When I was younger I used to think that the best thing I could do would be to buy a second home in Arizona. Why? Because some day I want to live there in the winter (aka: Be a Snowbird). I was convinced that a key strategy to my investing and saving for the future was to lock in a low price on a place to live in Arizona today to get rid of the risk of unaffordable prices later. I’ve since changed my mind.
Real estate in various parts of Arizona is dirt cheap these days. Mind you, that comes from someone living in the Seattle area where prices are much higher. In 2006 the median price of a home in the Seattle area peaked around $400K. That has come down a bit since then but it’s still much higher than the price of many new homes in Arizona. The median price of a house in Arizona in 2006 was half of Seattle’s. I found brand new housing developments down there with houses starting in the $110K range. During the real estate "run up" that we’ve experienced over the last X number of years, the prices in Arizona seemed to be going crazy. Just like Vegas, reality is setting in though.
Over the years I’ve also realized that owning a second home isn’t a low cost endeavor. Whether it’s used as a vacation home or a rental, there are many monthly costs to contend with. Since long distance landlording (Hey, did I just make up a new word?) doesn’t sound very appealing to me, I’d most likely just sit on the property and let it drain my bank accounts. For my personality profile, being a landlord just doesn’t feel like a good fit.
So what am I doing instead? Well, for starters, I’m saving money. On top of that, we have the second home out near the lake that we are enjoying during our younger saving years. By my estimation, we’ll be able to sell it as we get closer to retirement age and use the proceeds to buy a place in Arizona. Who knows. By that time, we may decide to invest the proceeds of the sale and just rent a place there in the winter time. The important thing for us now is to keep on task by saving and watching our spending so that we have all of the potential options open to us later.