{"id":179353,"date":"2024-11-29T10:11:22","date_gmt":"2024-11-29T17:11:22","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=179353"},"modified":"2024-11-29T10:11:25","modified_gmt":"2024-11-29T17:11:25","slug":"new-data-spells-out-the-key-factors-driving-migration-trends","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/new-data-spells-out-the-key-factors-driving-migration-trends","title":{"rendered":"New Data Spells Out the Key Factors Driving Migration Trends"},"content":{"rendered":"\n

A new <\/span>report from Redfin<\/span><\/a> details why <\/span>both homeowners and renters move<\/span> in 2024.<\/span> While the top reasons are the same they\u2019ve always been\u2014the desire for more space, greater affordability, and being closer to family members\u2014a couple of reasons chosen by significant numbers of respondents stand out. These are worries about crime and climate impact. <\/span><\/p>\n\n\n\n

In total, 17.5% of respondents said they planned to move within the next year because of crime concerns, while 13.7% said they planned to move because of climate risks. These two concerns loomed larger in people\u2019s minds than the search for areas with lower property taxes (11%), changes in family circumstances (10.3%), and better school ratings (8.8%).<\/span><\/p>\n\n\n\n

Of course, any report gives a limited snapshot of the population as a whole, and how these figures play out in reality will vary depending on location. Nevertheless, these are intriguing figures worth investigating in more depth. <\/span>Who <\/span>exactly<\/span> is worried about these things, and should investors consider these factors when making <\/span>their<\/span> investment decisions?<\/span><\/p>\n\n\n\n

Worried Homeowners vs. Carefree Renters? It\u2019s Not So Simple<\/span><\/h2>\n\n\n\n

Logically, <\/span>it makes sense that<\/span> homeowners overall would worry more about longer-term issues like climate change.<\/span> Per the report, 20.4% of homeowners worry about crime in their current area versus 16.3% of renters. <\/span>When it comes to<\/span> climate concerns, the disparity is <\/span>larger<\/span>: 17.4% of homeowners versus just 10.6% of renters. <\/span><\/p>\n\n\n\n

The temptation here is to say that<\/span>, of course,<\/span> homeowners are more concerned\u2014they have to deal with repairs if their property <\/span>is damaged<\/span> by extreme weather.<\/span> In addition, because selling a family home isn\u2019t as simple as leaving a rental, they have to put up with the impact of local crime for longer. <\/span>The traditional idea is that renters <\/span>simply<\/span> don\u2019t have to worry <\/span>all that<\/span> much because they\u2019re much more mobile than homeowners.<\/span> If something goes seriously wrong, they can <\/span>just<\/span> leave.<\/span><\/p>\n\n\n\n

But this is only part of the story and doesn\u2019t account for the shifting realities of renting. People\u2019s perceptions of risk are changing because their <\/span>experiences of renting<\/span> are changing. Let\u2019s look into some examples of how this is playing out.<\/span><\/p>\n\n\n\n

The Crime Factor<\/span><\/h2>\n\n\n\n

Obviously,<\/span> concerns about crime are nothing new. Both renters and homeowners will almost invariably prefer areas with lower crime rates\u2014except, of course, in hot markets with <\/span>very limited<\/span> inventories, where people may not have as much <\/span>of a<\/span> choice. Renters in hot areas will compromise, at least initially. Some will move into an area that has higher crime but is cheaper. <\/span><\/p>\n\n\n\n

Chicago<\/span><\/a> is <\/span>a great<\/span> example of an ever-popular city with <\/span>a very hot<\/span> rental market, but it has its fair share of problems with crime in certain areas. For an investor, this type of city presents plenty of opportunities but also extra work in <\/span>terms of<\/span> minimizing the associated risks and reassuring tenants who are worried about crime in the area. <\/span><\/p>\n\n\n\n

Jonathan Klemm<\/span><\/a>, a real estate investor in the Chicago area, describes the evolution of his investing strategy to BiggerPockets this way: \u201cI started investing in better areas and then sought out higher-risk\/higher-reward areas with multifamily properties on Chicago’s South Side.\u201d<\/span><\/p>\n\n\n\n

Klemm confirms that \u201cespecially on the South Side, there are neighborhoods where crime is the No. 1 factor,\u201d and tenants in this area want to not worry \u201cabout fires, drugs, crime…it is a huge issue.\u201d At one point, he <\/span>even recalls having had<\/span> \u201cto talk to the third precinct tactical drug unit.\u201d <\/span><\/p>\n\n\n\n

That said, Klemm doesn\u2019t want to dissuade other investors from investing in areas that are ultimately high risk but high reward. You will have to do extra work to secure your property and give your tenants the reassurance they need. <\/span><\/p>\n\n\n\n

This<\/span> will especially be the case for investors renting to people over the longer term and single women. Female respondents in the Redfin report were more likely than men to cite crime as a significant concern. And we know that more and more single people rent alone than ever <\/span>before<\/span>\u2014<\/span>16.7 million as of 2023<\/span><\/a>. Overall, they rent <\/span>for<\/span> longer, too, with <\/span>1 in 6 renting the same place for 10 years or more<\/span><\/a>. It is a very different proposition to live with the risk of crime when you are living <\/span>on your own<\/span> and planning to stick around for a while. <\/span><\/p>\n\n\n\n

The Climate Risk Factor   <\/span><\/h2>\n\n\n\n

Climate risk traditionally has been a nonfactor in most people\u2019s moving decisions. <\/span>Despite all the warnings and extreme weather events, people have not stopped moving to California, Florida, or any other <\/span>attractive and beautiful<\/span> places that <\/span>just<\/span> happen to be<\/span> at high risk from climate change impact.<\/span> <\/span><\/p>\n\n\n\n

There have been some signs that there are local pockets where this is changing. The most <\/span>obvious<\/span> example by now is Florida, where home sales have <\/span>slowed down<\/span><\/a>, <\/span>largely<\/span> as the result of<\/span> extreme weather impact and problems with home insurance. The same <\/span>problems<\/span> are affecting<\/span> parts of other states, notably California and Louisiana. <\/span><\/p>\n\n\n\n

Until now, though<\/span>, most discussions have focused on homeowners and their concerns. That\u2019s because homeowners are more affected by hypotheticals than renters. <\/span>Home insurance premiums go up<\/span><\/a> even in areas that haven\u2019t been directly hit by a hurricane because insurance companies are trying to safeguard themselves against future possibilities.<\/span> <\/span><\/p>\n\n\n\n

Renters do not have to worry about insurance premiums, or what may or may not happen to a house they will have left in two or five <\/span>years\u2019 time<\/span>. <\/span>This<\/span>, though, is again the old narrative. The new reality in several U.S. regions is that renters <\/span>are increasingly directly impacted<\/span>, <\/span>and that\u2019s what<\/span> changes everything. If your home floods or burns down, it doesn\u2019t matter whether you own or rent it: You will lose everything. <\/span><\/p>\n\n\n\n

Robert Washington <\/span>is the owner of<\/span> Savvy Buyers Realty<\/span><\/a>, which operates in the <\/span>Tampa\/St. Petersburg<\/span><\/a> area. His most recent experience is that he is \u201cstarting to see\u201d tenants pay more attention to flood zones\u2014something that previously just \u2018\u2018wasn\u2019t on renters\u2019 minds.\u2019\u2019 Why not? Because \u201cbefore Hurricane Helene, it was a <\/span>pretty<\/span> rare occurrence for homes in most flood zones to <\/span>actually<\/span> flood.\u201d<\/span><\/p>\n\n\n\n

Something that is a theoretical risk just isn\u2019t <\/span>going to<\/span> deter renters from moving to desirable areas in warm climates. However, Washington told BiggerPockets that recently, \u201cMany tenants who didn\u2019t have renter\u2019s insurance to cover their personal property lost everything.\u201d And once you know someone who happened to, you may think twice about your own moving decisions\u2014or may be spurred to move out of a high-risk area.<\/span><\/p>\n\n\n\n

We know that even the secondhand experience of a friend or family member <\/span>has a significant impact on<\/span> how people perceive risk.<\/span> Fannie Mae asked homeowners and renters about their experiences with weather-related property damage in a <\/span>survey<\/span><\/a> in 2023. Interestingly, most renters (62%) had not experienced weather-related damage <\/span>themselves<\/span> but had seen a family member or friend experience it. <\/span><\/p>\n\n\n\n

As a result, almost half (49%) of respondents said they were very or somewhat concerned about the possibility of weather-related damage to their homes. <\/span>As we can see, you don\u2019t have to have had your <\/span>own<\/span> roof blown off by a hurricane to become worried about climate risk; you <\/span>just<\/span> need to have seen a trusted source (e.g., family) who did.<\/span><\/p>\n\n\n\n

Finally, worries about climate risk aren\u2019t just about property damage. <\/span>Renters and homeowners <\/span>alike worry about the potential health impacts of changing climate patterns<\/span>.<\/span> The climate factor cited by the highest percentage of renters (34%) in the Fannie Mae report was extreme heat. <\/span>There is no federal law that<\/span> requires landlords to provide AC units in rentals; it may not be a <\/span>huge<\/span> problem if you\u2019re renting in Minnesota, but it is a potentially life-threatening situation somewhere like Texas.<\/span> <\/span><\/p>\n\n\n\n

Extreme heat in areas <\/span>that are<\/span> affected by wildfire smoke also translates into <\/span>poor air quality<\/span><\/a>. While a few days of bad air during the summer will not deter anyone from renting in their chosen location, if poor air quality becomes a regular occurrence (as it already has in some West Coast cities), it can become a <\/span>factor in people\u2019s decision to move<\/span><\/a>. Any such concerns will be <\/span>larger<\/span> among younger age groups\u2014the Redfin report cites that 14.9% of Gen Z respondents are worried about climate factors, as opposed to 12.5% of their Gen X counterparts. <\/span><\/p>\n\n\n\n

Again, the changing patterns of renting will play a part here. People rent longer and later in life. The median age of a U.S. renter is now <\/span>40 years old<\/span><\/a>\u2014much closer to the age groups likely to worry about the impact of poor air on their lungs and other potential health issues caused by extreme weather.<\/span><\/p>\n\n\n\n

Final Thoughts<\/span><\/h2>\n\n\n\n

Of course, it\u2019s <\/span>important<\/span> to put these factors into perspective. Climate change or crime concerns alone are highly unlikely to <\/span>make a renter move<\/span> from their chosen location, provided everything else is fine. <\/span><\/p>\n\n\n\n

What investors should watch for here is the tipping point effect. <\/span>Given that these concerns are now at the back of people\u2019s minds, they may <\/span>well<\/span> become one final contributing factor to decisions <\/span>that are<\/span> already <\/span>being thought over<\/span>.<\/span> If a tenant finds somewhere <\/span>that\u2019s<\/span> more affordable and <\/span>spacious<\/span> in an area they perceive to be safer from climate <\/span>and\/or<\/span> crime risks, all the factors combined may <\/span>just<\/span> be enough to get them to move.<\/span> <\/span><\/p>\n\n\n\n

You shouldn\u2019t choose a location based purely on climate safety, nor does it necessarily make sense to avoid an area with some crime issues if you are an experienced investor. But you\u2019ll need to be absolutely<\/span> certain that the major factors that go into renters\u2019 decision-making are solid: an affordable, spacious home where they\u2019ll want to stay, all things being equal.<\/span><\/p>\n\n\n\n

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A new report from Redfin details why both homeowners and renters move in 2024. While the top reasons are the same they\u2019ve always been\u2014the desire for more space, greater affordability, […]<\/p>\n","protected":false},"author":613618,"featured_media":174838,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-179353","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/179353","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=179353"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/179353\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/174838"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=179353"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=179353"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=179353"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}