To buy or not to buy: That is an answer ruled by cost of living, not interest rates

        A recent Business Week magazine article touted the currently low interest rates and why this was the time to buy a house.  Under the provocative headline “If You Don't Buy a House Now, You're Stupid or Broke,” writer Marc Roth laid out the case that interest rates are the lowest they have been in 40 years and that signs point to an increase.  His conclusion:  If you want to buy a house, now is the time, and if you don’t do it, you will hate yourself in the morning, or at least next year.

        I agree with his conclusion, if not his premise.  Interest rates are just

one part of the equation, and one particular sword that you can die by as easily as live by.  As one reader posits at the Business Week web site, if interest rates do rise, as Roth predicts, then fewer people will line up to buy homes, prices will go down and those who took Roth’s advice will lose value in their home (although they certainly will have bragging rights that they were smart enough to score the lowest interest rate in 40 years).

        Contemplating the yin and yang of predicting interest rates makes my hair hurt, what few I have left.  What is more relevant and easier to understand is cost of living.  If, for example, I were to move tomorrow from high-cost Hartford, CT, to relatively low-cost Aiken, SC, I’d save an overall 23% in my total living costs (according to a chart published bi-monthly in Where To Retire magazine).  Ignoring the wonderful reality that I will pay 30% less for a comparable house in Aiken, the cost of living adjustment eases the pain of what I will probably get for my home in Connecticut when it comes time to sell.  (What I would get today is probably 20% less than what I would have gotten four years ago, but so what if I am giving myself a big raise by moving?)

         The bottom line is, well, the bottom line.  Sell your current home and buy a new one if it reduces your cost of living and improves your lifestyle.  If you want help figuring it out, contact me, we will run the numbers, and I will be happy to suggest some great places where you can play excellent golf and spend some of that money you’ll save.