Look Before You Leap
A FEW WEEKS AGO, fellow contributor Dennis Friedman discussed how he’ll remain in California for retirement, despite the lower cost of living elsewhere. Dennis’s post got me thinking about the conversations I hear at my local dog park in Newbury Park, California.
A local realtor regularly talks about the many longtime homeowners who are moving out of state. Within days of listing their home, sellers receive multiple offers above asking price. The sellers then move to places like Arizona, Idaho, Utah and even North Dakota.
While I appreciate the rationale for selling in a hot market, I hope that those leaving California have asked themselves these three questions:
- How’s the weather? We recently completed a cross-country road trip along Interstate 40 from California to South Carolina. During our three-week trip, the best two weather days were the first (when packing the car) and the last (when unpacking the car). While there’s something to be said for having seasons, those planning to leave California would likely be well-served by digging into historical weather data for their new location.
- Where’s Trader Joe’s? There are downsides to living in densely populated areas. Still, I’ve grown used to having so much available to us within a small radius of our home. While there are benefits—such as less traffic—to living in a less crowded area, those departing should consider the longer driving distances to doctor’s offices, grocery stores and (gasp) Starbucks.
- What’s the overall tax impact? While most leaving California will benefit from lower income taxes in other states, many could see a significant increase in their property taxes. Another potential tax downside for some sellers: Their home-sale profit could be subject to federal and state capital gains taxes.