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July 05, 2007

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I'm guessing that Michigan is pretty cheap. What size house would cost $200,000 in Michigan?

Over here, in the UK, there is less scope for decreasing housing costs - partly because housing is generically expensive everywhere (small, crowded island syndrome) and partly because there are fewer major urban centres that one could move to.

Plonkee --

Like everything else, $200,000 will get a varying square foot space based on which city/area of Michigan it's in.

In our neighborhood (middle class, "average" area out side Grand Rapids), $200,000 will get about 2,500 square feet -- so that's pretty good, huh?

I've seen a number of people move in the OTHER direction - from California to Michigan. These people wind up in mansions - the largest and best home in the neighborhood - and often holding considerable remaining equity from their California sales.

Five years ago - before the insane real estate runup - homes over $250K were very rare outside of a few wealthy Detroit suburbs.

Grand Rapids had Founders Brewing - SF doesn't!

2,500 square feet. Wow, thats amazing..

In more expensive UK cities like Bristol that would be about £500K (approx $1m) and even in the cheapest areas (Carlisle) you're looking at £300K (approx $600K).

For $200K, in a provincial urban area (Birmingham / Manchester / Leeds) you could probably buy a 625 sq ft house.

Wow. I should move to Michigan.

DG --

If you do, I've got a house to sell you (we're looking at moving across town.) ;-)

I live in NYC, which clearly has high housing costs. So, yes, it is definately much harder to get that initial downpayment together.

On the other hand, I feel there are better oppty's to maximize income, which help offset the costs. Also, the oppty for capital appreciation is much much greater. The equity in my home is several times the cost of a house in Michigan.

So, worse case, if I sell my home and move to Michigan, I could pocket enough to retire (the scenario aptly described by Min Wage). However, I think I'd rather stay in NYC and keep working for the moment.


FYI--The SF Bay Area does not have a population larger than the state of Michigan. The SF Bay Area has about 6.8 million and the state of Michigan has about 9.9 million. The Bay Area also covers a large area. It's a 2 hour drive from San Jose in the south to Santa Rosa in the north (and that's if there's no traffic).

Otherwise, you are right. The cost of real estate here is a rip off. If you plan on being childless (like me), then it may still be worth it to live here. But if you plan on having kids, plan on an income of at least 150K in order to live decently. Otherwise your life will be a total rat race (and might still be if that 150K requires both spouses to work high pressure jobs (which, in general, it would). In general, this is NOT a good place for people of average means (or even somewhat above average means) to raise kids.

As far as "shifting" to skiing when the weather gets cold.....I don't think so. I hate spending much time in an outdoor ice box. The weather here really does add to the quality of life. Although I will admit, the cost of living here is still a rip off, even with the good weather factored in. And you won't enjoy the weather much if you're working and/or commuting all the time to pay for your tiny and overpriced condo, apartment, or house.

And what kind of skiing do you really have in MI besides cross country?? If you are a skiier, CA has good skiing. MI doesn't.


Plonkee:

I'm suspicious about the UK's housing prices being high due to lack of land. They use the same BS excuse here in the SF Bay Area. The real reason housing is expensive in my area is because there are LOTS of hidden rules and regulations that work against the building of new housing stock. I suspect that it's a similar story in the UK. I know it's a crowded island, but it's not THAT crowded.

There are indeed many restrictions against the building of new houses in the UK. They aren't hidden though, they're pretty well known and most people don't want new houses built in their areas (a lot of not in my backyard types here). There is genuine concern that if we build too much there will not be a lot of green space left.

Miguel -- you hit the nail on the head. I'm in LA,and I have tremendous equity in my home, as well as better income-maximizing opportunities here. It's definitely a choice people make -- cheap housing, lower salary in the "flyover country" (sorry -- just teasing everyone :) vs. more expensive housing and WAY better salaries (and greater opportunities) in the bigger cities.

Right now, I'm with Miguel -- but when I can make LA money and live somewhere else - I will take the opportunity. It's definitely something I am working towards...

One way to get the best of both worlds is to live in a smaller home. I live in Chicago in a 550-square foot condo that I absolutely love. I paid a lot on a square foot basis, but not on an absolute basis (especially compared to my salary, which wouldn't be nearly as high if I lived in a smaller city). Also, living in an urban area can bring economies elsewhere. Chicago's public transportation is so good (if frustrating at times) that I don't need a car, which saves me hundreds of dollars every month.

Of course 550 square feet is way too small for a family with kids, but the idea still applies--if you think you can enjoy living in a smaller home, it has amazing benefits. Along with being cheaper to buy upfront, it's cheaper to furnish, maintain, heat, and cool, and much easier to clean.

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Yes, it is true that living in SF costs more because, well, it is really nice in Hotel CA. You're neglecting to mention that people in the Bay Area typically earn more than people in Michigan. Even if you are a person of average means, when transferring within a company, it is not hard to get a cost of living increase and a raise. I know some that opted to buy a $200K house in upstate NY, rent it out via manager, and use the proceeds for a home in the Bay. Personally, I'm just finding the $200K for the down payment - could always sell if the kids need to be elsewhere. Besides, 300 days of sunshine and no snow is worth having my $1.6 million house in a "working class" neighborhood.

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