If it’s true that everything old is new again, we may be living through the real estate version of that idiom. Small cities and small towns sprinkled over the entire United States are having a resurgence in popularity. The COVID-19 experience has brought a new appreciation of small-town living with the help of remote working.
I am mildly obsessed with the Netflix show “The World’s Most Extraordinary Homes,” which I discovered in my dentist’s office while waiting for my new crown to be finished. The show is pure escapism featuring unbelievably expensive homes, some in exotic locations all around the world. But the real estate trend in the United States at this time is not for extraordinary homes but for modest, get-back-to-basics homes in anything but exotic locations.
Smaller cities and regions are turning out to be the big draw for home purchasing. Places like Topeka, Kansas and Decatur, Alabama, where homes would sit on the market, are now experiencing a shortage of inventory similar to the coastal regions outside of major metropolitan areas. This all started with COVID lockdowns and the desire to get out of densely populated areas, but it is now becoming a trend.
Young couples and singles are taking another look at the mid-sized cities and small towns they grew up in and saying this doesn’t look so bad anymore. I can park my car, get a table at a restaurant and get back into a comfort zone with family and old friends.
The only problem is investors are also looking at these areas, snapping up single-family homes and turning them into rentals. Investors are currently representing about a fifth of annual home sales, competing with local buyers and newly-relocated buyers. These smaller regions are experiencing bidding wars just like what we’re finding in coastal Florida.
The Realtor.com Emerging Housing Markets Index compiled in July represents the top 50 metro areas in the country. The top 20 in the index have an average population of just over 300,000, which is less than Manatee County. The index identifies the top metro areas for homebuyers looking for a good appreciating housing market and attractive lifestyle. These areas are ranked according to real estate market data and economic health and an interesting read for the real estate nerds out there, but I’ll just touch on a few of the areas.
First of all, Florida had two regions both represented in the middle of the index and both in the Panhandle – one in Fort Walton and the other in Pensacola. The other 48 regions are spread out all over the country, starting with Billings, Montana as number one and ending with Akron, Ohio at number 50. In between, there are cities like Raleigh, North Carolina, Colorado Springs, Colorado, Yuba City, California and Prescott, Arizona. Home prices in the top 20 markets in the Emerging Home Markets Index have risen 13.7% on average in the past year, per Realtor.com. This is less than the national average but impressive nonetheless. If you are interested in seeing the entire list, you should be able to find it on Realtor.com’s website.
So, is it back to the future? Have we gone from a more complex sophisticated culture to a more down-home 1950s and 1960s vibe? That, of course, remains to be seen. If COVID has changed things that much it wouldn’t necessarily be a bad thing – everything in life can’t be exotic, and I did love The Donna Reed Show.
