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Promising Places?

Dennis Friedman, 3:13 am ET

MY WIFE RAN INTO an old acquaintance at our local grocery store. I asked my wife if she was surprised to see her. “No, but she said she was surprised to see me. I asked why. She said she didn’t think I could afford to live here.”

Maybe that’s what most people would have thought, especially if they saw my wife in the neighborhood parking lot getting out of our 2007 Honda Fit.

It’s become extremely difficult for a middle-class family to own a house in California. The median price for a home in Los Angeles was $898,692 as of July 31. Where we live, it’s even higher. In addition, we have the nation’s highest state sales tax and gasoline tax, which makes life even more expensive.

We have no plans to move. But if I were 50 years younger and starting a new life, I’d move to another part of the country, where things were more affordable. Where to? A place that has many of the attributes that my younger self would have looked for:

  • Plenty of jobs for people from all walks of life.
  • Affordable housing—meaning a place where a machinist and manufacturing supervisor could own a home without having to commute two hours to work.
  • Affordable colleges. In 1978, you could work a minimum wage job and afford full-year tuition at a state university.

Maybe there’s no such place today. But it sure reminds me of the California I knew when I graduated college in the 1970s.

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Tim
Tim
4 days ago

As a former citizen of California I can understated. I graduated from the UC System and then my career took me to other parts of the country. I have looked at moving “home” when I retire, but the costs were too much to come back. We will retire in Southern Utah and enjoy the outdoors and we can visit family and friends in Califinia with not too long of a trip.

parkslope
parkslope
4 days ago

Considering that the average machinist makes $42,600/year, even buying a house with a two hour commute may be out of reach. While the major cities of CA are extremely expensive, the lack of affordable housing is a national crisis.

BTW, not every city in California has prices greatly above the national average. For example, the average price of a house in Fresno is $340,000.

medhat
medhat
4 days ago

Dennis, I had the chance to reflect on a similar topic this weekend, when I hosted a friend I haven’t seen in a number of years. We were having drinks at the university where he matriculated to 40 years prior, and we both remarked at how, in general but consistently, a slow and steady approach to both life and wealth management has seemed to pay off. He’s a few years from retirement age but nearly 20 years ago joined a company with a very generous pension plan that gives my friend options that many of our same-age counterparts would view in envy today. My long-ago strategy to “pay yourself first” by investing in index mutual funds (in the pre-ETF era) has similarly paid off over the past 20+ years. But in honesty, it was no crystal ball. Back in the late 90’s I knew next to nothing about the stock market or investments in general, but understood the benefits of a long time horizon on compounding earnings. That, and we also drive a collection of old (not antique!) cars! Mine’s a 2005.

R Quinn
R Quinn
4 days ago

That old acquaintance seems rather rude. But I like appearing less well off than I am. After all we know that senior and poor are synonymous. When I go to buy something rather expensive I purposely dress as disheveled as possible. Drives my wife crazy. Many years ago while looking for a Christmas present I wondered in a Gucci store in a high end mall nearly looking like a bum. The clerk said, “ Are you sure you can afford to shop here?” I wouldn’t pay those prices for a purse if I were Warren Buffett, but the experience was worth the trip.

IAD
IAD
4 days ago

I know you mentioned you have no intent to move, but one has to wonder at the cost to maintain a lifestyle in that high cost area. California is a great place to visit, but the economic and social policies of the state should encourage all but the highest and lowest earners to leave.

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