The Great Housing Market Migration Is Very Interesting

As the cost of living and mortgage rates increase, the housing market is seeing a swift slowdown in certain segments. Big cities like San Francisco and New York seem to have lost their allure in this post-pandemic era.

 Now, low-cost cities with strong economies seem to be outshining their big brothers.

 Second-quarter data from The Wall Street Journal/’s Emerging Housing Markets Index came out recently. Its rankings reveal the top metropolitan destinations for homebuyers.

 The Wall Street Journal reports:

 “Many Americans are still moving to suburban and low-cost areas with strong economies as remote or hybrid work remain options for some. High prices and rising mortgage rates have slowed down the housing market and pushed smaller and more affordable areas to the top spots for the hottest new places to live and own property.”

 In its top spots, the “Emerging Housing Markets Index” results list the following cities in order:

  • Elkhart, Indiana
  • Burlington, North Carolina
  • Johnson City, Tennessee
  • Fort Wayne, Indiana
  • Billings, Montana.

 Each one offers favorable real estate supply and demand, unemployment rates, average wages, and amenities. Also worth noting is that the top 20 of these cities have an average population size of about 400,000.

 If that seems a little small, it is. But homeowners are now having to get creative when it comes to a better quality of life. In which case, many underrated regions do indeed provide unique and alluring features today.

 Take Elkhart, for example. Known as the RV capital of the world, it boasts an unemployment rate of 1.6% with a median home sale price of $236,000. So it provides a stable economic foundation with an affordable, outdoorsy lifestyle.

 Are the days officially gone when people feel compelled to live in overcrowded urban environments? Maybe but maybe not.

 We certainly live in interesting times though. Of that, I am sure.

More Non-REIT News to Know About 

 Since 2006, Shopify (SHOP) has reengineered the e-commerce experience. It’s offered an easier way to give and receive payments for just about anything on the internet.

 During the pandemic, it really took off, forecasting huge growth as traditional retail endured the obstacles of the shutdowns. Unfortunately though – rather like Peloton (PTON) – Shopify may have overextended itself.

 As a result, it now has to cut about 1,000 employees or 10% of its workforce.

 In a memo sent out yesterday, founder Tobi Lütke explained to staff that these layoffs are inevitable. The American consumer is returning to the retail world, and e-commerce revenue simply can’t remain consistent with pandemic levels.

 Naturally, shares declined 15% to about $31 after that hit the news. Moreover, they’ve dipped over 80% since peaking in November at around $175 a share.

 “What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point,” said Lütke. “Still growing steadily, but it wasn’t a meaningful five-year leap ahead.”

 That’s an interesting commentary on the state of the economy in general – and one that could easily benefit many real estate investment trusts (REITs).

The World According to REITs 

 Park Hotels & Resorts (PKremains the preeminent lodging REIT by focusing on superior, risk-adjusted returns. That’s through active asset management with thoughtful external growth strategies.

 I have it on my Speculative Buy list due to its strong, flexible balance sheet and 49 properties with over 30,000 rooms.

 Part of sustaining a strong debt-to-equity ratio is knowing how to effectively offload assets for maximum profits. And this REIT just demonstrated exactly that by:

  • Selling its 195-room Homewood Suites by Hilton Seattle Convention Center Pike Street in Seattle, Washington
  • Completing the sale of its 25% joint venture interest in the 1,190-room Hilton San Diego Bayfront in San Diego, California.

Of this, Thomas J. Baltimore, Jr., chairman and CEO said:

“I am pleased with the progress we have made toward our targeted goal of $200 million to $300 million of asset sales in 2022. Year to date, we have sold interests in four hotels for combined gross proceeds of approximately $260 million at attractive pricing, with one additional non-core hotel currently under contract for $9.4 million. Our aggressive capital recycling program represents our ongoing commitment to reduce net leverage and better position our portfolio for long-term, sustainable growth.” 

Combined proceeds for the initially mentioned sales totaled $237 million. This includes the REIT’s $55 million pro-rata share of secured debt on the San Diego property.

 Right now, PK’s stock is floating around $14.48, up about 1.58% for the month.

 Author’s Note: If you do determine this stock is right for you, make sure to purchase it at a smart entry point. Even the best of companies can burn you badly if you buy in at inflated prices.

More By This Author:

Little Wavering Despite Weak Earnings (So Far)
Peaks And Possibilities To Peer At
Amazon Wants To Ask What Ails You

Brad Thomas is the Editor of the Forbes Real Estate Investor.

Disclaimer: This article is intended to provide information to interested parties. ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.