The pandemic lead to more people being allowed to work from home. While many companies are trying to pull people back into the office, many are allowing some flexibility. Something like 35% of people are now able to work from home according to McKinsey & Company. Smaller companies may want employees to work from within the same state, so that HR doesn’t need to learn about compliance requirements for multiple states (e.g., tax withholdings, Labor and Industries insurance, requirements to classify someone as an employee versus independent contractor, etc.). With more people working from home, there has been a trend for people to move from high density, high priced tech centers to lower cost, lower density areas.
A new migration report from rent.com shows that renters in the West and Northeast are looking to relocate to more affordable areas in the South and Midwest.
Outbound inquires from renters are highest in cities such as:
- Charlotte, NC
- St. Louis, MO
- Chicago, IL
- Austin, TX
- Atlanta, GA
Some of these locations (e.g., St. Louis, Chicago, and Atlanta) are relatively high crime so people may be leaving for that reason. Others are relatively expensive, such as Austin.
The following places saw the highest inquiries from out of town renters:
- Huntsville, AL
- Kingsport (Tri-Cities), TN
- Gulfport, MS
- Knoxville, TN
- Springfield, MO
These are all relatively lower population, lower cost areas.
Real estate investors may wish to consider such areas and the rent.com data. Growing areas are always better choices than stagnant, declining, or high crime areas. On the other hand, it is most important to focus on cap rate and to make sure that cap rate is sufficient to justify the risk of a purchase. It may also be advisable to consider issues such as ease of evictions, whether there was a state and or local eviction moratorium during the pandemic (and when it ended), whether there is a state income tax.
Contact Deepak Malhotra if you need help with real estate investing. Even if you are not looking in Cheney, Medical Lake, Airway Heights, or the Spokane area, mentoring services or referrals can be provided.