Author Topic: moving out of Bay Area to lower cost of living?  (Read 9635 times)

annod

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moving out of Bay Area to lower cost of living?
« on: August 02, 2013, 07:34:13 PM »
Hi all! Long-time lurker and first-time poster here.

My DH and I have been struggling to decide what to do with our housing situation and where to live.

We recently started looking to buy a house, and we realize that with the Bay Area prices, houses that will fit our needs, and in a safe neighborhood, walkable distance to my work, and large enough to have a home office for DH to see clients in, would cost us upwards of 650-750K . We are not handy and are busy with our work, so prefer to buy something that is move-in condition. Right now, we live within biking distance to my business so we are a 1-car family. We can look for somewhere cheaper but to me that means an extra 45 min.-60 min. at least 5 days a week, farther away from friends and family and a second car.

When we look at prices in other parts of the country that we may be interested in, let's say the Boulder-Denver corridor, we can get a very nice house for 300K (probably not in Boulder or Denver itself), and in a place that is close to nature (we both would love to be able to live 10 min. away from trails, mountains etc) . Neither of us are making the "Bay Area income", or do a lot of city things to justify the premium it cost to stay here. Frankly, DH works so much that we barely have time to enjoy what the Bay Area has to offer anyway. The main thing holding us back is that our entire lives is in the Bay Area, (friends, family, my business, etc.), which makes it hard to just leave.
We are both self-employed. DH is located independent (sort of, he flies all over for work, and he would have to fly to SF 4 times a year for work, but work will pay for his travel), I have a thriving small alternative health practice. If we move, it means I will have to restart my practice somewhere, and as with many small businesses, that means it would take at least 2 years to stabilize. The move will probably cost us 60-80K (moving cost, loss of income). Also, in most places in the U.S., we may need a second car. We will also have to fly back to visit family. But once we settle in the new place, our income would not be lower than what it is now.

We can put down 300K as down payment for a 650K house in the Bay Area, and still need to pay $1800 in mortgage+ interest, or we can leave for another part of the country, pay 300K cash for a house, and no mortgage! Property tax will be half as much as well.

In the long-term, we can probably save $17,000 a year by living somewhere else.

We keep going back and forth about this whole situation. The thing about living in the Bay Area is that neither of us see ourselves retiring here anyway, why not just find another place to move to now...

Anyone living in an expensive area in the same boat? Do you find yourself being able to achieve financial independence much sooner because you moved to another part of the country? I would love to hear your story.
 
-annod

easyrider

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Re: moving out of Bay Area to lower cost of living?
« Reply #1 on: August 02, 2013, 09:30:17 PM »
Do you think that your income levels would permanently fall in the cheaper area?  Would you ultimately make the same salary or would you plateau at a lower level?  That is the only reason I can think of for continuing to live in the more expensive city.  Often, even with higher expenses, the income increase in the bigger city leaves you with more.  You said you would save $17k per year, so if that takes income into account, or if there is no difference to your income level then I would say go for it, move!  You only live once.

MustSam

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Re: moving out of Bay Area to lower cost of living?
« Reply #2 on: August 02, 2013, 09:33:51 PM »
This is a common trend amongst those of us not on the start-up / stock option track in the bay area! Which is most people.
It seems that it would be hard for you guys to leave, not for financial reasons, but for other reasons. If you have little tying you here except your jobs, its much easier to take off based on a cost-of-living argument.
But what's the point of being FI in colorado or oregon if you have no family there (unless you're not that close). I think MMM overcomes this by prolonged canadian vacations with his family but he probably was not doing this prior to FI.
Personally, I think if you can put 300K down and buy a house in the Bay Area, that's great. If you've managed to save up that much, you're probably very mustachian and could pay off that remaining 300k mortgage early. Think of it as a solid investment because you know bay area prices are not going down anytime soon. You can still retire where-ever when you sell.
Having said that, we have lived in the Bay Area 2 years for work and plan to leave next year. Looking for jobs now, but similarly favoring cities like Portland / Seattle / Denver. We have more family connections in TX than anywhere else although neither of us has lived there but Austin is on our list too.

Joel

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Re: moving out of Bay Area to lower cost of living?
« Reply #3 on: August 02, 2013, 10:05:45 PM »
Have you considered the Sacramento area? There are a lot of Bay Area transplants here. Much more affordable in comparison. But close enough to the city, it's attractions, and your family. Depending on your career, potentially plenty of earning ability here as well.

It is a little bit warmer here though.

lagniappe

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Re: moving out of Bay Area to lower cost of living?
« Reply #4 on: August 02, 2013, 10:15:53 PM »
Annod,

I left the bay area a couple of years ago, after reaching FI.  I considered all the usual suspects (Boulder, Seattle, Portland, Charlotte, Chicago, other parts of California) and ultimately chose Austin.

If it helps, I have no regrets about leaving the bay area.  I rarely got to see my friends and family since I spent so much time commuting and working.  The local attractions are great, but they are great in lots of other places.  Best of all, I retired shortly after moving and realizing how little I needed if I wasn't trying to support a bay area lifestyle, including income & property taxes, commuting expenses, etc.  Everything just costs more. 

Best of luck with your decision.

pac_NW

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Re: moving out of Bay Area to lower cost of living?
« Reply #5 on: August 02, 2013, 10:31:56 PM »
We transplanted to Seattle from the SFO/Silicon Valley. Very similar in many ways, much less expensive, yet I still work for a Bay Area company and enjoy that salary base. The weather is actually quite good w 4 seasons and the region is amazingly beautiful. Also no state income tax.

SoCal

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Re: moving out of Bay Area to lower cost of living?
« Reply #6 on: August 02, 2013, 11:42:02 PM »
I'd rather work than live in Texas.

annod

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Re: moving out of Bay Area to lower cost of living?
« Reply #7 on: August 04, 2013, 09:46:11 AM »
I rarely got to see my friends and family since I spent so much time commuting and working.  The local attractions are great, but they are great in lots of other places. 
Best of luck with your decision.

How true. Thanks for the response. guess we are far from alone in having to make these decisions...

hybrid

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Re: moving out of Bay Area to lower cost of living?
« Reply #8 on: August 04, 2013, 11:03:00 AM »
Sounds to me like you have deep roots in SF, and I think that gets overlooked when people make big changes.  I've been in Richmond VA all my life and my family and my friends are here, so the job doesn't exist that would make we want to move to a different city.  I think you need to start with that question first - are you actually willing to move???

If the answer is yes, there are lots and lots of places that are far more affordable.  Shoot, there aren't many places in the US less affordable than SF....

Richmond is a pretty cool city, and I live in a beautiful 2400 SF brick ranch on a 1/2 acre in a nice subdivision just outside the city line that would fetch $180,000 in today's market.  If you have $300,000 you should be able to buy a nice home outright in any number of communities, Richmond isn't the cheapest city either (but a lot cheaper than the major metros).

randymarsh

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Re: moving out of Bay Area to lower cost of living?
« Reply #9 on: August 04, 2013, 04:53:50 PM »
It sounds like you might not want move this far (Ohio), but your 300K downpayment would let you buy a very fancy house in cash where I live. Honestly even 200K would put you in a nice house with plenty of room. Not sure what an extra 100K does for your FIRE goals, but you may want to consider the possibility.

olivia

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Re: moving out of Bay Area to lower cost of living?
« Reply #10 on: August 04, 2013, 06:26:41 PM »
If all your friends and family are in the Bay area, and so is your business, it seems like moving may not make sense.  Will an alternative health practice do as well outside of CA? 

Could you consider buying a smaller place or a condo in the city for less money?

SnackDog

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Re: moving out of Bay Area to lower cost of living?
« Reply #11 on: August 04, 2013, 08:31:28 PM »
You describe an urge to move driven by a desire to purchase a home.  In the Bay area it makes a great deal more sense to rent since you can rent for about 0.3% of home value.  From an investment and FI perspective, of course, renting will also get you there sooner.  Your 300k will grow at inflation, on average, invested in a house vs 10% typically in the stock market.

annod

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Re: moving out of Bay Area to lower cost of living?
« Reply #12 on: August 06, 2013, 10:30:19 AM »
If all your friends and family are in the Bay area, and so is your business, it seems like moving may not make sense.  Will an alternative health practice do as well outside of CA? 

Could you consider buying a smaller place or a condo in the city for less money?

 the 650K place we put in an offer (maybe it was a good thing it was not accepted) is an 1000 sq. ft starter home. I know, it is crazy...

The problem with where we live in the East Bay is that if it is a lot cheaper, it is either in a high crime area, or it is farther away from my work, which means we have to buy a second car...

annod

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Re: moving out of Bay Area to lower cost of living?
« Reply #13 on: August 06, 2013, 10:44:34 AM »
You describe an urge to move driven by a desire to purchase a home.  In the Bay area it makes a great deal more sense to rent since you can rent for about 0.3% of home value.  From an investment and FI perspective, of course, renting will also get you there sooner.  Your 300k will grow at inflation, on average, invested in a house vs 10% typically in the stock market.

It is true, staying where we are might be the best thing. We have some issues where we live now that makes it challenging, but then again, it may just make the most sense financially right now...until we have kids then we really need to move...but who knows when that will be.  I have pulled this chunk of money from the stock market to the savings account for half a year and really, the longer it sits there, the more money we lose (opportunity cost, inflation) which is frustrating...

Thank you all for your thoughts.
annod