Unable to fire only because of fancy/expensive house

[rob in cal]

  There are probably a lot of us out there who live in HCOL areas, have a paid off house, and could massively accelerate FIRE plans or fire right now if we would sell our house and move to a much cheaper area. However, there are many legitimate reasons not to do so, such as family, friends, a lifetime of memories and ties, a love for ones area etc etc and I can understand and respect why people in these areas stay, even if it means working for many more years than they otherwise would have needed to. 
   But, what about someone who has a really nice, really big, really expensive house in a hcol or even medium col area who could have the best of both worlds, sell their house and move to a decent, moderate sized house in their same town or region, capture a few hundred thousands in freed up equity and thereby achieve fire without having to disrupt or alter their family and friendships etc.  People like that I feel are really missing a golden opportunity, and they aren't working several/many more years to stay in their area that they love, they are working all those extra years merely to stay in the same house, when they could have a nice enough one in the area and retire 5 or 10 years earlier.

[Bloop Bloop]

In the city that I live in, the most expensive houses are about 5-10km from the city centre in large leafy suburbs. They sell for 1.8-3mil.

There are nice, smaller but still spacious (3BR, 2 Bath), more convenient, just as elegant, units and townhouses within 2-3km of the city centre, also in green surrounds with parks nearby, that go for 1-1.5m.

Or you could live in a lovely and secure apartment right near the city (and near your workplace), with access to parks and gyms and walking trails, for about 0.5-0.8m.

Even granting that these figures are absurdly high because Australia's cost of living is very high, I can not understand why people spend 2m+ on a house that's less convenient than other great family options. I've had friends say, "Oh, when are you upgrading your house." I say, never. It's part of the rat race that I don't need, and I only now buy houses to rent them out [and expensive houses give low rental yields.]

[EvenSteven]

In the city that I live in, the most expensive houses are about 5-10km from the city centre in large leafy suburbs. They sell for 1.8-3mil.

There are nice, smaller but still spacious (3BR, 2 Bath), more convenient, just as elegant, units and townhouses within 2-3km of the city centre, also in green surrounds with parks nearby, that go for 1-1.5m.

Or you could live in a lovely and secure apartment right near the city (and near your workplace), with access to parks and gyms and walking trails, for about 0.5-0.8m.

Even granting that these figures are absurdly high because Australia's cost of living is very high, I can not understand why people spend 2m+ on a house that's less convenient than other great family options. I've had friends say, "Oh, when are you upgrading your house." I say, never. It's part of the rat race that I don't need, and I only now buy houses to rent them out [and expensive houses give low rental yields.]

I think a large part of the desire for housing "upgrades" in the US is driven by school districts. That is the reason I will soon be upgrading from a 0.09M dollar house in the city to a 0.4M dollar house in the county.

[Metalcat]

I mean... yeah...a lot of people miss out on opportunities to FIRE, for many many reasons.

I'm not sure I understand your point other than to point out that you would make different choices than people who choose to keep working to maintain their expensive homes.

[Monkey Uncle]

The real-life version of this scenario perhaps isn't as clear-cut as you present it.  I could have FIREd a few years earlier than I did and/or had a larger spending buffer if my wife and I had moved from our too-big house into something more modest and less expensive.  We looked for a couple of years and never found anything that suited us.  All of the inexpensive houses were either right in the middle of town on a postage stamp lot, or they were fixer-uppers that would have eaten up a big chunk of the savings (and our time and energy).  Or we would have had to have bought land and built (which would end up not saving any money at all).  None of those scenarios appealed to us.  So we stayed in our 5 bedroom, 3 bath, 2,600 sf house.  Which is way more house than two people need, but it is in the perfect location on the edge of town, and it has the large lot and tree-covered neighborhood that we like.

[chasesfish]

I'm also not sure exactly what point you're making, but as someone who's going through it right now, geographic arbitrage ain't easy.

I'm selling the expensive house, feel like I'm being assaulted from the level of real estate agent fees, then have to deal with a move and then have to deal with finding a rental after only renting for one year in the last 17.  Our final destination isn't completely settled and most of my money is tied up in retirement accounts, so throwing around that much capital at a new house is challenging.

Oh, mortgages are tougher to get when you don't have earned income too.

I can see why people don't want to disrupt their life that much.  FIRE is about choices

[EscapeVelocity2020]

This thread would be a lot more insightful if you put numbers to this claim.  I know for me, once I go through all the stuff Chasefish mentioned, I end up with either an older and/or smaller house to come out significantly (FIRE-date changingly) ahead.  But my house is in the 300 - 400k range and we want to stay in a good school district.  So yeah, I'd rather work an extra year or two and stay in my house until the kids are out.

[chasesfish]

This thread would be a lot more insightful if you put numbers to this claim.  I know for me, once I go through all the stuff Chasefish mentioned, I end up with either an older and/or smaller house to come out significantly (FIRE-date changingly) ahead.  But my house is in the 300 - 400k range and we want to stay in a good school district.  So yeah, I'd rather work an extra year or two and stay in my house until the kids are out.

And to update my comments - I'm selling out of a $650,000 - $700,000 1950s house and will end up in the $300,000 to $400,000.  We all make choices on the big 3 (housing, transportation, food) and I'm fine with 20% of my net worth being in my primary residence

[rob in cal]

  I guess I'm thinking somewhere along the lines of a 300k or more price difference, would that be worth going through all the hassle, commissions, taxes etc to move within town or nearby.  I find it a compelling question because most of one's other possessions, expenses are not so potentially big ticket. For us, I know my wife wouldn't want to go through a move in our area because even downsizing significantly wouldn't yield a big extra infusion of cash, as our home is pretty mid-range, so we'd fall in the category of its just not worth it, but I guess I'm thinking about some of those really nice homes in our area that must be 300k and on up from an average priced home.

[Linea_Norway]

We will be selling our expensive home, rent for a year or so and then move into s9me hous3 half the price.
The price to pay is divided. We will move out into the country, the places where we go on holiday because of mountains, sea etc. But we are leaving friends and more sicial life in the city. We don't live in the city now, but pretty close to it.
For us, being able to FIRE is the biggest motivation. But I am sometimes thinking about the future rentals or cheaper home. They might not be as comfortable as our current home. We currently have lots of storage space and a large kitchen, garage, splendid view. But I really cannot continue to work as much as I do now. I feel that I miss out so much by working, so FIRE it is. If we decide we want to live closes to the capital again, at some later time, we can move back, but move to a cheaper area, where the commute would be very long. That wouldn't matter for occasional visits.

[better late]

We sold our 4,000 square foot home from the 1890’s in the high tax district. It was pretty clear that if we ever wanted to retire that place had to go.

Trying to find that smaller yet still spacious home; not as easy as it sounds.

[AMandM]

I'm not sure the scenario you envision actually exists. At least around here, there are not houses with $300,000 differences in price in the same neighbourhood.  So if you want to move from a fancy house to a nice house that costs $300,000 less, you have to move to a different part of the metro area.  IOW, you have all the transaction costs and hassle of relocating, and you disrupt your social life almost as much as if you moved out of state.

[Bernard]

Rob,
if you ask anyone where they ideally want to live, you'll find common markers such as nice area, safe, peaceful, decent neighbors, etc. For most people, a single family residence beats a condo. So going from the aforementioned requirements, you'll be ending up with a small 1, 2, or 3-bedroom house somewhere. It will have a moderate size and be somewhere between 1,000 and $1,400 square feet. That's the price of admission without being luxurious.

This price can be $70K in Texas or Oregon, $100K in other states, $250K, or $500K, 700K, or even a million in Silicon Valley.

Speaking for myself, living in the Ojai Valley, one of the nicest parts to live in the United States, price of admission is about $550K to $600K. There is nothing meeting the minimum requirements below that price. Since we not only LOVE the climate here, but I'm bound to this location based on my business, selling the house at the time of requirement is part of the plan. Hoping to walk away with about $275K to $300K in equity, and that will be the money for the final, "forever" home. I find it inconceivable to have a mortgage or pay rent in retirement, so there's no way around it. If I lived in an area where houses cost $150K and I had it paid off by the time of retirement, things would look different.

[cloudsail]

Condos and townhouses also typically come with pretty steep HOA fees, that can keep rising over the years. These are totally out of your control. A lot of people forget to factor this in when they look at the purchase price of condos and townhouses.

[Cgbg]

Neither dh nor I see any upside to selling in retirement. We have a place 10 minutes out of downtown- just outside the city limits. The city has seen a marked increase in housing prices. Our house would go for a pretty penny, but in order to stay close in to the city we’d end up having to pay just as much. The older we get, the more likely we will appreciate things like bus lines and local hospitals o we don’t want to go too far away.

We have a half acre of land with a 3 bd/ 2 ba house. The land is literally worth more than the structure and the house isn’t bad at all. We’ve remodeled a lot over the last 15 years. Our mortgage will be gone by the time I retire.

I have fruit trees and plenty of food producing perennials and an established vegetable garden area. I’m not limited on the type or number of animals (well, technically pigs and goats were prohibited at one time but I don’t think that’s true now.) I can have my ten hens laying eggs, or add rabbits if I wanted. I couldn’t do that in the city.

We’ve ran the numbers, because as dh nears retirement it makes sense to do so. I’d have a helluva commute if we wanted to make hundreds of thousands on selling this place. We love the peace and quiet of our neighborhood plus the nearby city. If the housing market crashed, we’d still not likely sell.

The last owner of this house (2nd one in 80 years) went out feet first. I expect to do the same.

[2sk22]

I have fruit trees and plenty of food producing perennials and an established vegetable garden area. I’m not limited on the type or number of animals (well, technically pigs and goats were prohibited at one time but I don’t think that’s true now.) I can have my ten hens laying eggs, or add rabbits if I wanted. I couldn’t do that in the city.

I have been watching a whole lot of permaculture videos recently on YouTube - your plan sounds wonderful. I have practically no land at all around my house living in a densely populated HCOL area so I'll have to rent some land in the country if I want to get into this activity.

[FireHiker]

We are in this situation actually. We have a giant clown house in a HCOL area. Our public high school is in the top 1% nationwide, and it's hard to justify moving elsewhere (although we have our eye on a couple promising locations...) while we still have kids in school. My oldest graduates next month, and it's amazing how many scholarship offers he received even as a mediocre student from a top high school, so we're very much torn on the high school thing. We could lean-FIRE now, but since we aren't to fat-FIRE yet we are staying put for at least 4 more years while we cash flow the oldest's college degree. We'll decide then whether we'll a) stay put and work until the youngest graduates, b) move to something smaller in the area and FIRE (may or may not be possible), c) move somewhere else entirely and FIRE outright.

Honestly I would love to downsize and stay in our area as our house is huge; we succumbed to lifestyle inflation back before finding MMM. We were lucky I suppose with our timing, because we bought in 2012 and property skyrocketed after that. It means we have over 50% equity in a house that would currently sell over 1.2M. We recently looked at smaller homes to consider downsizing and freeing up some cash flow, but I want at least a small yard or patio with a higher fence, and the places we recently saw have these patios with short fences our dog could jump over. The smaller places are not that much cheaper when you figure in the property taxes, HOAs (anything cheaper enough to justify moving is attached instead of a single family home like we have now), etc. So, we're considering our options but staying put for now.

[Cassie]

People from California are selling their houses like crazy and retiring to the surrounding states. We downsized in retirement and moved into town from the suburbs. Our neighborhood was not popular 7 years ago but it has exploded and became gentrificated.  We couldn’t afford to buy here now.

[Radagast]

People from California are selling their houses like crazy and retiring to the surrounding states. We downsized in retirement and moved into town from the suburbs. Our neighborhood was not popular 7 years ago but it has exploded and became gentrificated.  We couldn’t afford to buy here now.

Seriously.

[Pigeon]

Life is full of trade-offs and individual circumstances.  I live in a medium to slightly high COL place, but I'm not moving to Mississippi.  I'd much rather work a few more years. 

In our case, we're not terribly far off normal retirement age and are FI.  We'll quit when the youngest one fledges in a couple of years.

Housing can be weird.  We live in a nice paid off 4br 35 year old house in a great school district.  Our town has relatively lowish property taxes for the area.  We want something on one level next (or with a master suite on the ground floor) and something with reduced maintenance.  There are almost no newish small SF houses on one level.  Almost all newer SF houses are bigger than our house, with inefficient floor plans that waste a lot of space.  There are a very few smaller ranch houses, but they are the same age as our house or older, and thus will require more in maintenance.

There are a lot of new construction townhouses in over 55 communities with master suites on the ground floor, but they have much less living space, cost a whole lot more and have HOA fees, usually that just cover the outside and don't provide amenities.  I hadn't realized that downsizing won't save us money.

[Parizade]

I saw this article on USA Today this morning and thought of this thread.

More baby boomers stay in their homes as they reach retirement, skipping downsizing

The title is somewhat misleading, the article talks more about boomers postponing retirement so they can afford to maintain the big house, but it's still an interesting read.

The only point that really resonated with me was having room for kids/grandkids to visit. My son and his family choose to stay with her relatives when they come to town now that I've downsized, which have I found a bit depressing. I wonder if I would have made a different decision if I knew that would be the outcome of moving to a smaller space.

[Pigeon]

The only point that really resonated with me was having room for kids/grandkids to visit. My son and his family choose to stay with her relatives when they come to town now that I've downsized, which have I found a bit depressing. I wonder if I would have made a different decision if I knew that would be the outcome of moving to a smaller space.

I think that's something to consider, whether or not it changes your decision one way or the other.  My stepmother and father bought a one-bedroom condo in Florida when they retired.  They had loads of money but didn't want to spring for a larger condo.  Their money, their choice and not an unreasonable decision.  However, they would complain a great deal that I didn't want to come visit.  I'm not a huge fan of Florida to begin with and the fact we would have to pay for a hotel room kind of tipped the scales for me.

[FireHiker]

People from California are selling their houses like crazy and retiring to the surrounding states. We downsized in retirement and moved into town from the suburbs. Our neighborhood was not popular 7 years ago but it has exploded and became gentrificated.  We couldn’t afford to buy here now.

Our plan is absolutely to sell and downsize so I apologize in advance, other states, for contributing to this. But, Southern California is just not where we are going to stay. I'll stay here (at most) to get the kids through school, but I need to be near mountains or at least more nature that isn't desert. It's sad, really, to spend so much to live in So Cal when the beach is wasted on me, but that's where we have good jobs with a lot of flexibility so we're here for now.

We haven't even been able to narrow down where we want to move yet. We are evaluating places in: Colorado (but not the Denver area), Virginia, New York, Washington (my uncle lives in Port Townsend), Oregon, New Hampshire, and even still within California (I have family up in the Sacramento area, but we'd move further up towards Tahoe if we looked up there). I hope there will still be somewhere left that hasn't been gentrified out of our price range when the time comes. ;)

The reference @Parizade makes to boomers staying in their large homes is exactly what my in-laws have done, and it's not what I want. They have a 5 bedroom house with a pool that no one uses, but I'm pretty sure at this point that they won't downsize until they are forced to move for health reasons. They have SO much of their NW wrapped up in that house, but it's been paid off for 20 years and they live comfortably enough without access to it. They looked a few years ago for single story homes but didn't find what they wanted. Property has gone up SO much here that when they ran the numbers it just wasn't compelling enough for them to move. They did add the 5th bedroom downstairs several years ago in case one or both of them end up with mobility issues.

I think when we downsize it will be to a small single story home, 2-3 bedrooms at most. I just wish I knew where it will end up being! We need both of our jobs to cash flow the next four years while my oldest is in college, so we have some time to really do a careful analysis of what our priorities are and what places meet them.

[Cassie]

We moved into a 1400 sq ft ranch. It was built in 1950 and we completely remodeled it before moving in. We also made the yard low maintenance.   Our house is worth 350. You can buy a house double the size and newer for 550.  So people sell a small house worth a million. Pay cash and have money left over.

[Parizade]

The only point that really resonated with me was having room for kids/grandkids to visit. My son and his family choose to stay with her relatives when they come to town now that I've downsized, which have I found a bit depressing. I wonder if I would have made a different decision if I knew that would be the outcome of moving to a smaller space.

I think that's something to consider, whether or not it changes your decision one way or the other.  My stepmother and father bought a one-bedroom condo in Florida when they retired.  They had loads of money but didn't want to spring for a larger condo.  Their money, their choice and not an unreasonable decision.  However, they would complain a great deal that I didn't want to come visit.  I'm not a huge fan of Florida to begin with and the fact we would have to pay for a hotel room kind of tipped the scales for me.

They invite me to visit them often enough, in the long run it's cheaper for me to buy airline tickets a few times a year and visit them that it would be to maintain a larger home so they can stay with me in once a year. So I've made peace with it.