Many journalists have been writing about people leaving California for other locations. As Realtors, Jeney and I have seen some of this in action personally. Below are some pictures and a few paragraphs detailing many of the economic reasons for this.
But don’t get me wrong, I’m not trying to convince you to have us sell your home in California. Read on for some free advice…
I’m using the example of the Wichita Kansas metro area and the Temecula Valley area of Southern California. Above are screenshots of two properties for sale roughly around the same size, both having four bedrooms. Typical generic single story tract homes.
The home on the outskirts of the Wichita metro area has four bedrooms, three baths – and is a little larger than the Temecula Valley area home. In this example it would take you about 17 minutes to get to Wichita where you would find a wide variety of restaurants, concerts, a national airport, college sports and a minor league baseball team. With 20% down (56k), you’d have a house payment of a little under $1,600 per month. If you made $58,000 a year and didn’t have a lot of debt, you would be able to afford this home, no problem.
As you can see in the picture below, given income rising at a similar pace between the last data provided in 2019 and 2022 – it’s reasonable to assume that the average income in Wichita is likely now around $67,000 a year – more than what you would need to buy this home.
The home in the Temecula Valley area has four bedrooms and two baths and is slightly smaller than the Wichita area home. In this example it would take you an hour and 15 minutes to get to Ontario California where you would find a variety of restaurants, concert locations, an international airport and multiple minor league sport teams. With 20% down (124k) you’d have a house payment of a little under $3,300 per month. If you make $118,000 a year, with average debt, this home would be affordable to you.
As you can see in the picture below, given income rising at the same pace between the last data provided in 2019 and 2022 – it’s reasonable to assume that the average income in Temecula is likely now around $115,000 a year – slightly less than what you would need to buy this home.
You must take into account that you’re likely to have to drive to your work in order to afford either one of these properties. You will have a commute of somewhere between 15 and 20 minutes – or an hour to two hours – depending on if you chose a location in the Midwest or a location in Southern California.
Clearly there are benefits to living in Southern California. The weather is often better than what you will find in the Midwest, you have the ocean, the mountains and certainly if you drive to Los Angeles or San Diego you have more professional sports teams, art and museums then you would have in the Midwest. I get that.
If you live in the Midwest, you get all four seasons weather-wise, you have more options for hunting and fishing, you have less traffic, more open space and overall things are more affordable.
So based on all of this information, it is clearly an economic benefit to leaving Southern California – unless you are earning more than the average income. That said, if you purchased your home over 5 years ago in Southern California, you are likely not experiencing the extreme prices that we are now. Your house payment is likely lower than what it would be if you bought today if you have not refi’d your home to buy RV’s, boats and other things that you probably don’t need (and actually cannot afford aside from you being ‘mortgage rich’).
Now if you find yourself in a place where your job has transferred you to another ‘more affordable’ location, you want to get out of California to be away from the congestion or you just want to experience a slower pace of life – I get that. You may very well be tempted to sell your California property.
Don’t sell if you are not retirement age yet!
Your California property is an investment in your future. You’ve already bought into it. You’ve already made money on it that you can’t touch and spend on things that you shouldn’t or don’t need. But you will need that money at some point in the future when you choose to retire or have medical expenses that exceed what your insurance will cover. Instead of selling the property, if you are in a solid financial position I suggest you rent out the property. Rent prices are likely much higher than what your mortgage is, so you would have a net positive income monthly.
Additionally as time goes by, you will have an increased value of your California income property, and a decreased (or eliminated) mortgage for your California income property. When you go to sell the home in 5, 10, 20 years from now and retire, you will have a much larger retirement nest egg than if you sell the property now and put the profits in a money market account or the stock market.
If all of this makes sense to you and you’re interested in renting your home after you move, head over to https://www.fullvalue.us and read up on details about our Property Management services. We are happy to help!!