I would hardly call Dali Old Town overdeveloped, unless of course you are talking about the tourism industry. It's quite backwards in most other regards.
The best way I could describe it is you get all of the inconvenience of living in a big city (noise, traffic jams, high cost of living) with few of the ammenities (reliable power and water, access to schools and hospitals, shopping, skilled workers etc).
Be sure to check out some of the villages around Dali. Some are not touristy. You might find something rentable within cycling distance of the old town.
Note that the airport isn't all it's cracked up to be. It does not have many direct flights to the major cities, with most flights requiring a multi-hour stopover in Kunming.
A lot of the people I know in your situation opt to hire a car to the Lijiang airport or straight to the Kunming airport and fly from there. Now you can also get to downtown Kunming in two hours via high speed rail, another option, though it takes another 30-40 minutes to get to the airport from there.
@tigertiger, any villages you have in mind ?
I have checked the available flights and I don't think it's that bad, there is
at least one direct flight a day to the main Chinese cities but it is also good to know that Lijiang and Kunming airport are not too far away.
I have also seeking a city to move from Chengdu which is highly polluted. For this reason, now I am at Kunming and a few days ago I was at Dali. Dali air quality absolutely better than Kunming but Dali has got other disadvantages such as hospital, school etc. We have stayed
in a so called boutique hotel, even couldn't find a taxi to go for lunch or a dinner. We paid the hotel around 2400 RMB / day , it was not a poor hotel. Later moved to another hotel called Hilton and took a car to see all around the lake. We feel we can not live in Dali with my wife and my 4 yo daughter.
Today, we are in Kunming and has a surprised by high air pollution around 200 ( PM2.5). Here is much more well organized city plan with international school but we disappointed with high air pollution. Now, my plan is Xiamen. Hope to find somewhere unpolluted.
If your main criteria for living is air pollution you are simply in the wrong country.
Kunming has been below 100 USAQI for a month now. This means being in the yellow range, and it can be handled well by finding a flat not in the main roads and wearing a mask when
commuting. These levels are not bad according to Chinese standards, especially considering the winter low pressure.
We've had worse winters than this one and, having tracked thoroughly the levels in the last 4 years, I doubt they will get worse in the next 5 years or so. In fact, traffic isn't getting worse, and building of multistorey blocks is slowing down in the city.
Xiamen can profit from the sea draft, but only if you choose to live close to the coast. And construction works looked bad when I was there 2 years ago.
Dali and the countryside suffers from bad pollution caused by burning fields, at certain times of the years. I reckon 10 days of that heavy haze, throughout, count as over a month of city based pollution, at KM levels. I experience sore throat, running nose and dry eyes when I happen to be there in these bad times, something that doesn't really occur to me in the city. You can find several complaints about this aspect of the countryside also in this forum. So don't base your judgement according to a one-off trip.
If you are worried about pollution for health reasons, you also need to consider that the combination if altitude and pollution is especially harmful. Most of Yunnan is at altitude. Additionally, as you move into smaller cities there is an increase in the amount of wood and coal burning, not just for heat, but for cooking.
Regarding Kunming pollution. I did notice a significant drop in air quality with a lot of dirty haze around XiShan, perhaps 2 days ago, not sure why. This is not normal, even if it was 3 years ago. I also noticed last night, there was a lot of wood smoke in the air in the same area. Perhaps some ritualistic thing for spring festival.
Yesterday in Chenggong there was either a brush fire, one could smell the burn, or burning fields, but it seemed quite large, could smell it easily and very hazy.
I'm presently in Chiang Mai and coughing. The claim is that this year the burning off of fields in Thailand is forbidden, but I wonder. Local man told me the present air pollution in blowing in from Myanmar, and to some extent this is true. But air here in the Spring, especially March, is worse than in Dali.
Dali is also polluted with tourists.