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Do you live in a high-cost city or state? Are you geo-curious?*
Anyone familiar with this blog knows I’m a big fan of geoarbitrage. In 2006, Mrs. Groovy and I left high-cost Long Island for low-cost Charlotte, North Carolina. It was the best move we ever made. In one fell swoop, we dramatically changed the trajectory of our financial fortunes for the better. Instead of limping along, struggling to make sure our income kept pace with our ever increasing bills, we suddenly found ourselves with a monstrous chasm between our income and expenses. From the time we arrived in Charlotte to the day we retired—October 14, 2016—we easily saved 55-60% of our gross household income ever year.
The biggest reason for our “monstrous chasm” had to be housing. The cost of housing in Charlotte is easily half that of Long Island.
In 2007, Mrs. Groovy and I bought our current home for $225K. Today it’s worth around $240-$245K. Put our home in a town of equal stature on Long Island and I’d be shocked if its resale value were less than $500K.
But wait, it gets better. Not only is the cost of buying a home in Charlotte much cheaper than buying one on Long Island, the cost of operating a home is much cheaper as well. Here are the average monthly costs of our fixed operating expenses through the end of November (fixed in the sense that they can’t be avoided or put off).
| Expense | Monthly Cost |
|---|---|
| Electricity | $112.00 |
| Gas | $62.13 |
| HOA | $142.00 |
| HVAC Service Contract | $15.09 |
| Insurance | $48.64 |
| Mortgage | NA |
| Property Taxes | $171.94 |
| Water/Sewer | $51.37 |
| Total | $603.17 |
Knowledge Is Power
I went through this exercise of documenting my housing costs to help the geo-curious. People living in New York, Boston, San Francisco, and other high-cost cities are well aware that there are cheaper places to live.
But how cheaper are these other places? Are they cheap enough to make a drastic move worthwhile? Will they allow one to dramatically increase the gap between one’s income and expenses?
Geoarbitrage worked fabulously for Mrs. Groovy and me. But this doesn’t mean it’s right for everyone in a high-cost city or state. The only way to tell, of course, is to be armed with real numbers.
With that in mind, then, here are the real costs of home ownership in Charlotte.
- For $250-$300K, you can get a very nice 2000-2500 sq ft home in a very nice Charlotte neighborhood or suburb.
- Salaries in Charlotte are roughly two-thirds the salaries in New York City or Long Island. If you make $100K on Long Island, you’ll make around $67K in Charlotte—providing, of course, you get a job in the same field.
- If you put 10% down ($25-$30K) on a nice home in Charlotte, your monthly mortgage payment will be between $1,048 and $1,258.
- If you put 20% down ($50-$60K), your monthly mortgage payment will be between $932 and $1,118.
- If you put 50% down ($125-$150K), your monthly mortgage payment will be between $582 and $699.
- Monthly fixed-operating costs for a nice home (mortgage excluded) will run between $450 and $650. In most cases, it will be toward the lower end of this range. And this is because most detached, single-family homes in Charlotte don’t come with an HOA. Our house is very weird in that regard.
Final Thoughts
Okay, groovy freedomist, are you geo-curious? If you are, how do the housing costs in Charlotte compare to the housing costs in your area? Are Charlotte’s lower? And if so, are they low enough to compensate for Charlotte’s lower salaries? Let me know when you have a chance. I’d love to know just how attractive Charlotte is when it comes to geoarbitrage.
Oh, and I almost forgot. Great news. I finally got off my arse and picked up some garbage. Here’s another episode of Talking Trash.
Have a great weekend. Grease for peace.
* Geo-curious is my shorthand for anyone who is interested in geoarbitrage.
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