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It is a derisive term frequently tossed around in cities like Dallas, where image is important among a certain set.
A “$30,000 millionaire” is someone who tries to achieve a trust-fund lifestyle on a modest budget. When I first heard the phrase, it was used to describe a person who lived in a cheap, unfurnished apartment so that he could afford the designer clothes, expensive meals and lease on a BMW to appear richer than he actually was.
Now national real estate trends suggest the term could have a positive application in Arkansas. According to statistics released at the end of December, someone living here on an average income can afford to buy as much home as someone making far more in a bigger city.
Of course, property in places like New York and San Francisco has always been among the most expensive in the country, but in recent years prices there have increased at levels far out of proportion with cities like Little Rock.
For instance, according to Moody’s Economy.com, it would take 46 percent of the average income in New York to purchase a typical home there. In San Francisco, it would take 52 percent. Compare that to Little Rock, where a person can buy a home using less than 13 percent of his or her income.
Another survey by National City Corp. concluded that Little Rock’s housing market is undervalued by 6 percent compared to other American metropolitan areas. And data released in November by the National Association of Realtors shows that the median price of a single-family home in Little Rock is $122,700, while in New York it is $461,100 and in San Francisco it is $721,900.
There will always be those people who love the big cities enough to pay whatever it takes to live there. But their numbers will become smaller as these regional discrepancies become more stark.
In fact, it’s already happening. USA Today recently focused on young people who can’t afford the big-city life and are moving elsewhere. One 31-year-old college employee settled in Hartford, Conn., where he was able to purchase a condominium. He sometimes wishes he lived in Boston or New York, but the article notes, “Whenever he has pangs of regret, he goes to New York for a weekend and visits friends who are spending twice what he spends on his mortgage to rent a place half the size of his.”
Housing is not an insignificant consideration. Quite the contrary: for the last 100 years, owning a home has been for most Americans the primary vehicle for generating wealth and upward social mobility. That investment will probably be even more important to the new generation of young people who are projected to live longer but who have entered a job market that offers almost nothing in the way of pensions or other retirement guarantees. (We can’t even depend on Social Security being around.)
But young people who stay in cities with expensive real estate will have a doubly difficult time becoming homeowners because not only are the prices higher, but costly rents mean it will take longer to save for the purchase. Also, today it takes two incomes to buy an average home in 75 percent of America’s cities, but the median marrying age is as high as it’s ever been and getting higher.
Fortunately, the economic pressure toward migrating to a city like Little Rock is coupled with new technology that makes it a more viable option. With the Internet and increasingly sophisticated communication innovations, many of the best kind of New Economy jobs can be performed anywhere.
“Wherever the brains are, wherever the talent is,” said one Silicon Valley CEO quoted in the USA Today article, who is allowing his employees to work from anywhere in the country.
In this environment, Arkansas is in a position to benefit tremendously from an infusion of young people looking for more financial security and the chance to get more for their money. To embrace this opportunity, cities like Little Rock need to continue to focus on improving the quality of life to make it more appealing to big-city transplants. It also should attempt to keep real estate prices affordable in the urban core, because that’s where many young professionals will want to live, and too many expensive condominiums will negate the advantage of moving here.
Finally, Little Rock should consider marketing itself as one of the best urban values in the nation. “Live like a $30,000 millionaire” could be one slogan.