We all know and love the Bigger Pockets network of information and resources. Recently, a contributor tracked the latest inbound and outbound renter traffic around the United States. Here are our thoughts on the data.
Over the last decade, markets like California, Washington State, and Texas have seen historically high inbound traffic of renters migrating to these areas. Likely due to the influx of job growth in these markets, many flocked to get their share of the growth.
With years of this high demand behind us, these typical hot markets are beginning to see their outbound traffic drastically increase. So where is everyone going?
According to rent.com lead data, renters who once opted for these major western cities are now migrating to more affordable markets in the South and Midwest. This change in migration pattern is likely predicated on individuals searching for markets with greater affordability. Moreover, the flexible work environment that has been created by the pandemic likely makes it easier for these individuals to migrate rapidly without the need to enter a new career field. These migration patterns will undoubtedly continue to affect localized real estate markets, and understanding these patterns can be a strong indicator of investment opportunities.
What do these shifts in migration mean for Above 8 Capital's long-term rental target markets?
This is a good news story for the markets we look to target over the coming years as we are currently targeting markets all with growing inbound lead deltas. One such example is the Northwest Arkansas market of Fayetteville, Bentonville, Rogers, and Springdale.
As shown by the map, the Northwest Arkansas market demonstrates a 36.49% lead delta while averaging a 7.1% lower cost of living than the national average. Couple this with a low unemployment rate of 3.9% and strong economic drivers such as Walmart and its subsidiaries; this market will likely continue attracting increased migration. Although not a perfect indicator of rising rents, this net infill of migration to the market will likely continue to put pressure on rents and available inventory, making this a long-term bullish market for investment.
Overall, migration trends will always ebb and flow, and their effects on local markets will vary. However, in this near-term environment, we believe that affordable markets, specifically in areas that are considered to have more stable climates, will continue to see long-term net migration and thereby increase values.
For more context on migration shifts as reported on Bigger Pockets, check out this link.
What are your thoughts? Do you think these Midwest markets will continue to see increased migration over the coming years?
Learn more about the NWA market from Best Places to Live.
Luke Jenkins is a General Partner at Above 8 Capital. This article does not constitute investment or financial advice and solely reflects his personal thoughts and not those of Above 8 Capital LLC.
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