market
'Take this house and shove it'
More and more Americans are moving to get away from overheated housing markets.
December 6, 2005: 11:06 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 people in the state said they would leave if they had the opportunity, according to a poll by MassINC, a non-profit public policy think tank. They would join some 170,000 Bay Staters 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: Housing affordability.
On the other side of America, Hawaii faces a similar mindset -- two out of every five residents say they 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.
There are other places that have been affected.
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.
But 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 group that seeks to make sense of the nation's housing policy.
Compelling math
On Long Island, the once bucolic suburb but now heavily developed region next to 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 that 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 aged 18 to 34 are unable to afford decent homes.
"Many families spend more than half their income on housing," says Egan at the Center for Housing Policy.
The second is that older residents 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 above.)
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 the Deltona-Daytona Beach area, for example, costs about $194,000 compared with $434,000 in Long Island's Nassau County.
Younger Long Islanders, says Gallagher, often find that they may have to take a slight pay cut when they move to the Sun Belt, "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 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," according to Gallagher.
Eroding affordability
On the other coast, an exodus of Californians leaving for Nevada has helped transform the housing market in Las Vegas into 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 median 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 Californians to think elsewhere.
For example, California money pouring into Arizona has helped make Phoenix the hottest house market in the country, with home values ballooning 55 percent over the last 12 months, according to the latest statistics from Office of Federal Housing Enterprise Oversight, which regulates Fannie Mae and Freddie Mac.
It's even been reported that Las Vegans are starting to pull up stakes for the cheaper markets such as Phoenix, Tucson, and Chandler, all in Arizona.
Now, what odds could you have gotten betting on that a few years ago?
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http://money.cnn.com/2005/12/05/real_estate/buying_selling/forget_this_housing_market/index.htm?cnn=yes
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