There's one maxim in real estate: location, location, location. For years, the hot spots were on the coast - New York and California. Of course, places like Florida and Virginia have been popular for a while too, but you never really read much about the booming market in Wisconsin or Montana. Well, now the real estate industry is trending towards what it considers second-tier cities and previously unpopular areas.
A Generational Effect Is Moving The Trend
We're long-past generation X moving markets. It's the millennials' turn now. They're growing up and these 20 and 30-somethings are looking for a place to live. But, they're not crowding New York City. No, they're moving to traditionally second-class cities.
They're following jobs where they can be had. They're even following desirable places to live, where and when telecommuting is an option. Because it's easier than ever before for independent contractors to succeed, and because telecommuting is more accepted by employers today, people's aren't always limited by physical job locations anymore.
Second-Tier Cities Being Affected
Some cities, like Minneapolis, are seeing amazing growth. In fact, this city is number nine on a list of the top ten cities for housing developers. Why? Because this is where all the young people are moving.
It's got a diverse economy, and it's perfect for those who don't want to leave the mid-west. And, there are a lot of people who really like living smack-dab in the middle of the country.
There are also Dallas realtors that are seeing an uptick in business. Texas cities that were once outliers in the real estate market are starting to heat up. In some cases, cities are becoming "youth-dominated."
Job Growth Crucial
Of course, future growth prospects depend entirely on job markets. When there are jobs, there's going to be a natural increase in housing development and housing in general - even condos and apartment complexes.
On that front, there's more uncertainty. Depending on who you ask, job numbers either look good or they look terrible. The official statistics from the Bureau of Labor Statistics show that the number of unemployed people is unchanged at 10.2 million people, with a 6.6 percent unemployment rate. Teenagers make up the largest percentage of unemployed workers at 20 percent of the total unemployed. This is hardly surprising though, as many of these teens may be either in college or living at home with their parents.
It's a Seller's Market
There's something else driving the real estate market too, and it's sellers. Oddly enough, the buyer's market has dried up. Sellers have realized that they can ask more for their homes than they used to be able to. What accounts for the power shift? Interest rates and a general improvement in the economy.
As rates rise, homebuyers will be the ones chasing the best deals where they can be had. But, there's a rush of new homebuyers trying to snap up homes before the Fed raises rates on them. There's also the fact that home building has been in a slump for a while now - the surplus of homes is disappearing. All that adds up to good news for the real estate industry as a whole.