Baltimore, Los Angeles, New York City. Everyone seems to be talking about Cities and conditions associated living in one. You may think I’m going to talk about homelessness or rats, or other cons associated with larger metropolitans. But, my goal is to talk about the pros of living in the city. For centuries, cities have been the center of commerce. This stands true today in many of our great American cities. I’m not here to debate which city is best. (although that is a fun conversation) What I’d like to point out is how housing is different in a City, verses the exurbs.
Furthermore, to contrast City living to that of the rural America. If you enjoy road trips like I do, you intentionally get to see many small towns. While our cities may seem to be failing in terms of trash pickup or broken infrastructure, small towns in many parts of our country are literally dead zones. It’s almost as if a plague was released in some of these rural communities. Boarded up buildings, dilapidated homes, and just general despair. I’m not going to list any towns by name. But a full list of towns can be found on the McKeinsey Global Institute site here.
The point I’m making is that our Cities are where the growth is. Always has been, and will continue to be. So, if you are a young Millennial attempting to build wealth with home ownership, you have some decisions to make. Where you choose to live has as much to do with increasing your net worth, as the actual house you purchase. Does proximity to a city center effect price appreciation? Absolutely. So, if price appreciation is your number goal- the closer you are to action you are, the better. Look at high growth cities with a strong educated job base, and you will likely do well. Conversely, it could be shown in many cases that home appreciation decreases by the distance you travel to a city center. The further away you are, the lower your chance of success of selling a home for more than you paid.
Compare that to rural America. In many places, population decline has caused economic desperation. So, as Cities continue to grow, our young talented workforce moves towards the center. Causing affordability issues along the way. Sure, there are many reasons we tend to stay put; family; friends; etc. But, mobility has long been an indicator of wealth. So, for all the negatives floating around about conditions in our cities, they are still the best place for young people to succeed. Yes, it will be expensive at first. Rents are higher, as are home prices. The winning formula? Matching your lifestyle goals and employable talents with a city on the upswing. Our family has lived by the motto “figure out where you want to live, then figure out how to live there”. Most of our moves have been along the Sun Belt, so we benefited from long term trends in mobility. I’d encourage you to travel around until you find a place you would like to call home. Also, some additional advise, don’t buy right away when you move to an area. Get to know the place. Then dive into the housing market with a strategy. By strategy I’m suggesting you have a timeline for ownership for each home or “phase” of life. This will help you decide how much to spend remodeling. Also, think about the cost of transportation. We omit this expense when choosing where to buy, only to quickly find out travel time and expense exceed what you saved purchasing a home further away from work. I’m not saying you can’t enjoy living in a small town- you certainly can.
What I’m suggesting is that Millennials should move to an area of the country with home appreciation in mind.