Take this housing market and shove it
Americans are moving to get away from overheated housing markets.
December 6, 2005: 10:09 AM EST
By Les Christie, CNNMoney.com staff writer
NEW YORK(CNNMoney.com) - Many residents of high-priced housing markets around the country are cashing out and moving to more affordable areas.
In Massachusetts, a quarter of the state said they would leave if they have the opportunity, according to a poll by MassINC, a non-profit public policy think tank. They would join some 170,000 Massachusettans who left for other parts of the United States between 2000 and 2004.
The No. 1 reason cited by those who want to leave: The high cost of living. And the No. 1 area needing major improvement was housing affordability.
On the other side of America, Hawaii faces a similar mindset -- two out of every five residents have considered leaving the islands because of the cost of housing, according to a poll co-sponsored by the Hawaii Business Roundtable and Pacific Resource Partnership.
California suffers a net loss of about 100,000 residents a year to other states, according to Economy.com. In recent years, many have cashed out their rapidly appreciated homes and moved to Arizona, Washington, and Oregon.
Now that prices have climbed in those states as well, the latest trend is that Californians are turning to the Midwest, where spacious houses are available for half of the cost of similar space in Los Angeles.
"It makes increasing sense if you can buy more house and still live in a good area," says Conrad Egan, president and CEO of the Center for Housing Policy, a non-profit that seeks to make sense of the nation's housing policy.
Compelling math
On Long Island, the once bucolic but now heavily developed suburb of New York City, about 70 percent of residents are at least somewhat concerned that high housing costs will drive their families from the region. And this is not a far-off issue -- 45 percent said it was at least somewhat likely they would move out during the next five years.
There are two factors at work, according to Carrie Meek Gallagher, project director of the Long Island Index, which published the findings.
The first is that younger Long Islanders, the 18-to-34 age cohort, are unable to afford decent homes.
"Many families spend more than half their income on housing," says Egan.
The second is that older residents, ones who already own increasingly valuable property, find they can sell their present homes, buy in less expensive locales, and have big nest eggs left over.
For them, the numbers add up like this: A Long Island couple with income of $100,000 wants to move to Daytona Beach. (Florida as well as Georgia and the Carolinas are prime destinations for Long Islanders.) According to CNNMoney.com's cost of living calculator, they would need only about $68,000 a year there to live as they're accustomed to. (Try different scenarios with the tool calculator.)
And selling their house and buying a new one down South would produce a big fat dividend. The American Homebuilders Association reports that a comparable home in Deltona/Daytona Beach area, for example, costs about $194,000 compared with $434,000 in Nassau County.
Younger Long Islanders, says Gallagher, often find that they may have to take a slight pay decrease when they move to the sunbelt, "but they more than make up for it by being able to buy a brand new house for half the price it would cost on Long Island."
The trend has already taken root and it seems to be accelerating. "There was a big jump, from 62 percent to 70 percent, in one year of the 18-to-34 age group who think they are likely to leave within the next five years," says Gallagher.
Eroding affordability
An exodus of Californians to Nevada has helped transform the housing market in Las Vegas, which has been one of the hottest in the country. But there are signs that Vegas is about played out. The median house there has leaped to $283,000 and the ratio to income is now about 4.8, nearly as high as Long Island's ratio of about five to one.
The jump in Vegas has caused many California's to think elsewhere and California money pouring into Arizona has helped make Phoenix the hottest house market in the country, with home values ballooning 55 percent during the latest 12 month period.
It's even been reported that Las Vegans are starting to pull up stakes for the cheaper markets such as Phoenix, Tucson, and Chandler Arizona.
Now, what odds could you have gotten betting on that a few years ago?
tinyurl.com
tinyurl.com |
