There are currently approximately seven billion people on earth. The wealthiest 9.5 million (less than .2%) control about 26% of the assets given recent prices on global bourses. Many people will rail about moral issues for allowing so much of the wealth being controlled by so few. Today, given some recent mail that I received, I would like to address it regarding real estate prices.
When you travel at all, you find that marvelously attractive places to live have become very expensive. London and Paris apartments or homes are sky high in price. Foreigners often swoop in and buy apartments as a hedge against political unrest at home. It is one thing to freeze a bank account but quite another to take back foreign real estate. This scenario is playing out in North America in New York and in Vancouver.
Have you ever read the polls on great cities to live and work? Often, they highlight Geneva or Zurich, Switzerland, Sydney, Australia and Singapore. Check out the cost of a house or a decent apartment in those cities. Those places have become havens of the rich or lucky locals who have been there forever.
A number of Media Realism readers have mentioned to me in e-mails in recent months how they are struggling to find an attractive place to live with job possibilities and lifestyle appeal that is also affordable. With their permission here are a few highlights:
From New York a mid-30’s creative writes: “I am tired of living like a graduate student. My bandbox of an apartment is costing me a fortune. New York is great culturally but there are many things that I cannot afford. I want to get out and work in a city where I can buy a decent home. My career will not progress as well but I have been marking time financially for a dozen years. I also love the outdoors. It takes too long to get away here.”
A young German ad man wrote to me recently saying that he was weary of living in his small apartment and paying high rent for it. He was seeing if he could relocate to an agency in either Berlin or Vienna where he could live better and finally accumulate some capital. I had heard that Vienna was a relative bargain for apartment rentals but Berlin came as a surprise. The truth is that Berlin has been aging for years, has a stumbling infrastructure and a low cost of living by European standards even including food. Other Europeans say that northern Portugal is the best value in western Europe but there are not good agency or marketing jobs there.
A just retired midwesterner says: “For years I bounced around Chicago, Milwaukee, and Minneapolis. I am looking for some place warmer. Property taxes are killing me as are fuel bills. I want to sell my place here and live in a milder climate. Florida has little appeal to me and neither does rural Arkansas or Louisiana. I just would not fit in there. What I am willing to do is live in a place with fewer amenities if I can find a handful of like minded people for friends. Maybe a Texas town would work. I just do not understand why kids pay so much for a roof over their heads.”
A Bay Area ad guy writes, “About 10 years ago a buddy asked me to join an agency in Seattle. I believed all the nonsense about rain and stayed here. Now I can barely cover my studio apartment. The city is great but I will never own a house here. And, today, I missed the boat on Seattle real estate as well. I would like a bit of “elbow room” and I doubt if I can ever get it. Marrying a rich woman is my only hope. :)
“I now commute 45 miles in horrendous Atlanta traffic,” a sales pro writes. It is exhausting. The work is fine and I really like my boss but my quality of life is miserable. By Friday night I am totally wiped out. I need to move to a smaller city where I can afford a nice house close to work. Are you listening Cleveland companies?”
As income inequality grows, this issue has to loom larger. There is considerable cheap housing in America but how many marketing professionals would be comfortable living in rural areas of West Virginia, Mississippi, or Nebraska? True, in the digital age, some people can work from afar but not everyone can. One young writer tells me he has been trying to work out a deal where he can live in upstate New York and buzz in to Manhattan every few weeks for a day. That sounds great for him but he must have a proven track record for his company to even be able to consider such an approach.
Retirees seem to be in the same boat. Besides my midwestern friend above, several have written to me saying they want to cash in on their home equity and move someplace far less expensive. They all appear to have one thing in common--they do not care about great healthcare (surprising) or schools (their kids are grown) or even much in the way of cultural activities. They simply want a bit more money in their pockets each month. With cable or a satellite dish and a few friends, they seem to think that they can manage.
This is a trend that is worth watching. We all read or hear stories about the joys of moving to Mexico or Costa Rica. When you dig a bit, it is a mixed bag. Many Californians who live within 100 miles of the US border in Mexico have found that life in demonstrably cheaper there. Other worry about crime and some say it is how you behave with the locals that is what makes a difference.
Where will these people young and old go who want a bit more living space and will cheerfully give up some amenities? It is a big country and there are bargains out there relative to New York, Boston, Los Angeles, San Francisco and Washington, DC. It will be curious if tele-commuting will accelerate a trend away from our expensive cities over the next few years.
If you would like to contact Don Cole directly, you may reach him at firstname.lastname@example.org