Tuesday, October 30, 2007
Whether to move or commute?
In yesterday’s Wall Street Journal Real Estate Section they fielded a question from a man who lives in Clarkston, Michigan and has an opportunity to take a better job out of state. He wrote to ask whether it was better to take a company paid buy-out that would assure him at least no loss or wait by leaving his family behind and doing the weekly commute routine. Apparently his wife loves the Clarkston house and doesn’t really want to move. He questioned whether it made sense to try to wait out the current down real estate market.
Here is a portion of the WSJ answer:
Financially, your question is a no-brainer: Take your company's offer to buy your house and run! And not just for the obvious reason, which is that you'll avoid having to maintain two households. According to the National Association of Realtors, existing U.S. home prices fell 1.5% in the second quarter over the same period a year before; in the Detroit metro area, which includes Clarkston, prices fell 7.1%. Another troubling sign: Foreclosures in the metro area jumped 50% in the first half of this year over the year before. Part of this is a result of the cyclical decline in the real-estate market that's affecting the rest of the nation, but part is not. The flights of traditional heavy Rust Belt industries to other nations, and the troubling decline of the American automobile industry, are long-standing problems that directly affect real-estate prices. I see no immediate end to them. Home prices ultimately hinge on job growth. According to the latest report of the Bureau of Labor Statistics, Michigan was dead last among the 50 states and the District of Columbia, with a job growth rate over the last 12 months of 1.5%. The national rate is 4.5%.
I suppose that there’s no real news there, although I wasn’t aware that we’re “dead last” in the job growth rate. Michigan even ranked after the District of Columbia and I'd guess that, if they had looked at Puerto Rico and the other 7 U.S. Territories and Protectorates, Michigan would likely have ranked 59th instead of 51st. By the way, can you name those other 7 territories and protectorates - answer below.
The article went on to discuss the emotional toll that long-distance commuting can exact on a family and generally came to the conclusion that the author of the question should move on with life. I can certainly attest to the stress of having to leave the family behind to move to a new job. When I first came to Michigan, it was to take a new job and I had to leave my family behind in Indiana while we tried to sell our house down there. I got lots of company support for temporary living in the Detroit area, but I ended up driving back home every weekend until we finally sold the place there some three months later. It was not fun.
In Indiana, we had a neighbor who was a traveling salesman for a line of hardware. Each Monday he would set out from home and wouldn’t be back until that Friday afternoon. Somehow, that scenario plays completely different that the one above. I suppose it’s because the family never left their home and daddy always came home to the same home every week. It certainly takes an understanding wife to put up with having to raise the family essentially by herself; but, in that case it worked for them.
I’ve also known a family in Milford where the husband took a job in another state, that was about a 2 hour (one-way) commute and ended up driving back and forth to work everyday for almost a year, before he finally got so tired of it that they moved down thee and left their house empty and on the market up here. I can only imagine the stress of facing that commute five days a week and still having to get home and cut the grass or make repairs or whatever. And then there's missing all of the things that go on during the week, like little league games or soccer games. That's got to be tough.
So the answer, almost no matter what kind of deal you have to make on the house here, is to get it over with an move on with life. It’s not worth the hassle and the stress to try to wait out the current market here. I think you’ll find that whatever the loss you take here, you’ll make up some (maybe all) of it on the other end. Most of the country has caught up with Michigan in the real estate slump, so prices are likely to be depressed where you’re headed. Then there's the savings of not having to maintain two places to live. Most companies wouldn't sustain temporary living allowances indefinitely. So, my advice is to price your current home aggressively, get it sold and get on with it. Call me, I can help.
The U.S. territories and Protectorates are American Samoa, Federated States of Micronesia, Guam, Marshall Islands, Northern Mariana Islands, Puerto Rico, Palau and the U S Virgin Islands.