You've just got the job offer of a lifetime: a software engineer role at Twitter. For months, you'd been waiting for the call, to pack up your life and relocate to Silicon Valley, in one of the nation's most expensive zip codes. But COVID-19 has changed all that. Now, the social media company is allowing its workers to work from home — forever, if they choose.
With the entirety of the U.S. at your disposal, you have a daunting but rewarding task ahead of you. Remote work offers the chance to live somewhere you truly want to live, where a fantastic quality of life is well within your budget. But where should you start?
From my analysis of the 125 largest metropolitan areas in the U.S., three cities present themselves as obvious candidates: Nashville, Tenn.; Austin, Texas; and Sarasota, Fla.
Why these cities? To answer this question, I considered three factors: how much money you have to play with after tax; how far that money will go, from a housing perspective; and which places offer the greatest quality of life.
Let's start with your take-home pay. As a software engineer at Twitter, you can expect gross earnings of $150,000 a year, according to salary aggregator Glassdoor. Product managers make $165,000, including bonuses, while account managers, who are not on the tech side, earn a still extremely comfortable $100,000. (At a senior level, all of these salaries rise dramatically.)
How much of that you actually take home depends a bit on where you are. In Silicon Valley, a software engineer earning $150,000 could expect an effective tax rate of about 33%. In New York City, it would be closer to 35%. But in all three of my suggested cities, which are in states that have either no personal income tax or no tax on wages, the effective tax rate is just over 25%. That means an extra $1,200 a month of post-tax income, to a total of about $9,250 a month, according to SmartAsset's tax calculator.
Most personal finance experts suggest spending no more than a third of your post-tax income on housing. In each of these cities, that works out at $3,000 a month to spend on rent or your mortgage. If you're buying, your budget is about $550,000, assuming a 10% deposit.
While there are 10 states with a similar tax set-up, most have housing prices far above the national average, with Washington, New Hampshire and Alaska among the most expensive.
Finally, I considered quality of life metrics, paying particular attention to value and desirability. I excluded some factors that normally play a part in these indices, such as the job market or commute time — after all, you'll be working from home.
Median home value: $402,000
Year-on-year change: 5%
Median rent: $1,750
Everybody wants to live in Austin. Texas' state capital is a vibrant place to live and visit, with a world-famous arts scene, great food and fantastic schools. People may come for the barbecue and breakfast tacos, but they stay for everything else.
Housing prices are a little above the national average, with punishing real estate taxes. But home prices are rising rapidly, making right now a good time to buy. The current recession might dampen that growth a little, but you're likely to be in a good situation if you need to sell in a few years' time.
For $3,000 a month, or a $550,000 budget, you can afford to live somewhere especially nice. That budget will easily stretch to a three- or four-bedroom house, with bathrooms to match, with square footage over 2,000 feet. If you're on your own, or don't need more than two bedrooms, you can easily pay much less, or live in a brand-new luxury development, right in the city center, without putting a dent in your budget.
Median home value: $290,000
Year-on-year change: 5%
Median rent: $1,700
Nashville is on the rise. This famously musical city is experiencing extraordinary migration, with around 35,000 new residents in 2015 alone. It's a buzzy place, full of local charm, artisanal crafts and local pride. Beyond the city limits, there's lots to see and do, with the Great Smoky Mountains and Kentucky Bourbon Trail a few hours' drive away.
Altogether, combined with relatively low house prices, it's a great time to buy: The cost of a new home is well below the national average, and rising rapidly.
So, what can you afford? $500,000 will get you a three-bedroom, 2,000-square-foot luxury townhouse. $400,000, meanwhile, will get you a slightly smaller condo, with access to a pool. If you're craving outdoor space, look to the city's suburbs for good-sized backyards at a similar price point.
Median home value: $279,000
Median rent: $2,165
There's a reason celebrities such as Steven King and Rosie O'Donnell love Sarasota: It's beautiful, with miles of picture-perfect beaches and year-round good weather. And there's plenty to do, with Orlando, Tampa and St. Petersburg all within driving distance.
That said, while rent prices are still thoroughly within your budget, you'd be sensible to buy if you can. You'll get better value if you steer clear of beachfront properties, where the view comes with a price tag. A one-bedroom apartment right on the waterfront is around $430,000. Go a little further inland, and prices start to drop. For around the same price, you can afford a three-bedroom home stretching over 3,000 square feet that's just five miles from the ocean.