Compare Average Home Prices By State
27 September 2006Coldwell Banker has come up with an index to compare the price of homes around the country in various locations. They basically ask what it would cost to buy a 4 bedroom, 2200 square foot house in a nice, middle class neighborhood. There’s a pretty wide range in prices. If you want to live in California, for example, you’re going to be paying well over a million dollars. In New York, you’re pushing just under a million. Other states have much better deals - Texas stands out as the best with most of the major cities giving you that kind of house for $150,000 to $250,000. But that does make me question the methodology a little bit, just because I’ve been looking at Texas real estate recently. Houston, for example, clocks in at $155,000 for this kind of house - whereas they have Austin at $220,000 and Dallas at $290,000. But in my experience, Houston is more expensive than Austin by far - and probably more expensive than Dallas. Why the difference? My guess is that more of the surrounding area is considered part of the city, just because it’s bigger. You can get a house like that for $155,000 in the Houston area - if you’re willing to commute for an hour to your downtown job. The same goes for Dallas and Austin, but the stuff within an hour’s drive of Dallas isn’t considered a part of Dallas. Fort Worth, for example, is within an hour commute - and it’s set at $151,000 for the “standard house.”
My guess is because of local differences like this, you should take the numbers with a grain of salt. But for people who have yet to settle down permanently, they’re a good way to help you decide where to move if you want to end up in a bigger, cheaper house. Even if you like the city and aren’t willing to move out to the ‘burbs - which city you pick makes a big difference. Pick D.C., and you’ll pay about $800,000. Go to Philly instead, and you can get in for a little cheaper - only about $520,000. Go with New York, and you’re out $700,000 to $900,000 (depending on where you end up).
A lot of people think this doesn’t matter - but it can be the single biggest personal finance decision you make. Your house is going to be your biggest expense, period. It’s usually around one-third of your income. If you get similar pay in a cheap city, you can cut your monthly expenses, big time. Let’s say you’re picking between D.C. and Houston. That’s $800,000 vs. $155,000. In D.C., at 6% interest, that’s $4,800 a month. In Houston, you pay $929 a month. In reality, you’d probably just live in a tiny apartment in D.C. versus a house in Houston. But let’s assume you’ve got a real choice - same house in either city. How much could you save over time by picking the cheap city? $3,871 a month - at 9% a year - or about $2.4 million at the end of twenty years. So if you do it soon enough, pretty much all you’d need to do to retire is move off to a cheaper city. Most people don’t make anywhere near enough to afford a $4,800 mortgage, but they also don’t need $2.5 million in retirement, either.
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2 Responses to “Compare Average Home Prices By State”
September 28th, 2006 at 3:28 am
[...] “Coldwell Banker has come up with an index to compare the price of homes around the country in various locations. They basically ask what it would cost to buy a 4 bedroom, 2200 square foot house in a nice, middle class neighborhood.” So says Free the Drones, reporting on a wicked-cool tool. [...]
October 21st, 2006 at 1:56 am
Omg…this is great for my real estate investing. Thanks for the useful info!