Ditching your big house near the city is one of the surest ways to cut costs in retirement. The impact can be dramatic, especially if your nest egg has taken a hit and you’re looking for ways to stretch your resources.
Downsizing isn’t for everyone. It could mean leaving friends and even family behind. Still, the right low-cost region can be a game saver, and a lot of retirees find what they want in a college town. That means value, first and foremost. But it also means high energy, good healthcare facilities, continuing education opportunities, and a rich cultural environment.
If you’ve never explored real estate in towns like Madison, Wisc. (University of Wisconsin) and Gainesville, Fla. (University of Florida), you might be surprised by how far your dollar will go. A three-bedroom home in either place will run about $200,000.
And those are among the more expensive college towns. On average, a three-bedroom, two-bathroom property costs under $200,000 in two-thirds of the 117 college towns in a new Coldwell Banker survey. The cost is under $150,000 in one-quarter of these markets.
Intrigued by such findings, Jim Gillespie, CEO of Coldwell Banker Real Estate, went shopping for a home in Champaign, Ill. (University of Illinois) three years ago and found a town home for $120,000. “When I saw what I could get for the money it shocked me, and I’m in the business,” Gillespie says.
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If you own your home outright in or near a major city, you might be able to replace it for a third of the value of your current home and use what’s left of the proceeds to pad your IRA. The soft real estate market may create wrinkles, especially if you own in an overbuilt and deeply depressed market like Las Vegas and much of Florida. But in general if you sell your home now you’d be able to buy in a much less expensive college town where prices also have dropped.
Here are the five least expensive college-town markets, according to Coldwell Banker. The price listed is for an average three-bed, two-bath property:
- Memphis, Tenn. (University of Memphis): $89,244
- Muncie, Ind. (Ball State): $107,346
- Ypsilanti, Mich. (Eastern Michigan University): $107,458
- Toledo, Ohio. (University of Toledo): $112,688
- Kalamazoo, Mich. (Western Michigan University): $116,455
Not all college towns offer value. A simple house near Stanford University in Palo Alto, Calif., will run $1.2 million. Then again, that’s not exactly the kind of bucolic southern or Middle America setting most folks envision when they think of a college town. For more college town values, check out the Coldwell Banker survey here.