Real Estate Agents: Here Are the Downsides of Moving to a Cheaper City
The pandemic triggered a migration out of big, expensive cities as people sought financial relief in lower-cost towns and suburbs. But according to the Washington Post, the movement was short-lived. Many of those migrants have since returned after discovering that the grass wasn’t as green as they had hoped on the less expensive side of the hill.
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“Relocating to a cheaper city to find a lower cost of living may seem like a financially savvy decision at first glance,” said real estate investor Andrzej Lipski of Next Door Properties in Connecticut. “The dream of reduced expenses, lower taxes and a more affordable lifestyle can be appealing, especially for those looking to stretch their budgets. However, it’s essential to look beyond the surface benefits and consider the potential downsides of such a move.”
Here’s what you need to think about if the allure of low-cost living tempts you to move.
You Might Trade Economic Opportunity for Cheap Living
Most people expect to earn higher incomes in expensive cities or lower incomes where life costs less, but the economic tradeoff is more complex than that.
“Moving into a cheaper city invariably means transitioning to a place with less economic diversity, which, unfortunately, translates to limited opportunities for financial advancement,” said Pete Evering, business development manager at Utopia Property. “While the allure of reduced living expenses may be appealing, it’s crucial to recognize that economic diversity often fosters a range of industries, creating a thriving job market with numerous possibilities for career growth.”
He continued, “Unless your work can be done entirely remotely and requires no physical presence in a specific location, you’ll inevitably find yourself immersed in and dependent upon the economic ecosystem of the city you choose to call home. This reliance may impact your career choices and prospects, making it essential to carefully consider how the economic landscape of your new city aligns with your long-term goals.”
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Some low-cost cities break the mold and offer strong economies, attractive amenities and a high quality of life. But they’re rare, coveted and tend to fill up fast. And when the crowd increases, so does the cost.
“A cheaper city may not stay cheap for long,” said Evering. “While it may seem like a financial win at the outset, there is no guarantee that the city’s cost of living will remain consistently low.”
According to Fortune, the people who fled big, expensive cities like New York, Los Angeles and San Francisco during the pandemic got the cheaper housing they sought — but only for a while. At the start of the migration, the average relocated renter saved 12.4%. That gap has since dwindled to 5.8%.
“Factors such as inflation and economic expansions can lead to an increase in prices across various goods and services,” said Evering. “As neighborhoods evolve and develop, gentrification may set in, causing a surge in property values and overall living costs. The very characteristics that make a city attractive for its affordability today could change in the future, catching many residents off guard.”
If It’s a Declining City, Home Values Could Fall
Gentrification and the potential for future cost-of-living increases is one risk — but the alternative is worse.
“While housing might be cheaper, property values in cheaper cities may not appreciate as much over time compared to more expensive urban centers, potentially impacting long-term investments,” said Mike Qiu, a licensed real estate agent and owner of Good as Sold Home Buyers in Seattle.
Many inexpensive places suffer from population decline, and if you’re moving in as the town is emptying out, then slow appreciation isn’t your biggest risk. Your property could lose value and become difficult to sell in the future, even at a loss.
Low Taxes Mean Fewer Services
Low taxes contribute to low living costs, but tax dollars pay for programs and facilities that you might have gotten used to in a more expensive city that your new town is lacking.
“Lots of people move to cheaper cities for the cheaper taxes they will have to pay but don’t realize that the lower taxes typically come with fewer services,” said Lipski. “Consider the long-term impact of property taxes and the quality of services that you will get before making a decision, especially if you are relocating a family. Relocating to an area with poor schools or limited educational resources can hurt your children’s academic development and future prospects.”
You Could Face Limited Access to Quality Healthcare
According to the U.S. Government Accountability Office, people in sparsely populated, lower-income regions with lower living costs tend to have worse health than those in higher-cost cities, but less access to the doctors, hospitals and treatments they need.
“Cheaper cities often have limited health care options, longer waiting times, or lower-quality medical facilities,” said Lipski. “It’s critical to evaluate the accessibility and quality of healthcare services in the new location to ensure your family’s well-being, especially if you or a loved one have major healthcare needs.”
Culture and Amenities: Living Costs vs. Quality of Life
If you’ve gotten used to the nightlife, arts, entertainment and diversity that are common to pricier cities, you might be in for a difficult dose of culture shock in your new town.
“Moving to a cheaper city may mean sacrificing access to events, entertainment options and fun activities that you enjoy where you currently are,” said Lipski. “A lack of diverse cultural amenities may impact your overall lifestyle satisfaction and make building new social networks harder.”
The last point might be the most important consideration of all.
“Social connections are important to people,” said Lipski. “Moving to a cheaper city often means leaving behind family, friends and relationships you’ve spent years cultivating. Moving potentially leads to feelings of isolation and loneliness. A strong social network contributes significantly to overall well-being, and rebuilding these connections can be challenging in a new location.”
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