Glossy magazines often feature superb homes in America's richest neighborhoods - sprawling homes in various architectural styles, fashionably done up interiors, amazing kitchens and bathrooms, and what have you. And of course, many of these come with million dollar price tags.
But, the warm, soft truth is that most average Americans can live pretty well in a nice home in a nice neighborhood - without breaking the bank or dishing out a million bucks. Locally, cities like Weston and Coral Springs in Florida got high marks for affordability and quality life in a CNN Money survey.
And, personally, I ask myself - if I had a billion dollars would I like to live in a sprawling mansion in Miami Beach or Palm Beach... and my honest answer to myself is NO! See, a big house seems great and all--- but to me. warmth, knowing my neighbors, being able to go for an evening walk to a nearby coffee shop to meet locals - the warm social aspects of life matter a lot more.
Then there's the cost equation - a lot of expensive neighborhoods have higher property taxes, expensive grocery stores, higher gas prices, higher utility bills - and if I had this huge wealth (I'm Talking centimillions, here), I'd still want to minimize my energy footprint and care for my environment. And guess what, all that I just said actually held true for Steve Jobs who lived in a modest house in Palo Alto, California - despite his billions.
The great thing about our country, which I know for sure and many of my real-estate investor listeners know too, is that every single state of ours has several hidden gems - lovely cities with very high standards of living at very affordable prices.
So how can you give yourself a high quality life on a modest income? Well, here are a few things to consider...
First off, make sure your monthly mortgage payment does not exceed 25% to 30% of your annual income. That way, you wouldn't have to worry about making your mortgage payments or reducing expenses elsewhere. See, at all times, I want you to feel ZERO financial stress - so you can live a happy, healthy, productive life.
Next, understand your household needs. If you're single, your housing priorities will differ to some extent than if you're married with children. If you're retired, then again your priorities will be different from say a 30-year old. So understand your needs. Make a list of things that are most important to your household... things like
- The quality of neighborhood public schools
- Easy access to hospitals, doctors, pediatricians or day care
- Neighborhood safety - issues such as whether you could comfortably walk around by day or night, or whether your kids could walk to and from school without worrying about gangs or liquor stores
- The demographic profile of your ideal neighborhood - for example, if you have young children, you'd be better off picking a neighborhood that has younger children so they can easily have play dates or go trick-or-treating together
- Community values - that really come into play over time. For example, residents in Berkeley, California, have molded city laws that are very liberal and which may or may not agree with your own core philosophies.
- The availability of city services and facilities such as parks, recreation centers, teen centers, senior centers, soccer fields...
- Access to convenient shopping for day-to-day needs - food, clothes, household goods, easy parking...
- Entertainment options - which will vary based on your personality or what you all like to do as a family - malls, restaurants, museums, parks, beaches, hiking trails and so on.
- Access to public transport - freeways, trains, airports, ports...
- Your commute to and from work, your spouse's or partner's commute to and from work
Some say long commutes would be a definite deal breaker. Others say they need space to sprawl out and don't mind the commute as much. Before your buy, drive to and from your new potential address during morning and evening peak commute times to get a better idea of what you'd be facing on a daily basis.
Seek out crime statistics in the area from city and police websites. Talk to your future neighbors. Drive around at night to see what goes on. Do whatever you can to learn more about your potential home and neighborhood before you buy.
Distinguished schools and highly involved PTAs can shape your child's future. When researching schools, look at local community feedback and the school's academic performance in standardized state tests. Exposure and access to great museums, parks and libraries help cultivate young minds - so look at what's available.
Then make a list of things you are willing to forego or live with. For example, you may be willing to take on a 45-minute commute so your kids can walk to school or so your spouse or partner has a short commute and gets home early. Or, you may choose to sacrifice a big house for a smaller one in a great neighborhood that suits your lifestyle preferences.
Other things you should look at include
- The financial health of the city you want to buy in (and I say this because more and more, we're seeing cities go bankrupt which really messes up people's lives)
- Property taxes
- Zoning laws and whether there are factories, processing plants, landfills, trailer parks, etc. - the usual red flags
- The general look and feel of neighborhoods, the upkeep of streets and street lights, the quality of roads, how well parks are maintained, the use of fences and grill-doors and windows in neighborhoods - signs of the city's financial health and safety
- The quality of jobs in the area. Some cities, like Cupertino California or Redmond Washington or Washington DC thrive on large corporations, vibrant commerce or a big government presence, or perhaps an Army Base... but as we all know, jobs typically don't last forever so ideally pick a place that gives you ample employment opportunities should you need to find another job. On the flip side, many small towns thrive on a single company or a single government entity and offer very affordable housing and great neighborhoods - so if you're the type that can stay at one job, a smaller city would be a great way to go.
I also feel most people are comfortable living in neighborhoods that have similar levels of income - so you don't feel economic pressure with your neighbors doing better or worse than you by a wide margin.
The bottom line - you can spend as little as $50,000 to buy a great house in a good, solid neighborhood. Be open to looking off the beaten path. Check out web resources, trends in home prices, trends in population increases and decreases, changing demographics... and buy a house that you can afford for a happy healthy life.
Steve Pomeranz is a Managing Director for United Capital Financial Advisers, LLC, "United Capital", and owner of On The Money. On The Money is not affiliated with United Capital.
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