Trading Lifestyles
Recently the Wall Street Journal reported on the growing trend in homes sales. Many people, they reported, noticing the increased value in their homes, have decided to cash in and move to a less costly area, usually starting a very different lifestyle. For example, imagine the cultural shift from Silicon Valley in California to the college towns of Montana and you get the idea. The question is, should you sell? One thing to understand, as the article points out, is that the most highly priced areas today are the coastal regions. The reason is quite simple. When interest rates dropped so low, many people wanted to buy homes. But most coastal areas have little space for new development, so the existing home prices escalated far more than big city areas. And the big city areas were no slouch. As the article in the Journal reports, “The typical home price for the 10 American metropolitan areas with the highest housing prices has jumped to 230% of the national median from 155% five years ago.” What does this mean for second home owners on the coast? Well, one thing it might mean is that if you are willing to consider another location for your vacations, you could parlay your coastal home into a winning purchase elsewhere, and still have cash left over. Another factor that comes up is whether in fact, it is time to make a permanent move, escalating your retirement. For example, if you have a highly-valued primary home today, it might behoove you to consider taking the money and putting into one of the recreational areas that is still a good buy, and starting your retirement lifestyle earlier. The amount of profit from the sale of the first home can more than make up for the reduction of income from retirement. In some cases, you could wind up with a larger home, and be mortgage free as well. Some of the examples cited in the Wall Street Journal included folks relocating from New Jersey to Pennsylvania, California to Tennessee and Montana, Manhattan to Florida, and from New York City to Upstate New York. If you do find you are ready to sell while the market is at its peak, take time to research your next move. Using information on sites such as EscapeHomes.com allows you to compare housing costs and lifestyle in a variety of places, before you actually physically visit. Several of the people in the Journal article credited the internet as their source of information in making the decision about the destination. But first, ask the hard question: Are you ready to sell? If so, you are in good company.