Oren Quist makes a valid point about moving between places with vastly
different housing costs. 20 years ago I purchased a house for about 70k
which is now appraised at 180k. That means that in my town (with houses
currently selling between 80k and 220k) I have a pretty nice house with
about 3000 sq ft of livable space.
I have relatives in the western Chicago suburbs who have suggested we move
there. But they claim I would have to spend 300k-400k to match my current
house and neighborhood. If I am lucky I could sell my house for the
appraised value and have a nice downpayment. But if I use that to buy a
360k house then I have to borrow an additional amount equal to the value of
my current house.
My current house is paid for so I do not have mortgage payments. If I
borrowed 180k with a 7% 20-year loan I would have monthly payments in excess
of $1300. I would need a take-home salary of about 16,000 or a gross salary
of about 25,000 just to pay my mortgage.
The bottom line, once a person has become established in an area with lower
housing costs, he/she cannot afford to move into a higher cost area
unless... (1) a drop in housing quality is taken, (2) the salary is
incredibly high, (3) the employer absorbs the differential.
Note, I am aware of (3) happening, although I don't know if it currently
happens. 10 years ago a Westinghouse employee was asked to transfer to a
larger city and they discovered an equal house would cost 100k more than
they could sell their house here. Westinghouse paid the difference because
they wanted this person to transfer.
Michael D. Edmiston, Ph.D. Phone/voice-mail: 419-358-3270
Professor of Chemistry & Physics FAX: 419-358-3323
Chairman, Science Department E-Mail edmiston@bluffton.edu
Bluffton College
280 West College Avenue
Bluffton, OH 45817