Relocating To Save Money On Housing

One of the benefits of having readers spread across the country, even the world, is that often we are introduced to a different perspective on a particular topic. And often that leads to even more thoughtful discussion. That was the case recently when I wrote about my thoughts on the television showMy First Place on HGTV: How to Spend Your Next Thirty Years House Poor.

While many agreed the premise of the show seems to steer first-time home buyers towards more expensive housing, few of us could agree on whether or not the featured couples could afford such housing. Part of the problem is key elements of an affordability equation are often missing – such as income, other debts, etc.

An even larger discussion developed regarding the regional variance in housing prices. I must say, even I was surprised by some of the comments (and there were a bunch of them – 91 at last count!).

In response to my suggestion the couple should look for a house in the $200,000 range (half their intended budget), reader “Cat” commented:

I completely agree with your post, however, in the city I live in a you cannot get a house for $200,000 even in the worst part of town right by the railroad tracks. You’d be hard pressed even to find a crappy condo for that low of a price here.

As a guy who grew up in a $27,000 (at the time it was purchased) house built in the 1960’s, and purchased a decade later, that was hard to believe, but no doubt true considering the grossly inflated real estate markets around the country. Of course, everything is relative. Areas with high real estate values also usually offer higher salaries, making these more expensive homes affordable to potential home-buyers.

Still, I was struck by the number of people who indicated they could not find a decent home for less than $450,000. My gut reaction – why not move? But it’s not that easy.

People tend to settle close to family, where they graduated school, or near job opportunities in their particular field. Others may enjoy a particular climate or part of the country. It’s not easy to just pack up your stuff, leave behind family, and move clear across the country.

I’m fortunate in that I live in a relatively small town in a very reasonable real estate market. Home values here are among some of the most affordable in the country. It was a consideration we made when accepting a new job ad relocating here some six years ago now. It just so happened to be the same city my mom lived in, and before she passed away (a year ago today, in fact), we enjoyed being closer to family.

Comparing Apples to Apples: Housing as a Percentage of Income

We spend about 15% of our after-tax income on housing. I’m comfortable with that figure, even though when we were shopping for a home those involved in real estate tried to convince us we could easily afford to mortgage 25%-30% of our take home pay on monthly payments. No thanks.

The reason we avoided taking on a larger mortgage is risk. Risk of job loss, illness, income reduction, etc. should weigh heavily on you when deciding how much house to buy. Instead, risk is often an after thought. Oh, that won’t happen to us. We have plenty of savings. I can always find another job. Trust me; it will, you don’t, and you might not.

It’s worth pointing out that if I moved to another part of the country, and made significantly more money than I do now, then 15% of my income would buy a more expensive house (not necessarily more house, just a more expensive one).

Unless the couple in that show were bringing home $20,000 a month, a $3,000 a month mortgage was probably considerably more than 15% of their income. It may have been more in line with 30% of their take home pay, and if that works for them, they can probably pull it off, assuming nothing goes wrong over the next 30 years.

Relocating for More Affordable Housing

So the big question is this: Would you consider moving to a new city if housing prices were cheaper, and you could buy more house for a lower percentage of your monthly income? After all, these days more people are considering relocating to end unemployment; why not relocate to spend less on housing, often a family’s largest budget category.

Obviously, one would have to consider a variety of other economic factors such as general cost of living, average salaries and job opportunities, quality of education, crime rate, climate, and very personal matters such as proximity to friends and family.

It is certainly not an easy decision, but one I would strongly consider obligating myself to such an expensive housing payment. By the way, I found this Best Places to Live in America post which lists average home price. You can see from the list there is a considerable range, even among the top places to live.


  1. Thankfully, I live in an area that is great: low crime rates, small community, good schools, close (but not too close) to a major metropolitan area, etc.

    I have a $160k mortgage and a 1400 sqft house. My property taxes are under $500 total for the year.

    Even better, we are close (but again, not too close) to family. I, personally, enjoy this benefit. But my wife would disagree.

  2. I would absolutely consider moving to a part of the country (or world) with lower housing costs….if there were a job market there to go to. Then again, what’s wrong with renting until you can afford a place where you want live. My rule of thumb is the 25/2.5 rule. Housing shouldn’t be more than 25% of your gross income and you shouldn’t take out a mortgage for more than 2.5 times your annual income. That means if you want an expensive home, but don’t make a lot of moolah, you’d better start saving for a down payment.

  3. Hi Frugal Dad,
    In the past two years by husband’s salary has gone down (he’s a bartender at a five star restaurant in Atlanta) and our home’s value has gone down. We are in an upside down mortgage. We would LOVE to move to a house with a more realistic mortgage in relation to our budget. We’ve become better educated thanks to your website and others regarding “money sense”. We know we would be much better off financially if we could just sell this place- but here’s the rub:
    The AJC (our city’s paper) just had an article on Sunday regarding the slow down in Atlanta’s housing market this last quarter even though earlier in the year it seemed to be doing better.
    My husband tried to approach our county about reassessing the value of our home but has gotten no response. They need the tax money. We’ve looked at refinancing….the list goes on.
    I guess I’m writing to say that the blessing of this recession is that many of us are understanding the reality of “bad things” happening and affecting our finances. We arebecoming more money wise. However, many people are “stuck” regarding their housing budget as they try to make wiser choices in response to the times.
    Thanks for all the time and effort you put into this blog.
    Heather Clarke

  4. I would never consider relocating JUST for a cheaper house. (Assuming I already had a job and everything else where I currently live.)

    The thing is, it is all relative. Sure, you could up and move to somewhere with cheaper housing. But that also probably means lower salaries too. Going back to your point, you may end up relocating just to be spending the same percentage of income on your house.

    To me, a house is just a piece of your life experience. My main requirement is to live somewhere safe. Outside of that, the size of the house doesn’t matter to me. Sure I would prefer to have plenty of bedrooms and such, but I would rather downsize where I currently live than uproot everyone and move to somewhere I could afford a bigger home.

  5. Those HGTV shows scare me a lot. Of course, I don’t NEED to buy a house. Renting is costing more of our money than I’d like, but moving further out from my husband’s job isn’t going to make it better (we already live an hour commute by public transit – less than 10 miles away). It always startles me to hear the “budget” the couple has – on House Hunters it’s often more than on My First Place (like $600,000 +). That’s INSANE to me. I mean, there is absolutely no way I’d ever be buying a house that expensive. Although the only debt I have right now is a car loan, we would need to have 500,000 saved up to buy a $600,000 house! Um, no.

    I’d love to move back to where my parents live (much cheaper!), but my husband has limited job options. He’s an academic in a field where there were no job options last year. I kid you not. I’m still trying to figure out how to save ANY money with what we’re paying in rent & utilities.

  6. I am sorry for your loss of your mother. One of the best things a colleague taught me was to take the anniversary day and do the thing that you liked best about your mom. My friend bakes cookies, I fish in memory of my dad.
    Take care of yourself.

  7. Sorry again for the loss of your mother. May the anniversary of this day remind you of the joy she brought to your life, and not the pain of her loss.

    We live in Pittsburgh where, compared to other cities in the US, housing is pretty affordable. BUT we are renting an apartment anyway. We want to move to Indianapolis in the spring or summer. The biggest reason is to be closer to family, who would all be 1 hour away.

    But housing there is even cheaper than here. And property taxes are way lower. Here, property taxes are high. In the area where we’d wanna buy, I could expect to pay $3-4k/year on a $100k house. Seriously! That’s insane. The same house would have $600-$1,000/year taxes in Indianapolis.

    Plus, a lot of the houses here are older and need more maintenence from the start. There’s a lot more newer construction (and by newer, I mean after 1980) there. There’s some seriously OLD houses here. Like 50-100 years old is pretty common.

    The type of house we could get in Indy is way better and more affordable than we could get here. it’s not the only reason we’re moving, but it definitely helps us wanna speed things along so we can finally get into a house instead of a cramped apartment!

  8. We did exactly that – moved 25 miles from our jobs to buy a less expensive house in a decent school system. But we have found, after 14 years, that there is a price to pay in the form of car costs (purchase, gas, maintenence, etc) and the waste of time in commuting. I try to make the best of it by listening to educational podcasts, but it still is a waste of time to commute 30-60 minutes each way (depending on traffic). I’m not sure if I would make the same choice if I had to do it all over again.

  9. A core principle of our free market economy is personal mobility (ie, if there are no jobs in one place a person can move to another to find a job). There’s always been some stickiness in mobility for a variety of reasons like a person’s desire to be stay near family and friends, not wanting to pull teenage children out of their school environment, etc. However, those have been largely personal and not structural limiters.

    The massive decline in housing in most areas has created structural obstacles to mobility which in turn impedes the ability of the economy to evolve and grow. A significant percentage of home-“owners” are underwater, so they are stuck in their situation in the absence of a short sale or foreclosure. This structural impediment has to works itself out for the economy to resume normal workings, and in the absence of inflation or mortgage relief (both of which have negative consequences), the structural impediment may be generational. In other words, many people will just stay where they are because they are unwilling or unable to just walk away.

  10. Where I’m at in California far too many homeowners are finding themselves in the situation that your reader Heather talked about.In my county and another adjoining one housing prices have dropped by as much as 40-50%! A couple we know separated but tried to keep their home.Even though they put substantial money down(around 150K,proceeds from the sale of a smaller home)they found themselves underwater and lost the home to foreclosure.
    Their solution was to move to an area where they both have stable employment and housing costs are about 1/2 of what they were used to.I would love to do the same.Even as a renter spending less money on housing and making near or even higher salary makes total sense to me.I would never stay in an area just because it was “convenient”

  11. While I was mostly in agreement with your original post, this post actually upset me a lot. I live in a fairly expensive metropolitan area (because that’s where I was when I got out of the military, and since I got a job, I stayed). Now, I am insulted/astonished/shocked at the thought of 15% of post-tax income being enough to pay for housing!!! You know what 15% of my post-tax income would be? $210. Yeah, I can live in a car for that price. Rent here is no less than $650-700 (and that would be the very dangerous bad parts of the city). Respectable, reasonably safe areas are $900-1000. So, for those of us who do not make big money, that percentage is insulting.
    Secondly, what in the world is someone doing with 85% of their post-tax income essentially non-committed? I cannot imagine having all that money for a car, insurance, groceries, and savings. At that rate, the house should be paid off in 3 or 4 years! Please remember to check out your numbers on some REAL LIFE HARD WORKING people before (in my opinion, carelessly) throwing around lowball numbers.
    For me personally, I bought a house because if I have to spend 75% or so of my post-tax income on housing, I’d rather it be into a place I own, can build up equity, and don’t have to deal with loud neighbors and their roaches. While my rent was $890 for a one-bedroom apartment with only water included, my mortgage with homeowners insurance and taxes is only $1000.

    • Amanda, you’ve made a good point. The average income in America now hovers around 50k, I believe, so 15% of the take home pay on $50k would only be around $500 – hardly enough for most reasonable housing options. I certainly don’t think it is unreasonable to spend 25-30% of your take home pay in this scenario.

      Oh, and by the way, we do plan to have the house paid off in 3-5 years!

    • Amen, Angela! I, too pay a huge percentage of my income to my mortgage lender(s). I’m single, have no other debt and live in a nice, safe, but not extravagant place in a high COLA. I’ve also (pre) purchased my retirement home, Even though it’s not 100% positive cash flow, it’s an area I probably wouldn’t be able to afford by the time I get to retirement. This way, my tenant is making most of the payment for me.
      BTW, I’m still managing to put 20% into retirement accounts. I’m well paid, but still below the median in my area. It’s all about focus and goal setting.
      Your comment is a good reminder that there are many different ways to reach similar goals…

  12. There is definitely a correlation between housing prices and salaries, but it’s not 100%. Some places have high salaries but even higher housing prices (see also: NYC, various parts of California.)

    On the other hand, if you save a very large portion of your income, a high cost of living area might be good for you. If you save 50% of your income, and move to an area with 50% higher salaries and 60% higher costs (including housing), your annual savings will still grow significantly more than the low cost of living area.

    • Thanks for pointing that out, Steve. We used to live in Silicon Valley, CA. There were lots of professionals making a lot of money, but it was never enough to safely purchase a house, without the assumption that the value would go up a large percentage each year. We rented while we were there, despite the fact that we were pulling in 250k after tax a year.

  13. You’re not really comparing apples to apples, even in your Apples to Apples section, because you’re forgetting that where you live can/does affect other aspects of your budget. Someone who lives in a dense urban environment probably has a much smaller travel expense than someone in a rural environment – monthly train pass vs. gas and upkeep on a car. Shifting that type of money around would throw even the percent of income numbers off. That being said, people need to figure out what percent is right for their situation and not rely on the bank to tell them.

    • If you have kids, however, living in NYC or SF can be very expensive. It is a lottery to get into a good public school. If you get into a bad one (many are unsafe, too large, and on the other side of the city), most people I know leave the city or begin coughing up at least 15k a year per child for a decent private school.

  14. I’m in the process of downsizing from my “dream house” that I purchased when I was working to a more affordable house and perhaps area because I am now disabled. My income is 60% of what it used to be, and my housing expense needs to fall in line with my current income.
    My major hurdles are transportation (because I can’t drive very far without pain) and access to the physicians that see to my care.
    At first I was planning on moving to the “final” house–assuming that it would be a rancher, but there’s a part of me (the young 54) that wants to put that off for five more years because I am still somewhat mobile and have a great support system in our current area.
    I’ve given myself permission to waffle until my current house is listed for sale (next month) and I see what kind of interest there is. I hope to have a good bit of equity from the sale to put 70% down on the next house and be able to pay it off before I’m 65.
    My disability plan changes at 65 and the carrier is vague as to what benifit there might be. I can’t count on them, I realize, so will need to be able to live on my Social Security which is $1880 per month. Keep in mind that medical insurance expenses are $400 plus Rx costs, and the Rx’s cost ~$800/mth in the donut hole. Thankfully that is changing, but it’s very hard to keep up with right now.
    I am indeed fortunate, and know that many people are working with much less. My kids are finally starting out on their own (at 24 & 25 YAY!) and I hope that I’ve been a good leader financially so that they don’t make the same mistakes I did.

  15. I live in a city where $200,000 gets you a condo or a big fixer upper home. I’m jealous of my friends that get to live in the country and buy homes for $80,000. Howerver, relocation doesn’t work if where you want to move to doesn’t have places for you to work, or the amount of time for your commute isn’t worth it, or if you have a family of your own.

    • Exactly right, Jenna. If I had my way we would be living on the hillside of a mountain with a beautiful view and only trees for neighbors. But, since my day job is in the IT area that might be a little difficult to pull off (unless I could convince someone to let me work from my deck overlooking the mountains…now that would be heaven!).

  16. Actually we are looking to move to an area about a hour from our current location, where the cost of housing – and especially homeowner/flood insurance is much less. Combined with the low interest rates, we could buy a similar or slightly nicer new home for the cost of our current 28 year old house. Problem is, houses are not selling much in our area, so it’s not a good time to sell.

    We are self employed and our income will not change based on where we live. This makes moving to a lower cost area very appealing – moving to an area with a higher cost of living would be out of the question~

  17. My husband and I recently had the conversation about moving. We could relocate up to the Pacific Northwest, where he would earn the same salary but housing would cost 50% less than what we’re paying now. We chose not to move.

    Why? Because you can’t put a price on family. We’d rather live on a budget and below our means and spend every weekend with the people we love most in the world. After all, that’s the point of frugality, right? You save on the things you don’t care about to afford what you love. I’ll wear used clothes and eat home-cooked meals for the rest of my life if it means spending every Friday with my mom, grandma, aunts, cousins, nieces and nephews. Sounds better than sitting in a large home all by ourselves.

  18. My boyfriend and I have considered relocating to Houston because housing prices are so much cheaper than Southern California. It’s a tough decision because we both have great jobs and our family is out here, but it’s still not something we’ve ruled out.

  19. Interestingly enough, I actually moved into one of the top 5 cities on Money’s list (McKinney) in 2006. I did everything fiscally right to buy my first home, including making sure that I was purchasing less than I could afford on my salary. Then a couple of things happened: I moved in, and life happened. By focusing so much on the fiscal features of home ownership, I had neglected to do further research about the town beyond the realtor’s community information. Had I done so, I would have found out that McKinney is 90% white, that the median family income is $90K/year, and that there are 90% families (census data on the current gov’t site). Coming from central Los Angeles, you can image the shock. Of course, fiscally things are somewhat easier (nevermind that the market here has tanked too), but I would caution anyone looking to find a cheap house to do your homework beyond the money. If you live near family now, you have benefits you would be giving up if you left. Moving is tough, consider all the pros and cons besides the money.

  20. In todays markets in any area of the country one can pick up either a forclosure or a bank owned home or a short sale for far less. Today alone I saw four homes none ideal but liveable and fixer uppers for under $50K and this in a market where the average home prices vary all over the place some million dollar homes , $749.000 right on a street where my son lives and $400,000 and $800,000 condos. The fact is “need” for the younger genration gets lost in translation to “want” You need a roof over your head, less than ideal conditions still cover that need. You want to live middle to upper middle. Does not mean that your income will meet your wants esspecially with student debt!

    • Then there are folks like me who are retired and living on a fixed, very low income…less then eleven thousand a year…which is only possible if you have no mortgage, car payment or installment/credit card debt. I moved from a heavily populated area in FL to a rural area in TN and from one house to another that are roughly comparable. I moved to be safer, and to escape the summer weather I found intolerable. The cost of living is less here overall… for instance my property taxes went down from over 900 a year to just 62 dollars…yes, a year. Employment opportunities, and school systems do not concern those retired. So when I moved I got a bigger house, and a lot more land…but my taxes and insurance are less…the utilities are about the same…food tracked on an annual basis is 20-25% less. Vet care for my animals is only half as much…gasoline is a dime a gallon less, car repairs are less then 60% as much…and my car insurance on the same vehicle is half as much.

  21. Wonderful post!

    We made the decision to relocate a few years ago and it has been good so far. We were living by the coast and we were both employed, but the housing was overpriced. We knew we wanted to buy a small house at some point, so we considered options while we were savings up.

    We knew we didn’t feel comfortable being far away from family, so that limited us in scope. However, we were willing to be a few hours away (4-6 hours) and they meant there were cities to choose from.

    We found a location that wasn’t too far from our family and we have weekend trips back if we get homesick. We’re happy with our decision. It could change in a few years, but it was the right choice for us.

    A relative was in NC and told us to check it out since it much lower prices. After looking at NC, we decided if we moved it would probably be in the Raleigh area. My husband works in software development so the area appealed to him. My work could be done anywhere (supply chain/operations at the time).

    Once one of us got a job offer in the area that could pay out essentials we decided to make the move. The prices are more reasonable and we were able to find a town house in a new development that was in our budget that we couldn’t get in VA.

  22. What is the hang-up with renting?

    My grandparents were college professors who raised 3 kids, all in rented houses over a 30 year period.

    Shoot, single professionals still lived in boarding-houses back then and no one looked down on them because they hadn’t bought a 2,000 sqft. ‘starter’ home.

    As for all of you who think you will ‘build equity’ in your new home, good luck.

    Long-term price studies when the housing market was decent (but pre-bubble) all showed at best you kept up with inflation.

    Housing and transportation remain the two biggest discretionary items in a budget.

    Controlling those expenses is key.

    • I agree with you Bill. My husband and I are renting the house we are living in and about to rent out the house we own in our previous city.

      We moved to outside of Atlanta and the housing market like Heather posted is dismal here. Renting gives us the freedom to leave if we have to leave for work. If we bought, I shudder to think how hard it would be to sell and move on.

      The downsides of renting are simply that you don’t get a house that might have some of the love and care that you get when you own it yourself. You may not feel like it’s home, but so far I’m not that worked up over that.

    • I agree, Bill. I think renting will be a more popular option for people in the near term, but we’ll soon have others out peddling the “American Dream” idea of homeownership. I’m all for people buying a home if they can easily afford it, and have a large downpayment plus a sizable emergency fund. Anything less is just too risky.

      My wife and I were married eleven years before buying our first home, and at times (like when the AC stopped working, or when property taxes are due) wish we still rented!

  23. Here in Germany, you don´t buy your first house. You build (sometimes literally yourself) your one and only house, ideally before you have children. So you start with a house that is too big, pay for it for thirty years, and still are in the same house when you retire. In our neighbourhood, there are so many old couples or widowed persons who live in houses they are unable to maintain properly. There are also lots of husbands who commute four hours a day or longer so that the family doesn´t have to move. So, relocating for cheaper housing is unthinkable here.

    • Very interesting…sounds like there are trade offs either way. If you buy big enough to house a large family, pay for it for thirty years and own it outright, but everyone moves on, those left behind are left with too much house.

      Is there much downsizing for those entering retirement years? Doesn’t sound like many are willing to give up their homes and move.

  24. We prefer living where we can afford an acreage 5 min from work, an acre fenced for our dogs, our 1500 square foot house, and no mortgage. We have plans for adversity, disasters, job loss etc.

    If our families insisted on living in expensive dense metro then that would be difficult. Luckily our families are not interested in such. They are not close but the travel is reasonable for us and them.

    I understand “more home” to mean more value to what is important to you in your home environment (dogs! acreage! close to town for time and the environment as I work in town!) and, of course, “more paid” for! It is a choice.

    You may choose an expensive mortgage by living in a high demand area (to stay close to family etc), or purchasing a larger/newer home. You could rent and that does offer advantages in certain situations. Or you could choose early retirement, designer clothes, paying for your children’s (or someone else’s) schooling, sponsoring someone in another country or a new car. It is a choice.

    I do think it there is value to staying in a larger centre for medical care at times, eg children with diseases/disabilites who require access to specialists/therapists/specialty programs, certain cancers, rare conditions etc.
    Smaller centres can sometimes provide services but often more specialized therapies and specialists are localized in larger, more urban areas.

    We all have different priorities and we all know we need to be responsible for ourselves overall. No one best answer for everyone. Thank you for the thoughtful post.

  25. And yet this is still too much like right. =)

    You have everyone’s best interest at heart. You are trying to focus the lens and make the picture clearer and yet people will still give you reason why they need to take on more risk. Wow!

    “I know how to live in poverty or prosperity. No matter what the situation, I’ve learned the secret of how to live when I’m full or when I’m hungry, when I have too much or when I have too little.” Philippians 4:12

    Another great post. Keep up the wonderful job. 🙂

  26. What if you love the place you are living in? It’s suck to relocate to somewhere you don’t even like just to save money. Sure if you can’t afford it, you have to but moving to some remote are like Idaho or Arkansas is horrible.

    • I’ve lived in Dallas, Detroit, Philadelphia, Washington, DC, Italy, and worked all over the world. Being from Arkansas originally, I can only assume you’ve never been to Idaho or Arkansas or you wouldn’t have made such a ridiculous statement.

  27. I love reading that comments that people have written on this topic. My husband and I moved to a cheaper part of the country 4 years ago when an amazing job opportunity came his way. My husband took part in a substantial IPO. We were very sad to leave the area that we loved. And we still do miss Northern California. However, we were able to accumulate our wealth in Arizona, where the income tax is much lower. We estimate that my husband will be able to retire 10 years earlier due to this. It is also nice to be in an area where people are not so stressed financially. There is a greater sense of leisure that is palpable in our friends and neighbors. That being said, if my husband lost his job here, there are limited jobs that would be a good fit for him, and we’d likely have to relocate. But for now, we are happy with the way things turned out.

  28. I agree that moving may not be a good option if jobs are in a particular city. However, sometimes you do have to make “sacrifices” when buying your first home. We live in an area where you can buy a very large house in a very bad neigborhood for $70,000, a decent house in an area with terrible traffic and bad schools for $110k, or you can live on the “good” side of town and pay $200k+++.

    However, with a little work, you can find something reasonable. We bought a foreclosure in an area with decent commute times (longer miles, but less traffic) and right next to major shopping and restaurants. We’re also across from a horse farm and right next to a new subdivision of $300k+ homes. We paid $92k for a home that appraised for $107k. It was a foreclosure, but the bank had bought new cabinets, new heat pump, new carpet and paint and a new water heater. The bathrooms need updating and we had to buy appliances (no “granite” or “stainless” in our kitchen). But we have an incredibly low monthly payment (I think it came up to 7% of our gross income, because we got a 30 year mortgage, but plan to pay it off within 15 years). It’s a little over 1,000 sq feet, 3 bedrooms, 1.5 bath, fireplace, gorgeous back yard. Our electric bill for July was only $80. I know the huge houses next to us probably have $300 electric bills. I’m perfectly happy in our small “starter” home. We have a nursery and an office/guest room, a large dining area and plenty of yard to play in. The neighbors are wonderful, we have sidewalks, and we’re in an excellent school disrict. I couldn’t be happier. We “could” have afforded a lot of other homes, but then I might not be able to stay at home with my brand new baby. We have another few thousand set aside to redo the bathrooms and replace the back patio doors, but other than that we are perfectly satisfied.

  29. I envy those with low house payments. I am often jealous when I hear how paying are off their house is actually attainable.
    I would love to move, but I would never pull my kids out of their schools. Especially since they are both in high school. Plus our jobs and lives are here, to move would definitely save us money, but starting over would not be worth the price at this stage of our lives.
    We are always looking for options of other places to move too, but the only “affordable” place in our city is the neighborhood we moved out of. We moved out for a reason.
    Until then we will enjoy our awesome amazing house and find other ways to save money to enjoy our time here and not stress about it. Our plan is to move after our youngest graduates, which is not all that far off.

  30. This is a very good idea. The problem is we always want the best and that tends to make us extend ourselves. It’s even harder when deciding to lower expenses by moving down to a smaller home.

  31. I wouldn’t consider relocating for that reason alone, but it might be an incentive if I wanted to move to a particular area anyway. One thing I think people should consider is that you don’t *have* to buy a house. We are looking at possibly moving (at some point in the distant future) to an extremely high cost of living area, and really, my plan would be to rent if we do that. Why spend all that extra money on taxes, insurance (this area would also require disaster-related insurance), maintenance, etc when someone else can take on the risks & costs?

  32. I’m sorry about your mom. I enjoy your blog very much.
    For the record, I live in Chicago (I rent) and in my area, as real estate prices starting falling after the bubble burst, I was still stunned and told all my friends (who were also surprised) when I found a 1 bedroom condo listed for $199,900. That said, I have seen housing stats for the entire country, and certain cities, including Chicago, have high real estate prices even relative to the high COLA here.
    However, there are many, many issues at play, and it’s hard to isolate just one aspect. My sister lived in Pittsburgh for awhile – where you could buy waaaaaayyyyy more house for the $ – but she noticed how, relative to Chicago, everyone drove newer cars. Seems that when you have mountains to negotiate and not a flat prairie, you might need a car that you know could make the incline…and it would cost more $.
    One large factor not frequently mentioned is student loans. Sure, not everyone has this, but it’s not uncommon for young professionals to have, at the time they are determining where to live. My student loan payment is the same dollar amount regardless of where I live. So in a high COLA area, with higher salaries and higher housing costs, the student loan is a smaller percentage than it would be in a low COLA area with lower salaries.

  33. Thought provoking post.

    We have lived on the east coast, primarily DC, for the last ten years and absolutely love the area. We decided this year to relocate to an area about three hours from my hometown to be closer to family and to have a lower cost of living. We’re very blessed in that our salaries stayed the same so our housing went from 28% of our take home pay to 11.6% of our take home pay. We’re taking the opportunity to aggressively pay off our cars and student loans and then go after the mortgage.

    I have to say, though, we still miss the DC area very, very much. Our daughter frequently talks about Virginia and how much she misses her nanny. I miss my friends, neighbors, familiarity and routine of our life in DC, and the great things the DC area offers.

    Our take on it is that we’ll give it a few years, pay off any debt, and reassess whether or not it’s working for our family.

  34. Sometimes, jobs are tied to a particular locality very, very closely. One example of this is people who work on Capital Hill. They can’t very easily transfer those skills to Oklahoma for a lower cost of living (nor would they want to), yet DC is one of those areas where condos go for $500,000 and then you throw in association fees that are more than rent in many areas, and that’s still cheaper than renting after about 10 years given the rent ratios. For people whose jobs are tied to their high cost of living area, getting up and moving might require an expensive education first or a huge pay cut, and that’s only if they actually want to change career fields.

    As for putting 15% of one’s salary towards housing, that would be lovely. As one commenter mentioned, though, sometimes finding that house means living an hour from work and just re-allocating that money towards car expenses and gas. I understand being risk averse, I understand that 30% is more dangerous than 15%, but what about the trade-offs? What if to get it down to 15% it means that your commute eats up 3 hours of your day and you rarely get to see your kids? How in the world is that worth it?

    The trade-offs in housing are never so simple as just the numbers. Low cost of living areas are often low cost for a reason – there are fewer and less attractive jobs there. Perhaps some are able to tailor their lives to catch an up-and-coming career in an up-and-coming area, but the rest of us have to struggle under the burden of knowing that no amount of frugality is going to offset the fact that in some counties the average sale price is well over half a million dollars and renting doesn’t save you anything – and that’s where you’ve gotta live to do what you love or were trained to do without sacrificing all your life to the road/bus/train.

  35. My husband and I took this attitude to heart just over two years ago. We moved from San Diego (I was in the fifth generation born there in my family) to small-town Illinois, both for a job and for the cost of living improvement. Sadly, we were deceived by the cheap housing and still managed to over-purchase, ignorant to the fact that the taxes and maintenance would more than double the small mortgage. We were lucky and managed to sell four months ago for a small profit, and have now relocated to urban Tennessee, having learned the valuable lesson that owning a home costs more than money. We’ve decided to rent again and put our time into other things.
    If I could go back and undo our move away from family, it would be tempting, but as it stands the economic situation in California has them contemplating the move to be with us. For the time being, we’ve redefined abundant living to mean more time, less debt. To each his own, I suppose, but we feel confident that the costs have been worth the gains.

  36. I think about this a lot. I have some friends who moved to rural areas in the WV mountains and purchased amazing homes in the $180K range. The same homes in my own rural (but increasingly suburban) county would cost at least $400K. That said, even in a commuter city, I’m an hour from a major city, and an hour from my social life. If you are a “normal” American, odds are good that you can form good social bonds with your neighbors or at least a few people in any small town. If you are part of any kind of subculture (eg. homosexual or a particular sort of geek) you aren’t going to find a lot of “your people” far from an urban center of some sort.

    After repeated attempts to make friends in my own town, and even some successes, I still find myself with deeper and more enduring bonds to my social group nearer to the cities, and I still find myself climbing into my vehicle and spending the money to drive and visit them.

    There is a lot to be said about self reliance, but when you are part of any subculture there is power in numbers. I am learning that I really can’t drift too far from a city, which is hard to reconcile with my rural leanings, and even harder to reconcile with the rise in housing costs closer to urban areas.

  37. Kudos for the excellent post on the consumption of shelter. Your primary residence is not an investment or a piggy bank. I’m all for moving for cheaper housing, better job prospects and quality of life. That makes a lot of sense. I’m doing a series on home ownership and mortgages at my blog:

  38. People are doing this all the time. Retirees often sell out in expensive areas like NJ, NY, Connecticut (places with confiscatory taxes and cold winters) and move to the Sunbelt. Places like Delaware, the Carolinas, Georgia, which have lower taxes are booming. Places like Michigan with high taxes and cold climate, think NJ, CT. MA, NY (particularly upstate NY) are losing population. NJ in the past few years has hemoraghed 70 BILLION dollars in wealth as well heeled tax payers fled the state for low tax states like Texas. MD upped the income taxes on the highest earners and then was stunned when income to the state didn’t go up, because many of the wealthy had second homes in low tax states, and they changed their residences to the low tax homes. So many people are doing this. Same thing with people who don’t need to live near a city to earn a good income, those who work via the Internet, they are moving away from greedy, high tax states to lower tax states with warmer climates.

  39. Frugal Dad: I read a lot of financial blogs and the host of suggestions are about reducing grocery costs, coupon clipping etc. Few tackle the elephant in the Budget: housing costs. I really think we need to begin to look at alternative approaches to housing: way more sharing: Single folks could have roommates, the elderly could have a companion, empty nesters could take in a student, young marrieds could live with thier parents until they start families or longer ( this is done in a vast amount of the world: Middle east, africa, asia all have extended families). McMansions should be reconfigured to house multi-families. Or you can do as I did, found a job overseas where my Company pays for my housing! I save 70% of my salary as a result. Something has got to change in the USA’s approach to shelter.

    Great website. I just became a Fan on Facebook.

  40. When we went to our realtor about 2 years ago to purchase our home, she came back and said she was only able to secure a loan of 300k for us. But she said she could go back and try other banks and see if she could get more. I said, don’t bother, 300k will be just fine. I don’t plan on spending more than 300k anyway. I ended up getting a foreclosure for 230k in a nice neighborhood with great schools. Paid my 20% downpayment and currently have a loan for about $1k a month. Here’s the kicker: I live in the SF bay area. The home is not falling apart and there are no drug dealers around the corner. So I don’t accept the line that we live in an expensive city and cannot find a home for a low price. I am smack dab in the Silicon Valley. More likely, they can’t accept buying such a smaller place. My home is a small 2 bed 1 bath 880 sq foot. But it’s certainly large enough for 2 people and to entertain small parties. I’m sacrificing some space now in order to save up money to buy my dream home in the future rather than instant gratification now and risk losing it all if our income level dips.

  41. I think that this is an awesome time to BUY a house, if you don’t have a house you have to sell first, lol!
    We actually bought a second house last year for $30K for a mentally ill family member who was able to live on his own, but recently he chose to leave. I was concerned to find a good renter. A friend of my daughter’s was glad to move in. We allowed them to do all the paint, clean carpet, patch sheetrock, etc in lieu of deposit. our payment on this house is 280 and we are renting it for $500. In our area there is a flood of rentals so rent values have dropped as well. The main thing we wanted was a renter that was going to stay (they want somewhere to be for 4 years until buying in a good school district) and that would take care of the house (they have done awesome things with it, gorgeous!) and it was empty all of 3 days, so it is safe.
    And, if we can ever sell our ‘home’, we could live in the rental, or rent our other home for much more (since we are working on downsizing anyway).
    And it is a great time to buy a house if you were never able to afford before, which is what my daughter, SIL and 6 kids did. They found a house they could afford in one of the best school districts around. 4 years ago the house was almost double the price!
    I think each person has to just look and see what works for them. Personally, I wish we had sold our house before it lost 40% of its value and rented somewhere cheap, but hindsight is always 20/20!