Year end is often a time when many of us reconsider lifestyle choices. This year many Americans will be considering moving into communities that allow them to substantially lower their monthly cost of living. If you are one of these people, here are a few things to consider.
Price: Single-family living in the suburbs and ex-urbs of major metropolitan areas can lack the easy access to mass transit, employment centers, medical services, farmer’s markets, shopping areas and entertainment. Although it may seem less expensive to live in outlying areas, a family’s transportation budget often uses up the savings with automobile expenses.
Neighborhood: If a particular neighborhood or school district is what matters to you, don’t assume it is always better to purchase a home rather than rent.
Rent Ratio: Experts use a ‘rent ratio’ to analyze the benefits of renting or buying during a particular market. They determine this number by dividing the house price by the cost of renting the house over a year. In other words, if a home costs $300,000, and $1600 a month to rent it, the rent ratio would be 15.63%. ($300,000 divided by $19,200, which is 12 months rent.) If a home costs $500,000, and to rent it is $2200 a month, the rent ratio would be 18.94%. According to David Leonhardt’s blog in the New York Times, these were the ratios in descending order during 2016 in the following metro areas:
Metro Area & Ratio: East Bay (CA) 35.9, Honolulu 34.4, San Jose (CA) 32.7, San Francisco 27.9, Seattle 27.3, Charlotte, N.C. 27, Orange County (CA) 27, New York (Manhattan) 26.7, Raleigh (NC) 26.2, Portland (OR) 25.9, North-Central New Jersey 25.2, Nashville 24, Denver 22.6, San Diego 22.1, Long Island (NY) 21.4, Los Angeles 15.4, Kansas City (KAN) 15.3.
If the ratio is below 15, it is considered a good market and time to buy. Between 15 and 20, renting would probably be wiser. Above 20, renting is most practical.
Security: Apartment living and higher density housing can provide additional security, particularly for people who live alone. With neighbors who are close by and more eyes paying attention, the community benefits.
Employment Options: There are many benefits to living close to employment centers and not having to commute. Most of us think of driving to work as something we have to do, but inclement weather can make commuting very inconvenient. If a family has children in school, it can create some very difficult situations for parents too. The biggest benefit of living close in is probably the time saved between the job and home.
Our Carbon Footprint: With so many other things that concern us today, it seems like we are piling it on when we bring up climate change, but there is no getting around it. Without some radical behavior changes in all our lives, our planet is going to get sicker and so are we. Anything we can collectively do to reduce our energy use will help slow down environmental change. Moving closer to employment and services is one way all of us can cut down our energy use.
Not moving is also another way to go. Often we think the ‘geographical cure’ is going to make our lives easier, but as we bring ourselves with us nothing really changes. If you don’t need to move, try to think about why you want to do so. If there is a problem with your current home or rental, is it fixable? If so, it might be less expensive to stay put. Either way, happy new year!