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I’ve talked of our execution of geographic arbitrage back in 2005 many times on this blog.
Geographic arbitrage is the act of taking your existing coastal income/equity and moving to a place like Des Moines, Iowa where the economics of success are much more in one’s favor.
Our house in Corona, CA was an 1800 square foot ranch on a 7700 sq. foot lot. We bought it new for $156,000 in late 1997 with a move in during early 1998 when the market apparently had bottomed and glimmers of hope started to appear.
We sold the house in 2005 for $540,000. Improvements had been made but nothing structural…only cosmetic.
The house is now for sale in 2008 (who knows what the selling price will be) for $345,000.
In 10 years, we’ve seen a meteoric rise and fall back to reality when real wages have fallen, cost of life in general has accelerated, and the flow of easy credit has dried up.
If you think we’re near bottom…I believe you’re fooling yourself. There are probably thousands of $345k "starter homes" for sale in the area. Gas is $4.59/gallon too by the way and most people I knew commuted at least 45 minutes each way to work (idling and/or driving xx miles) Remember those two white Chevy Suburbans you have too with zero percent financing (14mpg seemed OK then). The boat lots are FULL and the RV lots are MORE FULL.
It hasn’t even begun there.