Thursday, December 10, 2009


During the past decades we have been amazed at how much difference a small move from one place to another can make to our enjoyment of living. We found that differences in prices, lifestyles, jobs, and opportunities between neighborhoods in the same city or county can be substantial. During times of great economic prosperity, the trouble of moving has not always been worth the small benefit gained by shifting between neighborhoods or areas. But in times of swift economic contraction, like we are currently experiencing, rapid changes in regional economies can make the inconvenience and cost of a move well worth it. If you are mobile, you may find that a region nearby has lower costs, greater employment opportunities, and better living conditions. These same economic upheavals can change a neighborhood from safe and cozy to noisy and violent and cause previously unaffordable neighborhoods to suddenly lower rents. Some of our moves have resulted in us having to trade something dear for moving to a lower cost area – like our safety – but most of our moves gained us much more than we lost. Overall, we have found that taking notice of regional economies and having the freedom to move between them has had financial benefits as well as greatly increasing our quality of life.

When we moved to Silicon Valley in 1996, we arrived as the region was recovering from a downturn making housing cheaper there than it had been for over a decade. Some of it was luck, but some of it was due to our calculations of the cost and benefits of one location over another in order to find opportunities to reduce our debts and improve our quality of life. For over five years we had been visiting Silicon Valley, always calculating the daunting amount we would have to earn to live there. In the mid-1990’s, it changed and we realized that housing prices had dropped enough and wages had gone up enough that the area was suddenly affordable. We calculated that the wages and benefits for our skill sets were so much higher in comparison to what our same skill set was worth in New Mexico, that it was suddenly far cheaper for us to live in Silicon Valley. Ten years later, the scenario completely changed and the wages and opportunities in the region for our skill set were in no longer sufficient to allow us to pay for even a downsized lifestyle.

Now we are focused on studying the regional economies of the Big Island of Hawaii, each with unique living situations, costs of living, and cultures. Two years ago when we moved to the Big Island, we calculated that it was about 50% cheaper to live on the east side of the island than the west side. Over the past two years, the reduction of visitors and loss of tourism jobs have dramatically changed the economic situation on the west side of the island. Since the eruption of Kilauea in March 2008, the west side has also had to deal with a cloud of volcanic emissions (VOG) causing many residents to move back to the mainland or over to the east side. During the same time frame, the east side’s economy has been bolstered by the increased enrollment at the University of Hawaii in Hilo which has bumped up rents and federal earmarks and state funds that have supported research, institutions and increases in Hilo jobs. Though it is hard to compare Kona rentals with Hilo rentals due to their differences in age, setup, and expenses included in the rent like grounds maintenance, water, sewer and garbage, we estimate that west side rents are off 50% or more from when we were looking at rentals there two years ago.

The combination of factors that have resulted in Kona’s regional economy changing so dramatically reminds us of the situation we experienced in Silicon Valley in the mid-1990’s and we believe will result in new opportunities for the west side of the Big Island over the next decade.


Anonymous said...

The increased VOG on the West side of the Big Island us a troubling thing, and who knows how long it will last - decades maybe. Do you know how many people have left the area because of this?

Keahi Pelayo said...

The only constant is change. It amazes me how we humans try to oppose it.

Anonymous said...

You may want to consider coming back to Silicon Valley.
Rents and housing costs have declined dramatically, and experienced IT people still make big bucks.

Economy in Hawaii will be in the tank for 5 to 10 years, due to drop in tourism, real estate falling like a rock, very high energy costs, and high costs of food, most of which is imported.

ronald said...

enjoy your blog! I live in Sonoma Calif and my wife and I have enjoyed the Big Island from time to time. We always liked our Hilo and look foward to a time when we can spend more then a week or two. Thanks for taking the time to write about your life experience.