Living in a big city has its advantages and attractions. That is why so many people consistently flock there. With all that a huge metropolitan area has to offer, it should be little wonder that huge cities such as Chicago, Los Angeles, and New York continue to attract homeowners.
But with that popularity and attractiveness comes a cost — a very, very high cost. Living in a huge metropolitan city is more expensive than ever. And for that reason, moving to secondary markets has become a more popular option for middle-class families.
For those investing in real estate, it is important to know what this means for the real estate market itself. Is it worth investing in those secondary markets?
Why Is There a Migration Towards Secondary Markets?
Simply put, the price of housing in those first-tier markets is the largest reason why people are actively pursuing secondary markets. To put it in context: it takes 115% of the average income to buy a home in New York City. That just isn’t feasible for most.
Secondary markets in the southeastern United States, such as Montgomery, Alabama and Macon, Georgia, required an average of just under 15% of the average yearly income to afford homes. That is one of the major reasons why families are migrating to secondary markets.
The second reason is that the cost of living is lower. In those major areas, everything is more expensive when it comes to cost of living. It is simply too difficult to live comfortably in homes of that value.
Secondary Market Investing Approach
Much as with real estate investing in general, there is value to be had in the secondary market. Also, as with the primary market, it takes time and patience. Real estate is an asset that cannot be moved quickly, appreciating slowly over time.
Do your homework on any real estate fund or investment property that you are considering. Not only that, but keep the endgame in mind: think through your strategy from start to finish.