, I've never once taken the time to contrive and vocalize a scenario involving a hapless homosexual, a truck and a buncha other dudes.

Thanks, Austin, for the helpful perspective. We have family in Dallas -- and the culture and RE does seem really different. and thanks for the cartoon! :)

Interesting comments about schools. Just in my opinion, it seems that there has been a big uptick in the number of parents who are absolutely set on finding ways to get their kids into the absolute best schools. I never paid attention to this back home. From what I could tell most people just sent their kids to whatever local public school they were zoned for. After moving to the Bay Area there seems to be this intense competition for the "best" schools and as a result any of those areas that are deemed better are prohibitively costly-such as Palo Alto and so forth.

This sort of segues into the whole Austin topic, or rather perhaps the general idea of relocating to one of the what I call "top-10" cities; the smattering of cities perennially listed in various magazines and online surveys year after year as THE places to live-or relocate to: Austin, Raleigh Durham, X number of primarily Southeastern cities, Nashville, etc etc.

I've been reading a number of relocation sites and forums for 4-5 years. I've made a few observations. One is that by reading these-especially the Austin and Raleigh sites, one would think that the entire East Coast and Midwest along with a lot of the West Coast is emptying out of people. Its like every other post is from someone in NJ, MA, NY, CA, MI, or IL. All wanting the exact same things, which means absolutely perfect schools, squeaky-clean safe neighborhoods, access to various organic grocery stores, and oh- their budget for a house is 'only' $400,000 or some crazy high number. In response the exact same neighborhoods are mentioned as the most ideal which in turn means these are probably also going to be the most costly. Thus these new cities have a number of hot-spots popular with relocatees who only know what they've read somewhere online and thus perhaps one of the reasons certain areas in Austin and Raleigh are dramatically more expensive.

We Visited Austin a few years ago. My observation from visiting for a few days was that there were some pricey central neighborhoods. There were houses that matched the Bay Area in cost except in the case of a $500k home in Austin, you'd also be on the hook for the 2-3% property tax, hence a $15k yearly tax bill. That and you need hardcore AC for a good chunk of the year thus factor in a few hundred buxs a month for that too. But on the other hand we met a couple who lived on the other side of South Austin where taxes were lower and so too were prices. I gather because the school in that area wasn't rated that high. They'd only paid $130k for their house. On the other hand a mile or so from there prices were really high.

I felt like Austin was trying way too hard to be like the Bay Area: The same exact kind of gentrification via hipstervilles and boutique restaurants and gourmet grocery stores and the same sort of general atmosphere. This was at least the case in central Austin. On the other hand travel 10-15 minutes out of the city and you are suddenly in outright suburban sprawl. The general impression I got was that if you wanted to live in some cute, central, walkable, safe neighborhood with perfect schools you were going to shell out a ton of dough. On the other hand travel out of the city by a bit and you could have your pick of whatever cookie-cutter house in the middle of a huge housing development for $150k or less. So yeah- We could theoretically move there and buy us one of those brick and vinyl boxes for a song. Then again we would be living in suburban hell. That or we'll just choose places that have schools with poor ratings and lower taxes.

I liked Austin. But it also felt a bit weird. Its like the city everyone is trying to escape to from whatever overpriced, cold, or miserable place they live in now.

Edvard -- It's not that Austin is trying too hard to be like the Bay Area -- it's much less dull than most of the Bay Area -- it's that the nerd bird diaspora has swooped in to roost, trying to create a poor man's California in Central Texas. Thankfully, it's not had as ruinous an effect on the homespun vibrancy that defines much of Austin's charm as you would think, but the impact is still palpable here, vs here a dozen years ago. Austin was always a homely town, but now it's homely with little pockets of mood-lit metrosexual razzle dazzle. I guess there's room for everyone...doesn't bother me.

There is not a day that goes by that I don't see at least one California plate here, even if I'm just running to the grocery store. That is not an exaggeration. Reviling the Californians is something of a past-time for natives/long-time Austinites, but I think you have that kind of thing anywhere. I remember when I was sixteen and flying out to Seattle, the guy sitting next to me explained how the Northwest cities exaggerated their gloomy climes to keep the Californians out. I feel like what really counts is what the impetus might be for someone relocating to a given city. If a city is too easy to live in, you tend to attract a lot of takers: speculators, bums, etc. If, however, you move to a city because you just fell in love with it, THAT is the kind of transplant any native or curmudgeon should welcome. I hope that makes sense.

BTW I'm sorry, but 130K is a meth shack, even on the southside, (unless we're talking Wimberly, which isn't really Austin), unless they bought 15 years ago or inherited the property. There is something they were leaving out, I assure you. It SHOULDN'T be that way, but it is.

we took the same leap 3 yrs back. any place else is never
" just like california". first 2 yrs were hard but we are happy at our decision and happy to call Dallas, Tx our home now. economy is strong, plenty of jobs around, no state tax..so more money is lining our pockets and found nice friends finally which makes it all fulfilling. even if you dont need one for money, you need some job to keep sanity..so I would say find something to do first and then go wherever you want to go.

yeah, I thought about this many times: putting so many parameters into happiness equations.

It all comes down to this question: you wanna pay for this weather or not ?

Other factors are similar, or subjective, or they are all similar in the grand scheme of the thing.

And of course, the most important thing is whether you are happy with your family and friends no matter where you are...

Austinhousingbubble,
The same thing is happening back home in NC where my parents live: Seems like every other moving truck is from NJ, MA, NY, or even California. NC is basically the sister state to TX in regards to the amount of domestic migration, coastal city influx. Downtown used to be somewhat dull and everything closed up at 5:00. Now there are microbreweries, Japanese restaurants, art galleries and so on. Some of this is great. On the other hand it all feels "imported". That and the level of ugly sprawl is crazy.

I saw some of that in Austin too. Lots and lots of sprawl. I did like Austin the city itself but I am assuming we would probably have to move 20-30 minutes out of town. We saw a bunch of older smaller cities in and around Austin that were more affordable. Anyway- time will tell.

I've read this very interesting thread and it is finally bringing me out of very long-term lurkdom.

While people raised many valid points, I would add one that I think is missing.

If your parents are nearing retirement age, they may not be around in ten more years. If you are close to your parents and would like to spend more time with them while they are still alive, I would just move back home and start enjoying life.

Having lots of money is all well and good. But more money in the bank will never bring them back.

I'm not well off like many of you here. My husband and I work hard, but we have struggled with numerous health issues and job loss with has meant a lot of financial loss. I don't ever anticipate we will be financially free like is being discussed here. For us it is a struggle to keep our business afloat, pay for our own health insurance, and pay off medical bills.

But tonight we had my in-laws over to grill hamburgers and next week we will drive an hour to go stay with my parents for a few days. Our life is pretty simple, but I wouldn't trade the ability to spend time with our parents for any amount of money. They won't be here forever and then we will long for just one more beautiful early summer evening to enjoy a meal and laugh together.

I sincerely doubt you would ever regret making the jump now and getting on with the life it sounds like you truly want back home. Best wishes in getting there.

Living a quiet life in the Midwest,
Yes indeed the thought of my parents is one of the primary factors when it comes to moving. My parents and I have always been rather close. They are getting older ( 60's) which is by no means 'that' old. But at this point I've lived out here for 12 years. They and where I grew up are not the same. The same goes for my Grandmother who is now approaching 90.

Its a big quandary. I spent the first 5-6 years of my post-college career being broke. I always managed to save but I just remember what it felt like ALWAYS thinking twice about everything I did- whether I got a hamburger or paid 50 cents more for cheese... whether I could tape the old shoes together or buy some used ones at Goodwill. There was no future for me. I consider myself lucky for having made it to a point in my life where I don't have to worry about those things. I think this is why I am so resistant to buying a house here. I busted my ass to save what I've saved and I'm not about to waste it on a house. I have distinct memories of what its like to barely scrape by and have no desire to live like that again if I can help it.

The jobs we have are unfortunately heavily tied to large international and hence unaffordable cities. Its not like there's not work elsewhere. But moving elsewhere- even a supposedly decent city like Austin- would probably mean financial uncertainty. I am totally prepared to do something else for a living- even if that means working at a Big Box store. But if we do that then everything else needs to be taken care of- cash for a house, adequate retirement savings, and some emergency cash. In other words- we're working in reverse, saving the nest egg and then semi-retiring. The economic world of today is a very different place and my gut feeling is to save while you can because tomorrow you never know when whatever company is going to downsize or ship yet more jobs overseas.

Lastly- If I were to move back prematurely its possible that if things went south I would myself become a financial burden to my parents- who instilled me with the sense of financial responsibility I now posses. Had these been normal times the decision would be easier. But seeing how the economy is in a seemingly endless spiral I'm not sure right now is the best time to be moving.

But to be sure- we do know that the Bay Area is not financially desirable to us. We WILL move at some point to a cheaper place. But timing is crucial and once that financial goal is met- we will do so and take the plunge.

edvard2,

Thank you for your thoughtful reply. What you are saying makes perfect sense. Once you have struggled financially you never look at anything the same way again.

The reality we all live with is that it takes very little to be wiped out today. A healthy bank account doesn't last long when the medical bills start rolling in. It is challenging to find the balance between being fiscally responsible and taking chances because there are no guarantees about tomorrow.

I guess it involves considering the potential worst case scenarios and deciding which ones are the easiest to live with.

I understand not wanting to end up needing help from your parents. But do they see it the same way? As they get older, they might value your presence in their lives more than your complete financial freedom. Obviously I don't know them or you, but it is worth considering that they might not view it the same way as they have in the past.

My Folks were not that well off when I was growing up. As such they really haven't saved up a ton of money for retirement. They'll be fine but they're definitely not in a situation where they could help us if we needed it.

Insurance is a big concern for me. I know way too many people who've gone bankrupt from medical issues because they either didn't have insurance or they had inadequate insurance. If we got jobs elsewhere, insurance would be key- perhaps more so than the income. At one point I actually repaired household appliances and other mechanical things as a side job. I could probably fall back on that but the insurance would be ridiculous if we were to insure ourselves.

But basically... the idea is to eventually move closer to my folks to a semi-successful city- whether its in Austin, Raleigh, or maybe even Nashville- figure out the whole job situation, buy a ho-hum but adequate house for 150k or less, and live frugal yet comfortable lives. Its a nice dream. Hopefully it will come true someday.

We went to Nashville a few years ago. Pretty nice little city. Might be a good option as its not quite on the radar like Austin is.

I greatly enjoyed the exchange between edvard2 and Living a quiet life in the Midwest. Good points are made on both sides:

On the one hand, the longer you stay in the high-end city the more you can save to ensure future financial stability. Of course, this presumes that you are really are saving -- sadly, it's all too easy to allow the higher cost of living (not to mention a foolish home purchase!) to eat away at that higher income. And I agree that financial security seems like a goal that is both harder and more challenging to achieve these days...

On the other hand, the time with aging parents is precious. But I think this can be generalized: I'd hazard a guess that when most of us are dreaming about a move to Austin, Nashville, etc. we are really dreaming about a different pace of life where we can enjoy other aspects of life outside of work. This could also mean the extra time with kids, extended family, or time to enjoy the beautiful surroundings, etc. All of this has a real value.

These are the real tradeoffs that make this choice so hard! (and a really exceptional thread)

jpd says

On the other hand, the time with aging parents is precious. But I think this can be generalized: I’d hazard a guess that when most of us are dreaming about a move to Austin, Nashville, etc. we are really dreaming about a different pace of life where we can enjoy other aspects of life outside of work.

I've had the experience of seeing what its like "over there" retroactively. As having spent the first 21 years in NC and then having moved to first the East Coast and the last 12 here in Cali I have a perspective of the differences. As mentioned my parents are not rich by any means. Neither have high-paying jobs. Yet they own a big chunk of land with a pretty nice house, a pool, camper, and 2 newer cars. They live fairly comfortably with a lifestyle that would require a 500k salary or more in the Bay Area. I say this only because the way they live is more the exception in that area: People can actually have normal jobs making normal salaries and still have a decent standard of living. My experiences on the coasts has made me feel that both coasts are more like their own countries. The cost of living and economic stratification makes them more akin to a 3rd world country; the middle class essentially went extinct years ago and it now requires an upper middle class income to attain a lower middle class standard of living. I think this is why the Southeast is getting so many transplants simply because there are fewer and fewer parts of the country where the middle class lifestyle that used to be prevalent in the US could more or less function and the SE is one last stronghold.

In no way am I saying I want a huge house, new cars, and stuff like that. Its just that from having lived where I've lived I know that we could be doing a lot better and not have near the financial pressures on us if we were elsewhere- assuming at least adequate jobs were found.

Re: the insurance issue... Even if you have great insurance, it really guarantees nothing. We purchase very good insurance with what is probably considered the top company in our state. Even then, we've had to continually up our deductible the past five years in order to not get completely priced out.

This year we went with an HSA which kept our monthly premium the same, but increased what we have to pay every time we do something. I dislike the HSA immensely, but that was the choice we made. I'd like to go back to regular coverage next year but I anticipate by the time our re-enrollment comes around this fall our premium for that will be approaching $1k a month. (This is for one single and one adult with child. You have to have a minimum of two employees to get this insurance and it is cheaper this way than a family plan.)

My husband and I have finally reached the point where we have wondered if we will simply have to forgo health insurance. A premium of $1k a month is a lot of money for us. And even then we still have to pay prescription copays, doctor visit copays, physical therapy copays, etc. It's truly depressing, but we cannot mentally make the leap to go without.

Even with insurance, if something significant happened to us... The 80/20 hospital coverage would still kill us.

I have no idea any longer what "enough" is to not feel anxious about how you would handle financial emergencies. My personal belief is there isn't "enough" possible for most people to ever really be ready for retirement or medical emergencies. This is part of why I believe that having strong personal networks is going to be critical in the years ahead for many people in the middle class. Many of those in the middle class are going to need to depend on the kindness of friends and family to make it through financially.

The real question is, how will the NC, Austin, etc of the world transform in this upcoming crisis? Will there be more crime because there are not enough jobs? Will there be lots of influx of refugees from both coasts that drive up the price and COL just as much?

The biggest problem I see with these cities is the lack of jobs, especially high level jobs. Here, it is not that hard to find a position paying $200K, and family income of $300K+ is dime a dozen. Over there, it will be very hard for both to keep the same income level, so essentially you may be taking a 50% income hit, and the potential of making even higher income is also severely compromised. Over a period of 10, 15 years, that will have a huge financial impact that you can hardly ignore. I have had many friends, myself included, looking for opportunities outside the Bay Area, and we can hardly overcome the huge discrepancy in job and pay prospect. Career is not something you can mothball, if you are not in a high-impact, high-visibility job for a while, you cannot get back onto the ladder any more.

Of course, one could always opt for a different kind of life at a place with lower COL, it is true that you lower pay can stretch much further. But, will these lower COL towns and cities remain so always? Aside from housing, I don't find any cost difference in other aspects of life, the organic grocery in these areas cost about the same, the cars aren't cheaper, and the insurance coverage of local employers are less comprehensive, and you have less take-home to pay for a good medical plan yourself.

However, I do think it is an excellent plan to take a sabbatical when my kids are in high school, and do the arbitrage in these areas, because by then I have saved up enough so I can afford to take a couple of years off the work as I plan to enter retirement.

Living a quiet life in the Midwest says

My husband and I have finally reached the point where we have wondered if we will simply have to forgo health insurance. A premium of $1k a month is a lot of money for us. And even then we still have to pay prescription copays, doctor visit copays, physical therapy copays, etc. It’s truly depressing, but we cannot mentally make the leap to go without.

Even with insurance, if something significant happened to us… The 80/20 hospital coverage would still kill us.

I have no idea any longer what “enough” is to not feel anxious about how you would handle financial emergencies. My personal belief is there isn’t “enough” possible for most people to ever really be ready for retirement or medical emergencies.

Is it possible for you to get high-deductible catastrophic coverage? If you are disciplined and essentially self-insure with your $12K/year (i.e. put it in an account and draw down from it), you could get a $4K or higher deductible for if you truly have something catastrophic happen. In addition, you would still likely be able to benefit from the discounts that the insurance company will get you (e.g. instead of paying an extra $150 for labs, your insurance companies uses its discount to say that it's included as part of the other services; and you pay 50% of the rate for substantive stuff).