Home Ownership–Would You Move to a Lower Cost of Living Area?

The average age of first time home ownership in the United States in the last 10 years has varied from 30 to 32 years of age, depending on the economy (Economists Outlook).  My guess is that it might also depend on the area of the country people reside in.  Certainly buying a house in rural Iowa is much more affordable than buying a home in the suburbs of Chicago or New York City.

My husband and I are well above the average age for first time home ownership, but we’re finally starting to look seriously into the housing market in our area, a nice suburban area a quick drive away from downtown Chicago.

Housing Markets. . .It’s All About Location, Location, Location

What we’re finding is that the lowest priced homes we can find average $375,000.  These houses are either two bedrooms (which is a tad too small for us and our three kids) or houses that elderly people have owned for years and not updated since the 1960s or 1970s.  (One photo inside an older person’s home showed a yellow rotary phone still hanging on the kitchen wall.)

A move in ready home is well outside of our budget, ranging around $550,000 to $800,000.

That’s not to mention the property taxes, which even on a modest house are at least $10,000 a year, though most average $15,000 to $20,000 a year.

We’re overwhelmed just thinking about saving $75,000 for a 20% down payment on a home that will require a significant amount of work (and money).  I can’t imagine paying $1,000 a month just in taxes for 15 or 20 years.

The Income Often Does Not Make Up for the Cost of Living

Part of why we’re currently priced out of the market is because my husband has a post-doc position.  In another two years, he’ll hopefully have a tenure track position, and his income will increase substantially.

Will he earn a bit more because we live in a high cost of living area?  Sure.

But not enough to negate that high cost of living.  Even if he earns $20,000 more here than he would working in a small (cheaper) area of the country, the difference is almost eaten up every year just in property taxes.

That’s not taking into account the higher price in housing, gas, food, etc.

Are You Married to Your Location?

We’ve been in this area of the country for 13 years now, largely because that’s where my husband was in school getting his Master’s and Ph.D.  Now we’re here while he finishes his post-doc.  We are rooted here; it’s the only place our kids have gone to school.

But are we so rooted that we can’t move?  Are our ties here strong enough to make up for the fact that living here for the next 20 years will have serious repercussions on our finances and ability to save for retirement?

Sure, location is everything, but we’re considering not just changing location within the suburbs of Chicago, but changing location by getting out of the city and the high cost of living.  A three hour drive in any direction would put us in an area with much more affordable housing, where we could buy our dream home for less than $200,000 and pay property taxes of less than $5,000 every year.

Is it worth it?  I think so.

Have you made a dramatic move to have a more affordable lifestyle?