From Bankrate:
If you live in a high-cost metropolitan area, the equity in your current home can buy a heightened lifestyle somewhere else.
While in certain parts of the country home prices have leveled off or headed south, housing price disparities in different regions mean that some people have more equity than others by virtue of their locations.
…
In White Plains, N.Y., the median price of a home was $558,600 in the third quarter of 2006, up from $387,300 in 2003. If someone had purchased a home there in 2003 and sold in the fall of 2006, the cashed-out equity would have totaled $171,300.The seller’s options: Pay cash for another house or upgrade to a larger one for the same price or less. “You can take the difference and live nicely in another part of the country,” says Certified Financial Planner Doug Thorburn of Northridge, Calif.
Recently, the “Walters,” a family of five in San Bernardino County, Calif., sold their 2,400 square foot home for $550,000. They had purchased the house in 2003 for $322,000. With the $228,000 profit, the Walters paid cash for another home of the same size in rural Georgia. They used leftover funds to pay off a vehicle loan and credit card debt. The Walters are now debt-free and their new home sits on 15 acres — a lot more space than the small lot they owned in California — for a fraction of the cost.
Gina Grzelka and her husband sold a two-bedroom 1,350 square-foot house in the suburbs of Chicago and now live in a four-bedroom 3,000 square-foot house in Baldwinsville, N.Y. The price of their spacious new home was half the selling price of their Chicago area home.
In Sanford, Fla., Jan Zeiger and her husband are in the process of selling their home for $260,000. They plan to move to Columbia, S.C., where they hope to find a bigger, newer home for less than $175,000.
Laura Markel sold her 700 square-foot condo in San Clemente, Calif., for $300,000 after paying only $105,000 for it four years earlier. With $180,000 of her equity, she purchased a 1,700 square-foot, three-bedroom house in Prescott Valley, Ariz. She now has a private backyard, which she did not have in San Clemente.
Geographic arbitrage at its finest.
jb
This is fine as long as where you are moving is where you want to be. I could sell my house (even with the decline that has already set in)and move to rural North Carolina, but I don’t want to live in rural North Carolina.
In a lot of cases I don’t think people understand their own lifestyle until they leave it behind. I’m not really familiar with San Bernardino or rural Georgia, but I would guess there are some differences that matter.
I wonder where the Walters will be in three years?
Of course, these people will run up property values in the areas they are moving to, creating a whole other set of problems.
Thank you very much for this advise, but what the heck do you do for work in rural Georgia?
This is a dumb article.
I understand it fully and I moved from NJ to NC just outside of Charlotte and will never move back. Jersey bites. Some great people left there but overall you just dont realize how bad NJ is because your not living anywhere else.
I have the same job here as I did up there and Perm positions actually pay me more down here than up there go figure? My house cost %50 less for %50 more house and its brand new. My taxes are a third and my insurance is half. I have more stuff around to do than I did up in Jersey and there are no super cells and unknown cancer clusters where I live. I commute some 30 minutes less to and from work. I dont get the finger, stalkers, horn blowing, when I need to merge. The only downside is I have to pump my own gas but when I really think about it thats a plus because I know its not going to wind up being on habib’s credit card fraud list.
NJ Owned 20% of my home mortgage wise.
NC I own 90% of my home Morrgate wise.
NJ House 2000 sq ft, Toms River, 27 years old needed roof, fence, pool liner, kitchen remodel.
NC House is now 2 years old, needs nothing and is 3100sq ft. Cost 50% of house in NJ by a good builder only nail pops were my concern and they fix them. I can see the lake from my house. Boat ramps are going in soon
NJ Taxes 6500
NC Taxes 2400. Would be 1200 if I moved one town over.
NJ Good Schools.
NC I live in the area with some of the highest ranking schools in the nation. However NC as a whole has a poor school system you have to research where you are going to live.
NJ Car insurance 2400
NC Car insurance 1200
NJ Commute 1.5 hours Toms River to Parsippany was the only place that had good paying positions.
NC Commute 45mins 1 hour on a very bad day.
NJ Super Cells and Undrinkable water.
NC Drinkable water and cleaner air.
NJ Home changes are a nightmare to get through township.
NC I faxed it in and they approved and faxed it back within 4 hours.
NJ DMV at least 2 hours and problems every time. Like going to immigration.
NC DMV only person standing there done in 30 mins.
It wont matter its only a matter of time before companies like Pharma start pulling out on NJ because they can hire people for much less in other areas and maximize profits. Oh wait that started already with Merial and Merck has a major data center in the Charlotte area. Lucent moved to Chicago also. Doh.
Tick says:
It wont matter its only a matter of time before companies like Pharma start pulling out on NJ because they can hire people for much less in other areas and maximize profits.
___________
Perhaps, but the tax breaks that NJ offers Pharma is pretty impressive and quite the draw. As is the huge on-tap talent pool, Companies don’t need to pay relo as they have such a huge mass of bodies in a small area. IL hates Pharma companies, Gov Blagojevich opening slams Abbott even though it is one of his biggest tax payers. CT is taxing everyone out, really only the biotech corridors have been successful in getting to critical mass.
Hence companies like Abbott, Lilly have a tougher time to recruit.
I have avoided NJ like the plague working for other Pharma companies, but now my company which just merged with an NJ based company forces us to be ‘NJbound’.
from BusinessWeek
Honda to make small jets in N.C.
By STEVE HARTSOE
GREENSBORO, N.C.
Honda Aircraft Co. will build its new executive jet in a plant near here as part of a plan that calls for an investment of up to $100 million, officials said Friday.
The project is expected to create 283 jobs with an average salary of $70,000 over the next five years, according to the office of Gov. Mike Easley. The pay is twice the average wage in the area.
Heh, I did this somewhat (leaving NYC for DE) and I really don’t miss NYC all that much. While I was living there I really wasn’t “getting my money’s worth” in terms of bars, movies, museums, etc. so there wasn’t much to leave behind. And if I ever crave any of that, NY/DC is 2 hrs, Baltimore is 1hr, Philly is 30m away. Nice places to visit perhaps, but wouldn’t want to pay the taxes there…
Friends? I have teh internets, and they’re all getting married and going into seclusion anyway, I hadn’t seen most of them for years even while I was living within 45m of them…
And now my costs of living a comparable lifestyle (good restaurants, tech toys, broadband, car + motorcycle) have dropped pretty dramatically, while my income has actually stayed the same as it was in NYC.
I sold my house in Bridgewater, NJ last October and now living in Katy, Texas. I am building a 300k 3500sqf house which will be paid for.
There are a lot of great places to live in this country
Sell and move now before the bubble BUST comes kNOCKING IN nEW jERSEY !!!
WATCH THIS: http://www.paperdinero.com/BNN.aspx?id=78
READ THIS: http://housingpanic.blogspot.com/
Mortgage lenders plunge amid missed payments, depreciating home loans
Posted 2/8/2007 3:34 PM ET
NEW YORK (AP) — The mortgage industry plunged deeper into distress this week as two lenders said sagging home prices and higher interest rates are pushing many borrowers into delinquency.
HSBC Holdings (HBC), Europe’s biggest bank and a major player in the U.S. mortgage industry, said the market for “subprime” mortgages, or home loans to people with blemished or limited credit histories, is in trouble.
CONGRESS INVOLVED: Predatory mortgages lending labeled ‘crisis’
Analysts’ estimate for how much HSBC needs to sock away for problem loans is shy by a fifth, HSBC said. The London-based bank estimates it needs to set aside almost $10.6 billion to cover loans it won’t be able to collect.
Shares of mortgage providers fell across the board on Thursday, but none were hit as hard as New Century Financial (NEW), a subprime mortgage lender based in Irvine, Calif. The company said late Wednesday accounting errors caused it to lose track of how drastically some of its mortgage loans are losing value.
Three Wall Street analysts downgraded New Century, and the company’s stock plummeted $9.58, or 32%, to $20.58 in afternoon trading, crashing through its previous 52-week low of $29.07, set last month.
During the housing boom, many mortgage banks devised crafty loans allowing people to borrow money with no down payment and pay low interest rates for the first few years on adjustable mortgages. Now, as interest rates reset higher, more borrowers are missing payments and many lenders are going out of business or putting themselves up for sale.
Subprime loans were once very attractive to some banks because of their higher interest rates.
But HSBC said the weak housing market exacerbates credit problems in the subprime mortgage space. Until a little more than a year ago, stretched borrowers who needed to raise cash could take out a second mortgage on their houses and use that money to pay off loans. With housing prices stagnant — and in some markets falling — consumers’ best source of financing has shriveled.
The problem for these types of lenders may not go away quickly.
http://www.usatoday.com/money/industries/banking/2007-02-08-subprime-lenders_x.htm