Heartland Real Estate Vs. Coastal Real Estate

As a Colorado native  I personally love heartland real estate. However, right after high school I had the same feeling that many young people do, that I needed to get out and see the world. A friend and I flew to Australia with two goals in mind. Expand our world view and surf as much as possible! I accomplished both things and then decided to come back to Colorado, the best state in the USA!

At the time I did not care about finances and real estate. We worked enough to pay the rent and then go out and explore. However now that I am in my mid 20’s I often think about the differences between heartland real estate and coastal real estate.

Why are some people willing to pay so much money to live on the coast? Prices keep getting driven up and people complain and moan but ultimately end up purchasing multi million-dollar homes. Does the normal rent vs. own calculation even make sense when we are talking about these high-priced properties?

Heartland Real Estate Vs. Coastal Real Estate Perspectives

When we lived in Australia we had a fantastic new modern apartment. With a total of 4 roommates rent was $500 AUD a month (per person). This place had views of the inlet bay and I was able to walk with a surfboard to the beach in under 10 minutes…not too shabby.

If I were to ever go live on the coast again I would for sure want to be right by the beach. However, my experience was in 2008 (again I knew the world was in a recession but had no idea of the severity) we received killer deals from a new build that was dying for tenants.

Now everything is more expensive, a lot more! So, the question is who is buying these extremely expensive homes? Why not rent and be on the beach and then invest in other ways then a primary residence? Is owning a home still the American dream regardless of where you live?


Colorado has been my lifetime home other than my year away in Australia. I was born in the mountains and there is something about it that makes it hard to leave. In contrast to the ocean there are many places in Colorado you can live that are far less expensive.

The front range and mountain towns have experienced a major boom like many other areas of the country, but that is only half of the story. Your dollar can still stretch further then many coastal towns and you get 300 days of sunshine. Heartland real estate in my opinion still presents value not just in Colorado but other locations as well.

Should heartland real estate be valued differently than coastal real estate?

Obviously personal residences are priced by people’s hearts rather than their investment calculators and that is why we often see short term fluctuations. In my opinion I think it is important to lower your housing costs to get ahead.  Should the normal rules of rent vs. own be applied to all markets? Does anyone have a different way they value properties in areas that are extremely expensive? Am I being a heartland real estate minded person by thinking that the boom on the coasts can’t continue into perpetuity? Help me out and let’s discuss what makes sense for those who are considering buying a home in these various markets.

What Are Your Thoughts?
  1. Where do you live for perspective on your comments?
  2. Do you think different metrics should apply when evaluating heartland real estate vs. coastal real estate?
  3. If you have lived in both what is your opinion on where heartland real estate is headed vs. coastal real estate?

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29 Comments on “Heartland Real Estate Vs. Coastal Real Estate”

  1. Nice post. Sam @ Financial Samurai has also had some interesting posts on coastal vs. heartland real estate.

    On your questions:

    1. Where do you live for perspective on your comments?

    – Currently in Chicago the last 2.5 years, but NYC for 8 before that in Manhattan and Brooklyn. All renting.

    2. Do you think different metrics should apply when evaluating heartland real estate vs. coastal real estate?

    – It depends on whether the particular piece of real estate is for your primary residence or an investment. I don’t view a primary residence as an asset, as it takes money out of your pocket. Overall, it might depend on what you’re trying to evaluate, but I’d see the same key criteria being applicable to both.

    3. If you have lived in both what is your opinion on where heartland real estate is headed vs. coastal real estate?

    – Heartland likely has greater opportunity for growth due to the generally lower prices and physical space available. Coastal real estate will also continue to rise in cost/price but margins for investment opportunities will likely be greater for heartland. I’m neutral in terms of where to focus, but real estate exposure does account for around ~25% of our assets via index REITs and a smaller amount in crowd-sourced funds.

    – Mike

    1. Hey Mike, thanks for the input. Actually just got done reading your update. I am interested for your post on the reasoning for the high allocation.

  2. MId 20’s!! You’re young! (I’m old, an old damn millennial lol).
    Yes, Australia housing prices are crazy. Vancouver housing prices are crazy too.
    I’m from Vancouver- a tear me down is around $2-3million in Vancouver proper.
    I’ve been to Colorado for a meditation retreat and passed briefly through Denver, it’s beautiful there!
    I’m not sure which one should be valued more.
    I can safely say I am getting jaded and burnt out from Vancouver’s high housing prices though.

    1. Haha will have to say late twenties next year I am 27. That is so steep I just wonder if those buying now will end up regretting it later. Or they could sell to someone else for $5 million. I do think that it would be helpful for many who are looking in those pricey areas to have metrics other then comparable homes to get a fair price.

      Right now the process I see is:
      1.) We are making good money.
      2.) We need to get into this housing market so we aren’t throwing away rent.
      3.) If we are going to buy lets get something we love (move up price search).
      4.) Call realtor who uses comparable down the street. “This is a hot area you are making a great choice”, collects commission and leaves, owner collects $1.5 million dollar asset and $1.2 million dollar mortgage note.

      My question is can this sell it to the next person at a higher price system continue forever? Even when the rents collected from the home (underlying cash flow that should give the asset value) are so off base?

  3. Live in Chicago metro area. So jealous of CO. My wife and I love to hike and have had several wonderful CO vacations. And okay GYM, I am young baby boomer. I’m old, you and DM are not. 🙂 Anyway, a little off topic, but as my wife and I approach “traditional” retirement age we are thinking about ditching our house, renting and traveling like you did when you were younger DM. Maybe not a whole year in one place, but 2-3 week trips several times a year. Tom

    1. Colorado is truly beautiful, with growth comes a lot of change lately though. Overall I think it is good to be progressive and I am not one of the bitter Colorado people who gets angry anyone new moves here.

      I think that sounds like a great plan. I feel like you aren’t alone in that thought process and when more families start to do this it will put downward pressure on certain markets. Also most aren’t as financially savvy as yourself so they will look to sell those homes to be able to fund retirement.

  4. I live in Oklahoma and the cost of living is much better. My sister lived in California for several years and could never afford to buy a home. She moved back this year and bought her first home. If a person wants to retire I strongly believe they need to live in the right place. It is just so hard to make it if you live on the coast.

    My mortgage is only $435 a month and HOA is $99. You are not going to find that on the coast. Great questions by the way.

    1. Holy cow! That is amazing. What is the average home price out there? I hear a lot of people in the multi-unit real estate space talking about Oklahoma for investing, but have not had much of a perspective for home owners.

      1. I believe it is around $115,000. However, it really depends on what area of Oklahoma you live in. I live in the Northeast region which is by Miami, Grove, and Afton. I bought a nice townhouse on Grand Lake for $71,000. They were motivated to sell.

  5. Wow! Your trip to Australia sounds awesome. I think the experience is well worth it!

    Idk much, but it sounds like Heartland has a lot of opportunities and potential for the very long term. Coastal sounds pretty expensive and I’m wondering where ppl have money to buy today (I guess I’m just not rich to know… sigh). It seems like prices would be something like nyc, just not affordable and it just keeps rising in general.

    Lol Whenever I think of GYM, all I think about is their crazy Vancouver prices! Soooo much more than Toronto’s typical $1mm mark.

    Idk how it suddenly got so expensive. Even our suburbs close to an hour drive away are over $1mm. Depending on what you buy, it could even be $2mm in the nicer neighbourhoods.

    My parents have a lot of friends and coworkers (baby boomers) who used to buy Toronto’s outskirts to live in and own a few as rental properties over 15 years ago. Those areas were new but developing. They would’ve bought it for something like $200-300k but today would sell for over $1.2-$1.5mm, or even more depending on where. But again, they never expected these type of capital gains. They were just trying to build wealth by looking at steady positive cash flows and appreciation at inflation rate, or just a bit higher.

    1. Holy cow! So do you think that those baby boomers are going to look to sell soon to fund retirement? I can only imagine that would make up a large portion of someones net worth if they had purchased at that prices as cash flow type units and then hit the real estate lottery. I know that after years of owning them my feeling would be to sell and diversify/simplify my life.

      They could also pass down to family that usually wants to sell rather then learn how to manage the property. Great perspective thanks for sharing.

      1. Yup, some of them sold to lock in the profits but kept maybe just one rental unit, and just quit their jobs.

        When I went outside my city to Niagara Falls area to look at RE, we met a baby boomer couple from Toronto suburbs where they said they are selling their home to move to Niagara bc it’s so much cheaper there. They wanted to take their huge profits and move 1.5 hour drive away. A much more simplified lifestyle and not toooo far from our city haha! Baby boomers hittin’ the RE jackpot!

        1. Wow no doubt about it. I think it makes sense if you are willing to shift gears into more of a laid back lifestyle. What will be our generations investing jackpot?

  6. I live close to GYM (Victoria on Vancouver Island) The house prices are crazy here. I feel sorry for the younger new home buyers. Colorado looks like a nice place to live and with the savings you can vacation to the coast.

    1. Bingo! Yet now that the secret is out Colorado is becoming quite expensive. We have enjoyed our lifestyle out here while still being able to invest a lot and travel so it works well for us. We took a trip to Portland-Seattle-Vancouver this year, it was great!

  7. Colorado is such a sweet spot! We rented in LA and owned in FL. The coasts are definitely escalating to a point where new homeowners are being squeezed out. Oftentimes by foreign cash buyers or domestic investment groups. Sounds like you are doing well at 27 and living the life!

  8. I live in Manitoba, Canada. This is considered one of the prairie regions and would fit in with your heartland scenario. The average price of homes in Canada are generally steep, but Manitoba would be easily categorized as having house prices that are less than the average. Most areas in Canada fitting your description for coastal house prices are pretty high and we can only afford to visit there for a short vacation 😉

  9. Hey I live in Toronto and it has gotten crazy expensive and it’s not even coastal nor sunny 🙂 Our house we bought $560K 5 years ago is now worth $1.1-$1.3M. But the city offers many opportunities and we have family here, so we are most likely to stay put.

    99to1percent recently posted…How we plan to pay off our $500K+ mortgage in 5 years

    1. Nothing wrong with just staying put if you are in a great situation. Great job on the timing with your place, I like the plan to pay off the mortgage.

    1. The beach lifestyle is amazing! If you can live a balanced life where you don’t have to sacrifice all your time to make money and can actually enjoy it, the beach is hard to beat. The mountains tend to have the same effect on people based on what you are into of course.

  10. 1) Where we live for perspective:

    We moved to Denver at the beginning of this year for this exact reason. The HCOL of the SF Bay Area was getting stupid…plus CA state income taxes are outright theft, the traffic was awful and the Tech Industry culture attracts a particularly annoying species of douchebag. I’d lived there 17 years, and had loved it for all but the last 2 or 3. We had to get out.

    The ocean is the only thing I miss, but you know what? The mountains are a pretty good replacement. And yeah Cali has mountains too, but they just don’t compare. The Sierras are nice, but the Rockies are freaking amazing…also they’re a lot closer and more accessible.

    Of course now Denver is exploding because of people like us I guess. Apologies to all CO natives. It’s just such a great place to live!

    2) Should the metrics change?

    As an investment, no. The price to rent ratio will naturally vary as a function of location but that doesn’t change the fundamental calculation.

    Now as a question of where to live the heartland vs coastal debate is pretty broad and totally subjective. I’d say we’re hooked at this point. If we live on the coast again it will not be in the United States.

    (Fun fact: when you were living down under, the rest of the world may have been in a recession, but the Aussies weren’t: http://www.bbc.com/news/business-39124272)

    3) Crystal ball:

    Coastal real estate will end up under water. Literally. Sea level rise is going to change everything. The high country will be the place to be, and we intend to have a lot of arable land and ammunition.

    In all seriousness though, there’s just so much more space in the middle of the country. From a cost perspective, the supply/demand curve might keep prices down in the middle states for a while longer. There will be pockets though (like Denver) where things might get just as stupid as the coasts.

    1. No worries here, I am not a native that minds its. The mountains are everyone’s to enjoy!

      Very interesting maybe that is why everyone there was still living a high quality of life and I was able to easily find employment ($18 an hour as a bartender for an 18 year old, I felt like I hit the lottery!).

      I think that is a solid call on what might happen in the future. Did you buy when you moved out to Denver or decide to rent?

      1. We bought.

        We could have sold our place in Cali and practically paid cash in Denver, but we elected to stay leveraged and rent out the CA property. We’ll probably end up renting out this place too although that could be 3-5 years out, so probably best not to make any plans that are too fixed.