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When Jessica and Gilbert Alderete decided to sell their Modesto home and move to the outskirts of Dallas, Texas, they knew that they would be trading up. They just didn't realize how "up" their trade would be. The Alderetes went from a 1,270-square-foot home on a standard lot to a 2,000-square-foot home on a full acre with a pool. But, that didn't prove to be the best part of the deal, says Jessica Alderete. The price of their custom-built, brand-new home was $155,000 - a full $168,000 less than the selling price of their Modesto home.
The Alderetes are part of a growing trend: California residents who are choosing to cash in on their biggest assets and spend the greenbacks in states where a couple of hundred thousand dollars doesn't translate to a fixer-upper or a down payment, but instead to a substantial piece of real estate.
"We have so much freedom out here," says Jessica Alderete. "We're not right on top of each other anymore." The couple's three children are happy, too; the house has four bedrooms, so none of them needs to share a room.
The impetus for the move was for the Alderetes to be in an area of the country where they could help their teenage children purchase their own homes someday. That dream was out of reach in the valley, according to Jessica Alderete. "In California, there's no way we could give them a down payment to get even a halfway decent home," she says. "Here, we can."
Karen Gustafson, the Alderete's Realtor in Modesto, is a Certified Relocation Specialist with Prudential California Realty. She says half of her clients have left the state due to the exorbitant cost of living. "They leave, because living here all they do is work," she says. "People are looking for a way to cash in on all that equity."
Dineen Sisson, a Realtor with Re/Max Executive in Modesto, has also seen the growing trend. "The housing market here has skyrocketed, and a lot of people just can't afford it," she says. "For a lot of them, it means moving out of the area for more affordable places."
Gustafson rattles off client after client who tried to make the valley work, but in the end chose to call another state home. "Businesses are leaving California, and people relocate to where the jobs are," she explains. Utah, North Carolina, Idaho, and Nevada are proving popular among her clients. A number of Sisson's clients have chosen Arizona and the Midwest.
The moves make financial sense. With Modesto's December 2005 median home price at $354,500, as reported by the California Association of Realtors, Wichita, Kan., is a downright bargain. The median home price there for 2005 was $88,217.
For Mike and Terri Brown, a move to Austin, Texas, just makes common sense. With four kids, life in the valley has become all about paying the bills. "They need a better way of life," says Gustafson, who is also their Realtor. "They need to not live off their credit cards. All of their money has been going to mortgage payments and utility bills."
When an opportunity arose for Mike Brown to transfer to Austin and keep his job with Cingular Wireless, he jumped at the chance. While it meant taking a slight cut in pay, the benefits far outweigh any monetary dip, says his wife, Terri. Plus, the savings in their day-to-day cost of living make the cut barely noticeable. "In that sense, he got a pay raise," she says. Utility bills and gas prices will be a lot lower, Terri Brown says. "All of that can make a huge difference."
The Browns have yet to buy a house in Texas. Terri and the four kids are still at home in Salida, keeping their fingers crossed that their three-bedroom home priced in the high $300,000 to low $400,000 range will sell soon in today's softening market. "I feel pretty positive that we'll eventually sell it," Terri says. Once that happens, she and the kids will join Mike in Austin and start serious house-hunting.
They shouldn't have much trouble finding the home of their dreams at a price they can afford. A brand-new house currently on the market that the Browns have been eying has five bedrooms plus a den, family room and game room. How much would the 3,000-square-foot-plus home set them back? A cool $212,000. "Plus, the houses are built further apart, and you get a much larger lot," says Terri, who grew up in Southern California and moved to the valley six years ago. She says that once she and her husband had children, they knew they would eventually move out of California. "California wasn't necessarily the best place to raise a family. There are benefits in other states that you don't have here," she says.
Some of those benefits include people who appear less stressed and more at ease. "It's just such a more laid-back climate," she says. "It's the way Modesto was 10 or 15 years ago. It's just more relaxed. You can feel it in the air. No one worries about being late to appointments."
Maybe it's because so many of the people are transplanted Californians recovering from reverse sticker shock. When Jessica Alderete went to meet her next-door neighbors for the first time, she asked where they were from. "Fairfield, California," they answered. "I thought that was so funny," she says. "We're definitely not the only Californians here."