Which is better to live in, a high cost neighborhood or a low cost neighborhood?
For me personally the answer is the lower cost neighborhood. My aunt used to say when I was little “I’ve been rich and I’ve been poor, and rich is better!”. That may be true, but for me, being rich doesn’t mean you have to live surrounded by high income people or by people who pay a lot for their mortgage at least.
“The Millionaire Next Door”, one of my favorite all time books, talks about studies that show that most millionaires (now multi-millionaires if you adjust for inflation since the book was written in xxxx.) live in average cost houses. The reason they do this often has to do with the fact that they are small business owners and need to save a lot of money in cash to cushion the ups and downs of the business cycle.
I have lived in at least 12 neighborhoods over the years. About half were high cost and half were low.
Pros of a lower cost neighborhood
1 .Less nosy neighbors. I am not exactly sure why the neighbors in higher costs neighborhoods are so nosy. At my last high cost neighborhood, my neighbors across the street went so far as to hire my housekeeper to drill her for information on my families’ life. My neighbor to the south would always peek in my windows to see what we were doing. When she found out her baby monitor could spy on what we were saying with my daughter’s walkie talkie, she didn’t have to decency to turn it off like I did when I realized the same.
The neighbors in the lower cost hoods I have lived in pretty much kept to themselves other than the bi-annual wave or two.
2. Easier maintenance leads to less stress: In the fancier neighborhoods I felt a constant pressure to keep up with my neighbors on exterior maintenance. This mostly was to keep up the property value as well as to keep up appearances to impress their family and friends. While I like a good exterior, when things were rough in my life, this chore just made life rougher.
3. Less financial pressure. Let’s face it, higher cost houses eat up a lot of your paycheck and make getting that high pay check a stressor in itself. If you are self employed, like me, that is especially stressful. When the market crashes 15% or more like it did not too long ago, you are much farther underwater if you have just borrowed to the max.
According to Dave Ramsey, if you are spending more than 25% of your take home pay on your mortgage then you will get in trouble.
4. Get charged more for services: It seems to me that in the fancier neighborhoods the bids were always higher.
5. More dogs: I am not a dog hater but I feel like dogs belong in the country like horses and cows. I hate picking up dog waste and crossing the street when walking to avoid someone’s scary looking dog.
6. Cheaper stores: It is much easier to live within my means in a lower cost neighborhood. There are not hundreds of businesses around vying for what they think is my bottomless wallet. The opposite is often true since I am spending so much on housing!
7. Less snobby people: It seems like the people in higher cost neighborhoods are always trying to prove how great they are and therefore how ungreat you are. It seems like there is a higher rate of NPD in higher cost neighborhoods, which makes sense since one symptom of NPD is believing that you deserve the best of everything.
8. People living beyond their means not as nice: I get the sense that most of the people in higher cost neighborhoods are living way beyond their means. This makes them very unpleasant to be around since they are constantly stressed. Sometimes it feels like everyone is just going to snap at any minute. There is a high amount of perfectionism.
Pros of the higher cost neighborhood
1. More respect: I notice immediately when I move from a lower cost neighborhood to a higher one, how service people treat me with much more deference in the higher cost neighborhood. Even the post men and delivery people are super friendly. I have to say I like not having to prove myself at all that I could afford things, like I do in a lower cost neighborhood.
2. Less crime: I have been broken into more times in lower cost neighborhoods then higher. It is not like you don’t get broken into at all in the higher cost neighborhoods, it is just less.
3. Better schools. OK, this one is obvious, so I won’t go into it.
4. Better restaurants: this can be a blessing and a curse. I find myself cooking more with my family in the low cost neighborhoods, which has its own financial and social benefits.
5. Prettier houses: while I don’t like the pressure of having to keep up my house, I do really enjoy looking at other people’s nicely kept house. I feel sad when I see neglected houses that compose more of the neighborhood in the lower cost neighborhoods. It’s almost like house abuse.
6. Smells Better: I have really sensitive smell. Sometimes when the air is still, the lower cost neighborhoods just smell bad. I think it is because people don’t clean and paint and air out their houses as often.
7. Safer streets:Traffic calming happens more in higher cost neighborhoods. The residents tend to stick up for themselves more with the city to get what they want. They also are better at articulating their needs often.
Read more ideas on how to pick the right neighborhood in this book.