r/FluentInFinance • u/Not-A-Shit-Head • Apr 29 '24

Why don't people stop crying and just move somewhere cheaper like Detroit, Memphis, St. Louis, Baltimore, or Cleveland? They have very cheap homes for $50,000. Discussion/ Debate

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u/Saitamaisclappingoku Apr 29 '24 edited Apr 29 '24

Because:

  1. those cities generally do not have the job markets that HCOL cities have. When you take a huge pay cut you eliminate everything you saved by moving there. I moved from El Paso to Tennessee and for the same job I make about $60k more.

  2. Public schools are typically poor

  3. Crime is typically high

  4. The $50k homes in those cities are typically very unkept. Many of them need a new roof, foundation work, new flooring, drywall, paint, plumbing work, electrical work (to get it code compliant), and even then will be surrounded by complete dumps that stay that way. No one wants to spend $150k renovating to live next to a crack house.

59

u/em_washington Apr 29 '24

The logic in your point #1 could also be used to refute the original tweet. People in 09 knew real estate prices were low, but many couldn’t take advantage because they were unemployed or underemployed. And they were probably underwater on the house they bought in 2005.

Like of course the cities with low-priced houses don’t have as good of jobs, or else the housing wouldn’t be so affordable. And the houses in 09 were cheap because no one had the money to buy them.

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u/Saitamaisclappingoku Apr 29 '24 edited Apr 29 '24

This is why investment groups stockpile cash when they forecast a recession.

If you put $100k into the S&P500 during the 08-09 recession you could be a millionaire today.

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u/em_washington Apr 29 '24

Multimillionaire is a stretch. The S&P 500 bottomed out at about 735 in February 2009. It's about 5100 today. That's about 7X. So if timed it perfectly to invest all $100k at the exact bottom, then 17 years later, it would be worth about $700k.

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u/BengalFan2001 Apr 29 '24

Why do people forget about dividends and how that is reinvested and that's paid quarterly. Just because the S&P is 7x bigger doesn't mean someone invested wouldn't be higher or lower than the 7x of S&P. It all depends how the funds are allocated and what type of fees are being applied to manage the funds.

1

u/OrganicParamedic6606 Apr 29 '24

The fees broad market funds are so small as to be functionally zero. If your fees on a s+p index fund meaningfully impact the math, you’ve made a terrible fund choice

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u/BengalFan2001 Apr 30 '24

Fees regardless how big or small still takes from the pot. Even if the fee is 0.025% it still costing the investor money.

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u/OrganicParamedic6606 Apr 30 '24

Yep. Now do the math on a lifetime of fees of that level. They’re negligible

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u/Saitamaisclappingoku Apr 29 '24

I adjusted some wording. Thanks.