Small Town Real Estate is Prime for a Boost

If you read last week’s post on growing household formation then you saw how there has been a large increase in new household creation over the past four years; a trend that is expected to continue till 2025 based on demographic data.

With that knowledge in hand let’s drill down a level deeper into where that demand will likely occur.

Small Town Real Estate is Prime for a Boost

The title pretty much gives it away.  We are seeing major shifts in 2020 due to COVID and small town real estate is already feeling the benefits.

Last week I referenced the book “Big Shifts Ahead.”  It’s the source of the household data I shared, but another key item in that book is how big unexpected events can change trends.  9/11 was a trend changer as it created a shift and led to people spending more time on family, seeking a better work-life balance.

The great recession caused another shift, impacting household formation as more and more children stayed home with mom and dad well into their late twenties and early thirties.

This current pandemic is already proving to be a trend changer too.   The desire for city living has suddenly reversed course and people are seeking suburban and even rural living as a first option.

The Typical Work Life and Commute Has Changed

Working remotely or from home has been an option for nearly two decades now, especially in the white collar space.  It was not a common though.  I was blessed to be in such a position back in 2010 when I still “worked for the man” and it allowed me not only to do my job, but be much more productive with the rest of my life (including real estate investing!).

This trend was already growing and I saw it first hand with many former colleagues starting to work from home at least one day a week or only going to the office on days they had meetings or corporate events.

COVID took this trend and put it on steroids!  Now a majority of the white collar corporate sector is working from home.  It is a good thing too, this has allowed millions of people to work safely and still earn a paycheck.

  • Living in more remote places…

The above trend has opened up the reality of people living in more remote places.  I personally know many people that live in rural Pennsylvania working in central Jersey, a hub for many major corporations.  The commutes are upward of 1.5 hours each way.

Doing that once or maybe twice a week is feasible, which is exactly what they do, but every single day?  They would not have made the move so far away.

This is just one shift that leads to more demand for smaller towns that are further away from major cities.

What the different generations want

There was already a shift in what specific generations want when it comes to living.  The millennials have different tastes than the Gen-Xers as due the baby boomers.

However, small towns can easily cater to all three and already are:

  • Millennials: seek more green living and don’t desire as much space.  Co-living and sharing office space is more than fine.   Access to nature while having the convenience of city-like amenities seems most popular.  Booming real estate markets such as Denver and Boulder, CO have benefited from this.
  • Gen-Xers: are really the main driver of the remote working trend as most are well into their careers and have families.  The ability to cut the commute allows them to live further away from the job as described above, more yard space and a larger home is now a reality as they can live in a more affordable smaller town.
  • Baby Boomers: it’s not your same grandma anymore.  The idea of living in a retirement community isn’t all that enticing.  They still want freedom of their own home just smaller with much less maintenance, coupled with nearby activities and hospital/medical care.   Many older suburban homes have less square footage, but have been redone by flippers, prime candidates for baby boomer buyers.
Know the basics and seek the trends

The first step in real estate investing is knowing how to analyze a property to see if it is a deal.  That framework can be used for any area or property type.  From there, finding areas that have catalyst for growth and will have continued rental demand is the next step.

If you still need to learn step one or find yourself without a strategy to level up your real estate investing then check out the video course and let’s get on the strategy calls.



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