Top Markets for Real Estate Investing: Is Your City on the List?

Penske reveals the nation's top moving destinations

Penske, the moving truck rental company, recently revealed the top 10 moving destinations in the country, a list they’ve been compiling since 2010 to track one-way truck rentals to cities throughout the United States. 

Below is the list of Penske’s top 10 cities for one-way destination moves, along with its 2017 ranking in bold.

  1. Atlanta (1)
  2. Phoenix (2)
  3. Tampa (5)
  4. Orlando (6)
  5. Denver (8)
  6. Houston (4)
  7. Las Vegas (7)
  8. Charlotte (9)
  9. Austin (new)
  10. Portland (10)

Why is this list important? How can you use this survey to guide your real estate investing decisions? 

Penske’s survey tracks net migration to major cities. Due to its sample size, it’s not a scientific study, but it does provide valuable insight into long-term trends. Cities like Denver and Atlanta continue attract newcomers due to strong job markets. These trends are backed up by various census data surveys which show the both Denver and Atlanta growing much faster than the rest of the country.

Strong migration into a city signals a robust real estate market, as new arrivals need housing, restaurants, schools, etc. The increase in migration drives demand for both residential and commercial real estate. In many cities, like Denver, the supply of houses has not kept up with the demand, leading to market price increases. As the migration continues, prices will continue to increase. 

Will the net migration to these top 10 cities decline?

During the last recession from 2007 to 2008, residents moved the least since 1962, according to the New York Times. A moving slowdown will likely occur again in the next recession. In the last recession, many people were unable to move as housing prices waned and homeowners were essentially trapped in their mortgages, with debt too high to sell the home at a price that would allow them to move.

As the economy improved and real estate prices recovered, the movement among cities also picked up pace. These trends will likely repeat themselves — as the economy sputters, migration will slow, just as we saw in the last recession.

Although migration to these top 10 locations is likely to slow as the economy slows, these markets should perform better than others during the next recession. Jobs will remain in these cities because it’s more difficult for companies to relocate their operations than for an individual household to move to a different city. Even though less people will be moving in general, each of these markets will remain attractive due to their robust job markets.

What does the Penske survey have to do with real estate?

We saw in the last recession that areas like Denver and Atlanta came back quicker than other parts of the country due to their job market and general lifestyle desirability. This will likely occur in the next cycle as well. Areas that are attractive for relocation should be at the top of your list if you’re looking to make a real estate investment.

The Penske survey provides valuable insight on the top markets for real estate investing because relocation is a sign of a robust local economy. Even as the next economic cycle takes hold, the top relocation areas will maintain their value better than others. If you’re investing, a wise strategy is to analyze surveys like these that record which cities are attractive to employees and employers on the move.

Categories: Real Estate