Price Disparities Based on Geography By Dena Mentis
Special to iNest There's no rhyme or reason to explain today's, price disparities for homes between one geographic area and another. The chasm can be enormous, dictating lifestyles, livelihoods, and life-altering decisions to relocate. For what is described in those free magazines in grocery store entrances as "charming" and "cozy" in certain parts of these United States, the advertisement may be referring to a 2-bedroom, 1-bath bungalow on a postage stamp lot with no garage in sight for $425,000. And in others, those terms may refer to a 5-bedroom, 3-bath house on a half-acre with a 3-car garage for $130,000. It always reminds me of my father's joke about the delicious steak dinner that only cost $6.75 in North Platte, Nebraska. Why is there such a difference in price between the dinner and one like it in places like Boston or San Francisco? Because when you wake up in the morning, you're still in North Platte, Nebraska . . . But how bad can it be in North Platte, Nebraska when you've gotten so much more home and an incredibly delicious steak dinner for your money? In an issue of BUILDER magazine, Peter Bodensteiner reports that a study was conducted by Rochester, Wis. research firm Runzheimer International, comparing what buyers would pay for the same 2,200 square foot home in a middle class community in different parts of the nation. In San Jose, California, a home that size would sell for more than $700,000, according to the report, while that same house in Port Arthur, Texas sells for a modest $82,000. In the article, a Runzheimer consultant admits that the disparity reflects the split between the old economy and the new one, based primarily on location and the dynamics of the local economy. Many upwardly mobile consumers (an even those that just want to survive) go to where the jobs are, instead of where the affordable homes are, forcing them to put up with ridiculously over-priced housing and jammed-up freeways in many areas. Corporate America sweetens the pot, so to speak, with relocation packages that provide roaming employees with interim housing, paid-for moving services, help with closing costs, etc. But it is still ironic to me that highly skilled professionals in high-tech areas like the Silicon Valley with incredible six-figure incomes sometimes perceivably possess less desirable lifestyles than a high school teacher earning $37,000 a year living in Muncie, Indiana--except for, perhaps, the weather and a not-too-distant beach. Although the study examined 300 metropolitan areas and came up with an average location value of $208,900, the cost comparison published in the BUILDER article knocks your socks off. Ranging from most expensive to least expensive for the mythical 2200 square foot dwelling, the biggest gap was listed first. Expectedly, California topped the list for the ten most expensive locations nationwide. The first comparison was between San Jose, CA and Jackson, Miss., with a difference in price of $582,100 for the same house. Next were San Francisco and Kinston, N.C., with a disparity of $444,200. Scanning down further reveals the same house that sells for $300,000 in New York sells for $101,800 in Towanda, PA. Of course, it's difficult to provide insight into the lengths to which Americans will go either for the almighty dollar or for a better quality of life. Pitting small-town Americans living their version of the American Dream against new economy, 32 year old millionaires would no doubt let fly a huge difference of opinion in just what the quality of life means as compared to the rest of the homebuying public. Demographic studies indicate a slow migration back to re-habbed city centers, where homebuyers will no doubt get less square footage and less room to breathe for their money, but bring them closer to the activities they may have missed in the suburbs. However, it's a stretch for me to believe that people in suburban and rural areas, where it may be a true excursion to visit the "big city" and where you can live in a 3,000 square foot house on an acre of land worth a measly $150,000 don't really know what's valuable in life. Perhaps waking up in the morning in North Platte, Nebraska isn't so bad after all. And lifestyle is truly only in the eye of the beholder. |
