This Friday I’m bypassing my usual Farmer Friday post not because there isn’t an orange pumpkin (SO EXCITED) in my garden or a bunch of humongous green tomatoes on the vine but because this blog isn’t just about gardening. And I’ve also neglected to post any recent DIY or cooking projects (on of which includes a sander and another which includes cherries, but not those two things together).
This post was going to be about what I would do if I randomly received $2 million — assume that’s the value after taxes and fees and such– to spend as I please. That’s no small sum of money. But then after I donate a small part to charity — which I would do because when all I won was a turkey last year, I still felt that donating some of our Thanksgiving feast to those less fortunate was the right thing to do– I realized that maybe just putting a “large” down payment on a house may not actually get me that far. BUT, and of course there is a but here, I would still argue that while buying a million dollar home without the large salary to support it may be hard, it would still be easier than if I lived on the East Coast in a state like Connecticut, New Hampshire or even Massachusetts.
I want to be clear I’m talking about the San Francisco Bay Area versus the East Coast, primarily Boston area. The reason I chose the East Coast is because I’ve been making this argument to my husband ever since I asked him to move to the left coast with me from the Boston area. We now own a house and live within our means in the Northern California Bay Area. While some things are definitely more expensive here, there are other things that are more expensive in the east.
Skip to the bottom if you don’t care about all my research and arguments and just want to see my conclusion.
Let’s consider housing first. I love to look at houses online in our area and wish that we could suddenly afford a super nice big house, I’m an American, after all. Bigger is better. I happened upon a beautiful house and started doing the numbers. Here’s the house:
Huge outdoor fireplace? Yes. Separate studio space (on the left)? Absolutely. Amazing views, updated kitchen and baths? Check, check, and check. Huge price tag? Of course. The asking price is just over $1.3 million and they will probably get it.
So why would it be better to but this house in California as versus somewhere like Massachusetts? Because property taxes are lower! Yup, California introduced Prop 13 in 1978 which limits CA property taxes to 1%. The counties add a few little things on top of that but generally it may only take property taxes to about 1.2% of your property’s assessed value which is the land assessment plus the building assessment and that has limits on how much it can increase year over year. We’ll leave the notoriously high-in-property-tax state of New Hampshire out of this, but what about Massachusetts? According to the Tax Foundation, “Massachusetts’ combined state/local property taxes are the 8th highest in the nation per capita.”If you compare property taxes on a $500,000 home in CA (1.1%) to MA (1.75%) you end up paying $32,500 MORE over a 10 year period in taxes. That just means you could have bought a more expensive home in CA in the first place.
If you’re looking to buy a home on one of the coasts, California is the better bet. People think it’s more expensive here because, well, generally speaking there are more high-value homes. Between Los Angeles, San Francisco, Orange County and San Diego we have a lot of urbanized coastline with some high-priced homes. Property in urban areas is in higher demand but there are still affordable homes to be had.
What about renting?
My husband and I have friends right now who are looking to move in the next couple of months so we’ve actually been more exposed to the Bay Area apartment hunt than we normally would be. There’s a great tool at padmapper.com that will pull in apartments (and sublets and room shares) from all over the internet, display them on a map and let you narrow down your search. For a two bedroom apartment in a decent part of the city, I’m going out on a limb to say that Boston and San Francisco have comparable prices. The apartment in the image above is a two bedroom, two bath for $2,500 per month WITH parking. It also has a view of the ocean and a remodeled kitchen. It’s in a safe (but foggy) part of SF. Apartments in similar areas (without the fog and ocean view) of Boston are about the same for a nice two bedroom. Let’s call this one a tie.
Are living expenses higher in California? Not if you ask me. Yes some of our other taxes are higher according to the Tax Foundation (sales tax, gasoline tax) but we also save money in some other ways. For example, generally our produce is cheaper than the east coast because so much of it is grown in California. I believe our liquor laws are also more lenient and we pay less tax on wine, beer and alcohol. More importantly, on average we have lower heating costs. And at least in Northern California, most places don’t have or need air conditioning because it never gets so hot/humid that we need it (we do have some dry heat). But on top of that, salaries in California are higher.
Here’s another cool tool that allows you to enter your salary, where you live and where you would move then see the results of what would cost more/less at CNN Money. I picked the arbitrary round number of $50k as a salary to compare my current city, San Francisco, to Boston:
I’m not great at math, but according to that, it would be about 25% more for living costs in Boston and my salary would be lower. But then again when I flip it around the other way as living in Boston and moving to San Francisco it tells me that California is more. I guess I really am not great at math.
My Conclusion: It’s neither more or less expensive. It’s about the same in the end cost-wise to live in Boston or San Francisco. That being said, I would argue for the fact that for some people, the Bay Area is a much more enjoyable area. We have world class skiing a few hours away, year-round hiking trails, world class wine tasting, good sports teams, surfing for surfers, golf for golfers, races for runners and all sorts of clubs, groups and organizations for people. We have some amazing food available to us, great music and music venues and top notch educational institutions which makes this area a hot bed of culturally aware intelligent people. While Northern California does get some chilly weather, we never have to shovel snow or scrape inches of ice from our cars, our days are longer because we’re closer to the equator (more sun than Boston!) and we don’t really get humidity with our heat.
In the end, even if it were more expensive to live in California, spoken like a true Californian, it’s totally worth it.