Originally Posted by Goin camping
The downside is that the prices of such areas are climbing at a pretty good rate too.
Nonetheless, the basic math tends to favor those who already own in high-home-value locations like California. For example, if prices in some other nice place are half what they are in California (a very real possibility), then the annual growth in prices in that other place would have to be more than double the annual growth rate in California for the California owner to be disadvantaged in absolute dollar terms, ceteris paribus.
$1,000,000 x 5%/year = $50,000 (California)
$500,000 x 10%/year = $50,000 (some other reasonably nice place)
In fact, in compound terms, the 5%/annum rate on the higher starting amount would put you ahead of the 10%/annum rate on the half-priced home.