Some of America's most affordable cities are still lagging behind
As millions of Americans have relocated or begun to relocate due to the pandemic and its ensuing remote work revolution, some cities have seen huge booms in real estate. Homebuyers are flocking to areas like Boise, Dallas and Charlotte because of their combination of affordability with both urban and natural amenities. Reports from real estate companies point to affordability as the key factor governing these workers’ decisions to relocate and yet, a category of American cities has largely been left out of these post-2020 migration trends: the rust belt.
While the idea of the rust belt is somewhat ill-defined, there are a number of major American cities in the Midwest and Northeast that boast rock-bottom property prices and solid urban amenities. Cities like Detroit, Baltimore, Buffalo, and Cincinnati have pro sports teams, urban amenities like theatres and restaurants, and homes that should fit into first-time homebuyers’ budgets. However, they’re being passed over for cities like Austin, Charlotte, Boise and Denver by those who’ve decided to relocate.
“There are a few possible explanations,” said Ed Carey (pictured), CEO of real estate advertising platform Audience Town. “One is that if people could live anywhere, most of them cite warm weather as a factor. Those movers who are qualified and financed enough to move look at lower taxes and warmer weather. Each of those [rust belt] cities are terrific industrial cities with lots of amenities and renaissance activity, but I think weather has to be examined.”
While that may play a factor, Carey noted that weather can’t tell the full story here as colder and more northerly cities in the Mountain West, like Boise, are among the hottest housing markets in the country. To describe markets like Boise, Carey has been using the term ‘Zoom cities’, ideal locations for remote workers that boast the amenities of a larger coastal city at a lower price. In addition to fundamental geographic and urban factors, many of those cities are offering cash incentives to potential movers. Even if major rust belt cities offer these incentives, though, Carey accepts that their reputations might be holding them back.
Many of these cities earned a reputation for crime and decay after decades of suburbanization that hollowed out the tax base and school systems in post-industrial urban cores. More recently, some of those cities have begun resurgence pushes. Carey’s own company spent its first few years in Newark, New Jersey, a city with a reputation for crime and decay, thanks to a business incentive program from the city. He believes that the remote work trend has put those efforts back somewhat as many of those businesses have less influence over where their workers live.
While most rust belt cities haven’t seen huge population influxes in the past year, the end of the pandemic and the reopening of more urban amenities might change the landscape. Cities like Detroit and Baltimore boast truly world-class art galleries and museums, as well as lively bar and restaurant scenes that could attract more young people keen to live in more affordable areas with easy access to urban amenities. Carey believes that as restrictions ease, these cities will have more appeal for young movers and condo developers. The right set of amenities is key, he noted, to which markets will continue to succeed.
As mortgage professionals look for new avenues of growth, Carey explained that they should look for those cities and metro areas offering the right combination of amenities and affordability, whether they be in the sun belt, the rust belt, or anywhere else.
“Our data shows that the people who have a Zoom job have at least two or more children, work in high-paying industries, and want a lot of amenities,” Carey said. “They want a pool, a gym in the house and a movie theater. They want these retail amenities in their home and they’re going to need bigger mortgages to get it. That’s the opportunity right now.”