Cost of Living
What Does It Mean to a Homebuyer?
Home prices can vary drastically not only in different parts of the country, but also in different parts of the same region. Cost of living, the term used to describe what you should expect to pay for a particular standard of living, varies throughout the country as well. A new home in Fort Myers, Florida could cost as much as 59% less than a comparable home in Silver Spring, Maryland, for example. (Source: Sperling’s Best Places, June 2014).
Cost of living factors in the price of necessities in a particular location, like food, utilities, housing, services, transportation and taxes. If you’re looking to buy a home in a new location, comparing this number with the national average, and with your current location, can be a useful way to determine where you can find more bang for your buck.
Keep in mind that cost of living doesn’t necessarily indicate quality of living—a more expensive location isn’t necessarily a better choice for you. Likewise, the amount you’ll save in a less expensive location might necessitate a change in lifestyle. You may be able to afford a bigger house in a different state, but it might require a longer commute—or the added cost of a car if you don’t already have one. Also worth considering: do jobs in the area offer pay that’s comparable to your current job? What can you expect to pay in income tax, sales tax and insurance premiums?
On the other hand, there are certain factors that simply don’t have a price tag. It might be more expensive to live by the lake, but being close to nature and recreation might have more value to you than having a lot of space. If you have children, it might make more sense to buy a smaller home in a higher cost-of-living area with a more desirable school district. In the end, your new home is, above all else, a move toward the future.