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Still thinking about moving to a cheaper city? Here’s what to consider

The past year has made everyone reconsider where they “live”.

The pandemic has accelerated the need for more space indoors and an increased desire for homeownership.

This has left 2 major segments wondering what to do next:

  1. Homeowners wanting to trade up for more space in booming cities
  2. Aspiring homeowners that are getting priced out (44% of millennials surveyed said they didn’t have enough for a down payment)

Option 1 - Moving to a cheaper city created a list of top cities for first-time homebuyers, many of which are under the radar type of cities.

4 of the top 10 are in the midwest, where millennial homeownership is the highest.

Here are the top 10:

  • Bloomington, Illinois
  • Iowa City, Iowa
  • Kalamazoo, Michigan
  • Great Falls, Montana
  • Eau Claire, Wisconsin
  • Savannah, Georgia
  • Schenectady, New York
  • Taylorville, Utah
  • Harrisonburg, Virginia
  • Rapid City, South Dakota

Maybe you’re always dreamed of living in Schenectady (good luck pronouncing that) or Rapid City. 

If you’re considering it purely to own a home, here are some other factors to consider.

Family & friends

Depending on what stage of life you’re in, this could mean nothing or everything. 

Many times the grass can seem greener, meaning the shiny, new house in a shiny, new place is great at first. Until you realize your family and friends aren’t close.

Especially as cities open back up. Remember, things will eventually get back to normal and hanging with friends and family will be a thing again.

On other hand if you’re seeking a fresh start where you can reinvent yourself and meet new people, this may be just what you need.

Just remember that the smaller the town, the tighter circles might be. But once you’re in with new friends it could be longer lasting!

Isolation distortion

After a year of basically isolation, we get it. It’s easy to think “If I’m going to be stuck in the house, it might as well be a bigger one and in a place I can afford it”.

Before you know it we will be able to get coffee together, have a beer, go to a sporting event and do all the other things that you enjoy about your city.

Research and think hard about what the true quality of life will be like in this new place.

Nothing is permanent

If you are lookin to cash in on that sweet equity or get in for the first-time, it’s not forever.

There are many that try living in a different city for a few years. It’s a great opportunity to experience a different culture and maybe make a few bucks in home equity.

So if you feel like you’ve missed the boat on home appreciation in your city, this could be an opportunity to be “early” and reap the rewards.

Option 2 - Get scrappy

If living in a smaller, slower town is out of the picture then you’re gonna need to get creative.

If trading up is proving difficult with rising prices then think about how you can a) increase cashflow or b) lower expenses.

Some options:

  • Rent out a room in your house
  • Sell then rent temporarily in a cheaper place
  • Sell then move in with friends or family
  • Learn a new skill and start freelancing on the weekends to save up quicker
  • Change unnecessary spending habits

If you’re a first-time homebuyer, it ain’t easy out there. You’re competing with cash offers and offers well above listing price in many markets.

Here are some tips:

  • Change your spending – this usually means a sacrifice of a smaller apartment, less Starbucks and a few less drinks each weekend
  • Talk to a lender – there are more first-time homebuyer programs than you think, many that have low down payment options
  • Side hustle – homeownership is a privilege so work for it! Drive Uber, freelance, pick up extra shifts and do what it takes to build up that down payment.
  • Consider a starter condo or townhouse – it doesn’t always have to be a single family house