It's better for well established players to move to low cost areas. Startups need to be in places where there is abundance of talent. Engineering salary are extremely high as-is, it would be nigh impossible to make them move to the middle of nowhere.
And, hate to say it, but Talent likes to live where it is desirable, fun, and interesting to live. Because Talent can afford it, and Talent wants a life full of desirable characteristics. The Bay Area isn't expensive because of magic. It's expensive because people want to live there, and people want to live there because it really is a great place to live, all things considered. You can play the value game all you want and try to make the argument that upstate New York is somehow unfairly treated by an economic imbalance, but the truth is, people want to live there less than they want to live in NYC or SF or nearly anywhere else.
In a world of PaaS and the cloud, and amazing communication capabilities like Skype and Google Hangout, why? What about CA or NY makes them more talented? They're there because the work is there, not vice versa. Also, you don't have to be in the middle of nowhere. There's plenty of large American cities where you can buy a nice house for less than $150K. I realize that the SF reality distortion field would suggest that everywhere else is powered by oil lamps, but I figure as long as you have high speed Internet and are within an hour of an Apple store, then you are quite capable to getting the work done from your home.
What you are saying makes total sense as a founder. But for an engineer there us no motivation to move to an area where there are not many opportunities.
Engineer salaries are not "extremely high". Compared to cost-of-living, they're more than adequate and on the high side by historical standards, but not "extremely high". In fact, most engineers make less than all those supernumerary non-technical VPs and product managers for nonexistent products that plague VC-funded companies.
"Extremely" high starts around $350k per year for a mid-career (10 years) engineer and things aren't at that point right now.
And you don't even have to go to such extremes as to move to the small town where the OP is from. Chicago, for example, is the 3rd largest city in the country and can be relatively affordable. Although it's not huge, there is an existing entrepreneurial ecosystem that allowed the likes of Groupon to rise.
That house looks big enough for a very spacious office.
Google says it's a 6:30 drive to NY, which is no Valley, but should present enough opportunities. One could get up early and be there by noon, for meetings or whatever.
What kind of maintenance fees would one be looking at, with a house that size?
Taxes in Upstate NY are going to be high. But keep in mind that central and western NY are depressing places. The place peakedin the 50's with industrial, rilroad and defense industries that are long gone. The city of Buffalo demolishes 2 houses a day. It was a city of 600,000, now down to 250,000.
A nice $50k house in Schenectady, NY (former industrial city 3 hours from NYC) has $5000/year taxes. The house is worth 10x the Jamestown house because of the proximity to state government (150k jobs).
If you want to live in the country, lots of cheap houses in rural towns <2 hours from NYC.
I think we'll see this. I don't think anyone knows for sure where the future is, but it's not in New York or the Bay Area. High housing costs mean that the wrong kinds of people are winning to have innovation or to build the future.
I still have faith that Real Technology will make a comeback when this social media bubble blows up and, after that happens, we're going to start to see an outline of the future emerging.
I hope there won't be a single "winning" location. I don't think that's a good thing for society.
