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The Wall Street Journal Online reports that due to huge real estate booms in the coastal cities, many are taking advantage of the market and cashing out their expensive East and West Coast properties for less pricey ones inland.* For those welcoming a change, this might be the perfect time to consider an early retirement or a lifestyle transformation.
A perfect example would be Tony Jones, a client of Daniel Johnson at www.YourMountainBroker.com, from Hoboken, New Jersey. Tony, who made the move from Hoboken, New Jersey, decided it was all about rethinking priorities.
Formerly working hard in the busy financial service industry in New York City, Tony was present for September 11th. After that, he said his priorities had shifted. He decided he needed a change of scenery and took a look at the market.
Tony was able to sell his Hoboken home for a huge gain. He ended up with an incredible 80% increase in only 4 years. He also had a vacation home in New York, which he decided to sell and gained a 60% increase in only 2 years. With his two homes “liquidated”, he was able to relocate to Breckenridge, Colorado and retire after buying a 2-bedroom condominium in town.
Why Colorado? Tony loved the outdoors and knew that the quality of life in the mountains was more of what he wanted after 9/11. Though the cost of living is comparable because he’s in a resort town, he is very content with the decision he’s made to move west because he enjoys the outdoor activities abundant in Summit County.
According to The Wall Street Journal Online, “Over the past five years, raging real-estate markets in some coastal areas have more than doubled housing prices, while farther inland prices have risen more moderately. That has stretched the price gap between the middle of the country and the coasts far beyond the norm. The typical home price for the 10 American metropolitan areas with the highest housing prices has jumped to 230% of the national median from 155% five years ago, according to an analysis by Economy.com for 'The Wall Street Journal'.”
In a study of Hot Markets on Economy.com and the National Association of Realtors, New York has shown a 92% change in median home prices for the second quarter 1999 to the second quarter 2004. Other coastal towns are showing similar percentages and some are as high as 142.5%.
Many people are deciding it’s time to take advantage of the market and cash out, allowing them to afford either a smaller home and perhaps a second home in a location more inland. Others, like Tony, are choosing to downsize -- they’ve decided to sell everything and head for the hills.
The Realty Times on September 7, 2004 reported that annual home value growth is presently at its highest rate since 1980 in the U.S. due to record-low interest rates as well as very low mortgage rates this year. The New England states had an annual home-price growth gain of 11.7 percent, whereas the mountain states trailed the nation with only an 8% increase.
For Christian and Nancy Lorenzi, formerly of Guilford, Connecticut, a move to Colorado was not something new. They had lived many years in Summit County and, in 1998, moved back to the East Coast, where Nancy had grown up. Due to job relocation, they recently found themselves back in the Rocky Mountains after six years.
Since she’s experienced both sides for long periods of time, Nancy notes that there is definitely an elevated level of stress on the East Coast. Taking two hour commutes into the city, (which includes driving time to the train station,) adding a packed train with tons of strangers where you can’t find a seat, and mixing in long workdays in order to afford the lifestyle people crave out there, is a recipe for tension and a much different quality of life.
Nancy’s opinion is that Colorado is better for raising kids than the East Coast because of the emphasis on outdoor activities and athletics. She noticed that New England kids often spend hours just “hanging out”, which she feels can be dangerous. She said that, in general, East Coast children have more pressure to have the “best”. Their focus seems to lie with obtaining material things – they have a ‘keeping up with the Joneses’ mentality at such a young age. “Kids in Colorado are definitely less concerned with material goods. There is just more to do -- there are more things to occupy the kids and keep them busy here.”
The Lorenzis also sold their Connecticut home for a nice gain – 50% in 6 years. A welcome difference for them will be the amount of property taxes they will have to pay compared to what they were paying in the East. Their CT home cost them over $5300 in taxes last year, whereas their new home in Colorado will be around $1700/year. She was astounded at the difference for a house of comparable size.
In both cases, Tony Jones and the Lorenzis were able to make considerable gains on their respective East Coast properties. With high percentage increases in just a few years, the market has become tempting for those on either coast to make that move to the mountains.
After 9/11, there has been a tremendous re-examination by people of what is important in their lives. It seems as if people are looking at life differently and wanting to savor it without the hassles of traffic jams, pollution, working endless hours to afford a lifestyle that their neighbors think they should have, and they’re wanting to leave behind the competitiveness and aggressiveness of the big cities for a more affordable and laid-back way of life.
For the Lorenzis, ‘life in the fast lane’ just got slow enough for them to stop and smell the roses. And who knows? If the real estate trends in the east continue, maybe people in the big cities will follow suit and try to “keep up” with the Tony Joneses of Colorado.
*From, “House Play: After Big Run-Up in Real Estate, Some Coasts Are Cashing Out,” by James Hagerty, The Wall Street Journal Online, 9/22/04
© Copyright 2004 by YourMountainBroker.com
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