Sunday, August 3, 2008

The Cost of Location

In the past month, I've made two trips to small-town Minnesota, both of which included some discussion of real estate prices in small town America.

Real Estate Prices in Chicago (rough estimates):

A smallish two-bedroom condo in my neighborhood: approx. $300,000 with assessments of about $200 a month.

A "nice" two- or three-bedroom condo in Chicago: $400,000 to $500,000 with assessments of $400 to $800 a month

Any sort of single-family home in a non-scary neighborhood in Chicago: At least $650,000, and usually much closer to a million.

Real Estate Prices in Small Town Midwest:

1. Small two-bedroom house on large lot, no garage: bought for $27,500 in June

2. Grandma's old lake house (three bedrooms, two baths): currently offered at $97,500. Grandma thinks a fair price would be $65,000.

3. Victorian "mansion" (three floors, at least four bedrooms, adjoining barn and other outbuildings): bought for $70,000 in 1988

4. Grandma's custom-built, architect-designed four-bedroom home with large lake-facing lot, huge kitchen, dining room, two fireplaces, spectacular living room with very high ceilings and view of lake, three-bedroom garage, almost infinite storage: sold in June for $250,000

But what do you give up to pay this kind of money for real estate?

Properties 1 and 2 are in a town of about 6700. The nearest town of significant size is a three-hour drive away. The paper mill is the largest employer. The second largest industry is tourism to the beautiful nearby lakes and national parks.

Property 3 is in a town of about 1000, which is about 40 minutes away from a larger town of about 50,000. The larger town could provide some employment prospects for someone who wanted to live in a very remote place. My relative who owns this property is a doctor with a family practice for the town of 1000. Other relatives who live here own a drugstore and farm.

Property 4 surprises me the most. It is in a town of about 18,000. Like the other towns, this town is slowly aging and dying. But it is much more centrally located--if you were motivated, you could commute to either Rochester or Minneapolis. I could see this town becoming an exurb of one of these cities in 10 or 15 years. The largest employer is a fast-growing health care center. But a comparable house in Chicagoland would easily go for over a million dollars.

All of these towns have limited options for what big city dwellers think of as entertainment. A few dive bars. Maybe a music venue or two. Restaurants are mostly chains or independent places serving diner-type food. The Elks or Lions Club might be your best option for a good meal out.

On the other hand, fishing, boating, and other outdoor activities are common and much cheaper than they are in Chicago. It's plausible to have several pets and even a horse or two. The two larger towns have airports that offer flying lessons and manage to support small concert series and community theaters. Shopping is decidedly limited, but can't you do most of that over the Internet anyway?

I hate most suburbs and the sorts of medium-sized cities that seem to consist mainly of big-box stores and strip malls. I like the place I live in to have a sense of place. Chicago does. So do these tiny Midwestern towns. Someday, when I have a primary source of income other than my job and if my other activities are pretty location-independent, I might consider moving to a place like them.


Anonymous said...

It kills me to think of a decent sized house in a safe neighborhood being 1 mil+ in my area (San Francisco/Berkeley), but right now it wouldn't make sense to live somewhere less urban given my abundant job prospects here. Does anyone need a biostatistician in SmallTown, MiddleState? Maybe, but all the hubs are in big expensive cities (San Francisco, Boston, etc...). Oh the trade-offs...

My boyfriend is from Nebraska, and he says a huge, fancy, modern, mansion-like house there would be $250,000. But we don't want to live in Nebraska.

PS-I also like the abundance of organic produce, sustainable local businesses, and pedestrian centric mentality of this area...

Scarlett said...

Yeah, not much call for book editors in small towns, either. And at this point in my life I can't imagine living in a place where I would have to have a car...but who knows how I'll feel about that or what the state of public transportation will be in, say, 20 years?