Comment by scarface_74
3 years ago
Maybe. But I had a big house in the “good school system” in the Atlanta burbs built in 2016 for $335K. Even today that would cost around $550K. It would take more than $300K to duplicate our lifestyle in the Bay Area.
I’ll take my former $150K in the burbs of Atlanta over $300k in the burbs any day.
And before the usual responses implying I’m disdaining what I can’t have, I current work for BigTech remotely.
You spend on a lot of things beyond housing, and most things outside of housing are about the same price between regions, so even if your housing costs is half as cheap, you are still falling behind on half as much salary. This is especially true for retirement savings, since you don’t have retire in a HCOL where you earned that money, and that expensive house can be sold, perhaps with some kind of profit to offset the extra interest paid, later.
Gas, property insurance, car insurance for your home (especially since insurance companies are starting to refuse to sell in the state) and even food is more expensive.
To put some real numbers on it.
My 30 year fixed 3.5% mortgage all in from 2016 - 2021 was $2185 and that included the FHA PMI since I only put 3.5% down. I refinanced in 2021 to a 15 year mortgage and bought points and got rid of the PMI. My house is now worth close to twice that.
My mortgage? 1.97% fixed 15 year - $2550 and $1575 of that goes toward principal. My total household expenses as of March 2020 when I was making “only” $150K with my wife working part time making $25K was around $6000. We were bringing home after taxes and before retirement savings about $10500 after maxing out my retirement savings it was about $9300 a month.
And if you haven’t noticed, people are moving away from the west coast and office occupancy is down - that doesn’t bode well for home prices long term.
Our lifestyle is a little different now (see below). But out of my base income which is still only $160K - and my wife no longer works -with the rest coming from RSUs, we still manage to pay all of our expenses and I’m able to max out my 401K.
(https://news.ycombinator.com/item?id=36306966).
I don’t think people who have been in the tech bubble understand how easy it is for a two income earning family to accumulate wealth where one is making your standard enterprise dev tech salaries in a major non west coast city.
Most couples I know our ages where one is a mid career developer also has a spouse working making at least $70K (the average salary of a college grad). You can do quite well in most cities with a household income of $220K.
If you’re younger and single making $135 to $170K - typical for a developer with 5 years of experience outside of the west coast - you can find an apartment or buy a condo in the city for $2500/month.
Are we comparing with Atlanta? Food is more expensive maybe, but not 2X! Insurance is usually not more expensive, especially in mild weather west coast cities. Electricity can be cheaper (Seattle where I’m at). I’m not in California, but still an HCOL. But if I were in LA, food would be cheaper than even Atlanta. Gas is expensive, not that I notice much (I have an EV, and our electricity is cheap).
> And if you haven’t noticed, people are moving away from the west coast and office occupancy is down - that doesn’t bode well for home prices long term.
I wish, but it’s just a dream. The traffic is bad, rents are up, the housing market is insane. You are betting that the “it’s too crowded so no one comes here anymore” will regress so much that housing prices will drop, but that’s not how equilibriums work.
Everyone in our industry should be maxing out their 401k’s, no matter where they are living. However, those who survive in a HCOL will have a lot more assets and money at the end of it than a LCOL, simply because their house is worth more and they made more money (same percentage of savings even with higher expenses).
There are good reasons to live in an LCOL, especially if you like the place and you have friends and family there. But making more money overall than a HCOL isn’t one of them unless the jobs you can get in the HCOL don’t really pay much more than the LCOL (then get out of dodge as fast as you can).
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