Why Are People Moving Away from Major U.S. Cities?
This weekend, 4,400 people were talking on LinkedIn, Facebook and Twitter about major United States cities losing their luster. What could cause the bright lights of the big cities to seem less shiny?
What’s Happening in the Metropolitan Areas?
Eight of the 10 major metropolitan areas in the United States has more people move away from them than to them last year, according to a New York Times article. Cities like Los Angeles, San Francisco, New York and Miami lost residents this year.
In fact, based on this Bloomberg article, New York City lost $8.4 billion in income from people moving away.
But if these cities have the highest paying jobs in the United States, why are people moving away?
The fact is that these high paying jobs come with a huge barrier to entry: education. So, while people with college degrees are moving to the big city to get jobs in tech and business, people who do not have college degrees are moving away.
When faced with high rent prices and below average incomes, these residents likely felt they’d have a better chance of economic success living in a smaller city where rent prices are more affordable and minimum wage employees earn about the same rate.
While people with college educations may want to consider rent to own in these areas. People who do not have college educations are feeling cost burdened and moving away.
How Does the Exodus Affect Rent to Own in Metropolitan Areas?
What does this mean for these metropolitan communities? There will be fewer people in the area to do critical jobs that keep society functioning.
How will these communities bring workers back to do these essential jobs? Employers in the area that want to stay in business will likely have to pay employees more money to keep them within their positions. If living on the wage they earn is unaffordable, employers will have to face an employment deficit or fix the problem.
Additionally, landlords will likely face lower demand on their properties based on fewer people being able to afford living in the city. To keep their units full and bring back renters, the fair market value of rent will likely need to decrease.
What does this mean for rent to own? The next few years will be a great time to start renting to own in a big city. As home sellers and landlords start to decrease the cost of housing, you’ll get a lower monthly rent payment for your lease option and the value that you can lock in for the home will likely be lower.
Nonetheless, time the market and try to enter at the right point. If housing is remaining on the market for a long time, it’s a good opportunity to bring up rent to own opportunities with sellers and negotiate good pricing.