Best Recession Cities for investment

Best Recession Cities for investment

Member since 2020 · 13 posts · 7 votes

I'm 33 and looking to relocate. I was an interior designer (cabinet sales basically) in Denver, Colorado before the corona. Now I'm provided with a new opportunity. Im not going back to my old job and I can basically move anywhere USA.  The high cost in Denver had me priced out of the game of homeownership/investment properties (wish i found contract sales sooner). Although I am expecting prices in denver to correct in light of current events, I have decided not to stick around (been there 9 years and ready for a change). 

I'm researching cities that may be best for coming opportunities in the RE market and want to open up the national discussion from members. How do you feel your city will fair? Is it overpriced or underpriced currently? how is the population growing? (Denver was non stop young people) Do you expect prices to correct and fall if they were high (denver, san fran, boston, scottsdale/phoenix, seattle, La to name a few) 

Personally I liked the idea of "B' cities before the rona ever showed up. Following one of  the trends of millennials moving to generally southern, smaller towns in search of cheaper prices, better taxes, young vibe: I see that holding (Nashville, baton rouge, Raleigh, charlotte,  Ashville, Charleston, lots of Florida) 

My Insight to share:
I have experience in Coastal SC and Savannah (lived there 5 years -Bluffton, Hilton head, Savannah). I personally am biased towards savannah (love it) but it has some major problems (crime) and decent steady growth but not explosive growth. I am already seeing lots more houses coming on the market, ones that were under contract two months ago are suddenly available again,  tons of new spec houses in the big suburb developments are littered on realtor.com. Not sure how those will play out or what the opportunity is there for the new builds. In general, my senses tell me there are better areas out there.  There is industry around but nothing too large ( Gulfstream, Georgia pacific, daniel defense) but they have already been hit with layoffs and aren't bulletproof. I went to Savannah college of Art and Design (SCAD), a very popular school in that area that is also a keystone in renovating and investing in the city. Most of the students that go there would stick around if there was a supporting high-paying tech job market but there just isn't for most of these fields- interaction design - UX design - industrial design - design management - graphic design - fashion design - etc. Lots of my friends ended up in bigger cities to work for IBM, google, Microsoft and larger design firms in places like Seattle , Austin, san Fran >  and some in Raleigh where even the bigger companies like IBM are opening up campuses. So that gives you an idea of the area and job market income limitations -There is money obviously there just not the higher paying jobs on average. I think the play in Savannah is buying close to SCAD buildings ( the campus is scattered throughout the city) and rent them to students with the long option of selling years away (5-7).  Charleston is a step up from savannah economically, historically and its larger. I'm not as familiar with it but that's a consideration.

What are your favorite areas right now, where would you set up shop for the next 5-10 years if you were starting out?

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Troy GandeeBusiness Member
Real Estate Broker · Charleston, SC · Member since 2013 · 795 posts · 454 votes
6y

@Brandon Schaffner I'm hesitant to say Charleston is "recession proof", but as far as the South goes, we have a staggering amount of industry. Our economy is also pretty well diversified. We have a ton of tourism, which fuels hospitality. We have a lot of Govt jobs thanks for the Air Force Base and Naval Weapons stuff. The ports and rail provide a lot of great jobs. We have a half dozen international manufacturing companies. Quite a bit of tech. There are more to mention, but these are the primary ones. Savannah is a great city, but I don't think they're nearly as developed as Charleston economically. Charleston is quite a bit more expensive than Savannah, though.

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  • Troy GandeeBusiness Member
    Real Estate Broker · Charleston, SC · Member since 2013 · 795 posts · 454 votes
    6y

    @Brandon Schaffner I'm hesitant to say Charleston is "recession proof", but as far as the South goes, we have a staggering amount of industry. Our economy is also pretty well diversified. We have a ton of tourism, which fuels hospitality. We have a lot of Govt jobs thanks for the Air Force Base and Naval Weapons stuff. The ports and rail provide a lot of great jobs. We have a half dozen international manufacturing companies. Quite a bit of tech. There are more to mention, but these are the primary ones. Savannah is a great city, but I don't think they're nearly as developed as Charleston economically. Charleston is quite a bit more expensive than Savannah, though.

  • Rental Property Investor · MA · Member since 2020 · 98 posts · 77 votes
    6y

    Hi @Brandon Schaffner

    Congrats on the future move ! 

    Washington DC area (The City, Northern Virginia, Parts of Maryland), although not recession proof, have strong fundamentals to weather a down economy. Over the past 10 years many business have moved into the area (ex. Amazon HQ2) and home sales have dramatically increased. This area is not just government but also has built a strong private sector. The workforce is one of the best in the country which is a big reason why Amazon choose the area. A large percentage rent and have very high income compared to the rest of the country. Schools in Maryland and Virginia are great. 


    If the economy does turn than the government (I hope) will continue to pay their bills which should help with home value. 

    Good luck in your choice! 

    - Mike 

  • Real Estate Broker · Austin, TX · Member since 2015 · 715 posts · 527 votes
    6y

    According to a study by ATTOM Data Solutions, Travis County in Austin, TX ranks 457 out of the 483 housing markets surveyed in vulnerability, meaning it is one of the 30 markets expected to be least vulnerable to effects from the coronavirus pandemic.

  • Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes
    6y

    Hi @Brandon Schaffner, props for being so logical in determining where to move! I'm in the Northern Virginia area, and like @Michael Belmore noted, this region is typically considered to be as "recession proof" as possible. Prior to COVID-19 we've had a seller's market for the past couple of years. Since mid-March, we're seeing some sellers take their homes temporarily off the market (wanting to avoid showings, presumably), but the buyers are still there, so it's still a strong market! Overall transaction volume is down, but prices aren't. I'll PM you a couple of resources for market statistics for the Northern Virginia market.

    Out of the areas you mention, I also like Raleigh. Prices aren't quite as high as they are in Northern Virginia, there's a lot of industry/economic strength there, and it's a fun city with a lot to do. I'm familiar with Savannah as well, and based on my experience I'd consider Raleigh safer, and stronger economically.

    I hope this helps you!

  • Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    6y

    Regarding Kansas City I think we will weather recession pretty fair. Since 2012 average price in KC has risen from 100K-173K. Our market is linear and stable. We have diversity in jobs. Most investors here have a 1% R/V ratio so prices are affordable. When the market crashed in 2008/2009 there was only around a 10% drop. I see the market slowing but due to our market history we should fair okay. 

  • Washington, DC · Member since 2015 · 81 posts · 49 votes
    6y

    @Brandon Schaffner there's no question that there's going to be some carnage out there. That said, I agree with @Michael Belmore. The D.C. area has fared well so far. If you follow market cycles I think we're just beginning to hit a dip and enter the second phase of the seller's market. Days on market is ticking up but buyers are still paying full or close to full price in and around the beltway in Northern Virginia. 

    Regardless, if you're looking to buy a house I'd exercise a little caution as it may take a little while for the market to price in any sort of devaluation as housing tends to be slower to react than the stock market. It all starts with people pulling houses of the market (which has been happening everywhere). "In the week ending March 29, more than 28,000 sellers took their homes off the market—a 148% jump over this time last year. In total, 4% of all homes on the market were de-listed, about twice the normal rate." - Forbes (https://www.forbes.com/sites/alyyale/2020/04/04/home-sellers-flee-the-market-as-coronavirus-concerns-grow/#2f5620217e3d) 

    Good luck!

  • Rental Property Investor · Savannah, GA · Member since 2018 · 174 posts · 129 votes
    6y

    @Brandon Schaffner

    I’m pretty bias as well, but I think Savannah has a decently diverse economy and tons of opportunity. 3rd Largest Importing port in the Country, Colleges (SCAD, Georgia Southern just bought Armstrong’s campus there), tourism is huge obviously, the beaches and downtown life. Quite simply, people want to live there, and I think it’s demand and popularity is only going to continue to rise.

  • Contractor · Raleigh, NC · Member since 2020 · 37 posts · 14 votes
    6y

    @Brandon Schaffner 

    The Raleigh market has appreciated dramatically in the last 7 years. Home prices have out-paced rental rates significantly. It is difficult to find turnkey homes inside the I-440 beltline below $200k. Investment opportunities lie in forced appreciation or fix and flip. Rental properties not so much. Raleigh continues to grow with the expansion of Research Triangle Park and other large corporations setting up offices here. The triangle area has some of the best hospitals and universities in the country. There are rumors of more professional sports teams coming here as well. Raleigh is 2 hours from the beach and mountains, so it can be viewed as a best of both worlds situation. I've lived here for 15 years so if you have any specific questions please feel free to reach out.

    Best of luck to you in this new chapter of your life. 

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @Dylan H.   I agree, and there is a good amount of diversity in savannah with the military base and ports others noted that I failed to mention. What I was getting at was the lack of a good tech industry like the Research triangle park in Raleigh @Nick Schultz ( great info, thanks) mentioned. It would be great if Savannah had that layer of industry,  which seems to rapidly grow areas.

    There has also been talk forever about a second port on the savannah river South Carolina side. There seems to be some preparation going on with land clearing etc but I cant tell. From the google satellite maps it looks like they will have to place it on the left side of 17 if you're heading north and cut a shipping path through Hutchison island to work around the low bridges.  The South Carolina side portion of the bridge is only 4-5 years old and they didn't prep it for ships so it will a shipping lane will have to go through the island or a turn further up the river IMO. If this does happen I would love to be ready with properties in the Pooler, GA area. 

    @Dylan H. what parts of savannah are you interested in? Garden city is cheap but seems a bit to sketchy, im wondering if that will flip with the new waterfront expansion but that seems like a wait. Pooler is obviously great for expansion, Georgetown I've looked at and its fair, Ardsley park is out of my price range - as is anything SCAD convenient,  Windosro forest/ coffee bluff seems fairly mixed. What underpriced areas do you think are next on the slate for a makeover?

  • Arlington, VA · Member since 2014 · 12 posts · 5 votes
    6y

    I have 5 doors in Savannah and it feels undiscovered. Though, I’ve heard this has been the talk for sometime.  Lately though, there is a lot of development along the entire Route 16 corridor from downtown all the way to I-95 and the airport. I could see it completely filled in over the next 20 years. The entire area is screaming for a midtown gentrification ... something to bolster the mall and maybe some taller buildings or business parks that wouldn’t fit in downtown historic/Victorian districts. I could also see the north side of the river developing nicely ... there’s nothing there other than a Westin resort. 

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @neil Narayan 

    thanks for the article

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @Marshall M. that seems to be what I am reading as well with regards to the time frame in housing prices in relation to the market. Most investors/business/economists I listen to seem split between a Recession or Depression. I like your optimism on  V-shaped recovery but it's beyond my knowledge and would only be a "slightly " educated guess from me. It's fairly odd right now. You have record job loss with record gains in the market. It does appear we are on the edge of signals saying we can have a  V-shaped recovery. I know "the future is priced in" and some of the best market days are during upheaval all that but I personally think we are going to see lower lows on the DOJ.

     That's my collected opinion from those smarter than myself, I think the stock market is going lower and if housing lags behind and has yet to catch up from the first drop how will that look if there is a second delayed wave? I don't expect and answer really as no one knows for sure, I'm just laying my though process out here. \

    All I know is I will certainly take your advice and exercise caution and patience. The best thing I can do right now is learn. That's why I am here. 

    Thanks to everyone for all the great responses. Sorry for not @ everyone, hard keep track and to respond to everyone personally.  Lots of great info to consider here 

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @Dean Baluch 

    The area is certainly growing as you mentioned. The mall area is Pooler and it is exploding, or was, a bit of a pause now and time will tell how much it slowed but overall it's not going to shrink. A tech area with some taller glass buildings would be phenomenal and I can see that area as a candidate. Savannah has a bit of a geography issue. With the marshes and intercoastal waterways, it's a bit of an odd layout but starting to fill into that vacant area to the east near the airport. Right now I also see a nice empty void in the middle area between Georgetown( southeast of Sav) and Pooler (Nother East Sav, Airport ). Lots of room there and cheaper by about 10-15K for comparable homes.   I think in the 10 years we will see Hitishon island ( Westin resort part) more filled. It seems they have tried to make it happen but the velocity just isn't there yet and what the deal is but there are a few apartment condos there looking like nails sticking out of the ground, Liekthey built a few and halted the area around them and gave up. .  But it should fill in eventually. Even the South Carolina side is filling in with subdivisions in the past 3 years extending into the Bluffton , SC area. This will all be one connected area eventually. 

    @Dylan H.

  • Rental Property Investor · Savannah, GA · Member since 2018 · 174 posts · 129 votes
    6y

    @Brandon Schaffner Yeah I agree, having that tech industry would be great. Yeah Garden City is definitely a little sketchy, and I'd rather not purchase there. As far as areas I feel like I need to highlight and circle areas on a map, haha. I do think the Windsor Forest / Coffee Bluff area is good and going to turn around a little, especially since GA Southern bought the campus there, and GA Southern just keeps expanding. Obviously student rentals aren't the best right now, but they'll recover. Since you went to SCAD you know how the downtown area is, really nice and then you cross a street and you're in the hood. If you're willing to take the chance buying in those 'border' areas downtown I think your poised for success in the future. Everything is slowly gentrifying, it's just a slow game. 

  • Washington, DC · Member since 2015 · 81 posts · 49 votes
    6y

    @Brandon Schaffner it’s never a better time to learn! While we’re all cooped up in our homes...! Stay in touch and let us know how it goes!

  • Real Estate Agent · Member since 2019 · 167 posts · 72 votes
    6y

    @Brandon Schaffner great question and what a tremendous opportunity for you to start fresh.  There are definitely positive ways of viewing this pandemic we are currently in and this is one of them.  Instead of seeing this as a way obstacle you seeing it as a new opportunity for you and I love that outlook.  I am 33 as well and have basically lived 3 places in my "adult life".  Richmond, Louisville and now Nashville.  Love all 3 for different reasons, but I love them for all the advantages of big city amenities (arts, culture, nightlife, parks, concerts, sports, outdoors, etc) with a less price tag than the big cities you named in your initial post.  All affordable and have vibrant places and things to do as well as strong growth in diversified industries.  I am also a fan of Cincinnati, Lexington, Chattanooga, Knoxville, Raleigh/Durham, Wilmington, Norfolk/Va Beach, Huntsville, St. Louis just to name a few.  Personally I recommend the Southeast U.S.  I was born in Detroit and have family in Cleveland, Pittsburgh, D.C. and Chicago so I know the midwest and southeast best.  I have also traveled to 49/50 U.S. states and have visited almost every city over $1million people and the Southeast is where I would hang my hat and call my home for sure.  Best luck to you and your journey and pray God opens many doors for you!

  • Rental Property Investor · Charleston, SC · Member since 2019 · 38 posts · 21 votes
    6y

    I just moved from Northern Virginia (Pentagon City) to Charleston, SC. I went to college in Nebraska so Im familiar with Denver prices. I appreciate both being mentioned. 

    Jobs:

    DC Metro: Unlimited Gov/Contractor jobs for tech. I had a job offer every week

    Charleston: Limited to the Navy base, Boeing, and Volvo. I have seen very limited and specific jobs here compared to DC.

    Real Estate:

    DC Metro: More expensive than Denver, If you want to OWN a nice condo in a OKAYish area youre looking at 400k+ for a 2b/2ba, 850 or less SqFt. Not even sure with houses. 

    Charleston: You can get into a house downtown for 400, I just bought one, with a yard. There is also beaches on each of the surrounding islands of downtown. There are great stats for Real Estate in Charleston. It was in the top 5 in most polls for people moving here. AKA Great potential to always have rentals.

    Summary:

    DC Metro: Provides a lot of job security, I can see it as one of the last places to suffer from a recession due to the everything there supporting the government. Real estate prices living close to the city is TIGHT literally and figuratively.  

    Charleston: Not great job security, real estate is much more affordable and lots of people moving here.

    Side note: I moved to Charleston because my job lets me work remote and my SO got a job here, crossing fingers I don't ever lose my job because job market isnt looking promising here.

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @Dylan H. I know how it is downtown for sure. I figure the crack dens will get bough out eventually and I have been lookign on the borders of the hood areas like you said, its just a gamble and waiting game. I liked the idea of Rincon but after driving and looking there I feel its just too remote and not well enough connected at this point. 16/ 17 east of savannah, Georgetown, pooler might be the best bets until I could afford more rentals for SCAD kids. 

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @Mark Gliebe 

    Great post, I have lived in Northeastern PA, Western PA (western is more midwest mentality), Denver, and South Carolina / GA. I am impressed with the southeast as well and the trends show northerners moving here readily to escape high tax areas like Massachusetts and New York. I also see lots of younger people moving down there for the weather and a more laid back lifestyle that's being increasingly supported by the arts, music, film, culture etc.   l do see lots of opportunities in Ohio the more I read but I just don't see personal enjoyment in the midwest ( sorry midwestern people). Kansas city could be an exception. That seems like it's underrated and growing.

    I'm glad you mentioned Chatanooga as that has piqued my interest. It seems like a great area that offers lots of city amenities with the mountains and countryside nearby. I have just begun researching Knoxville and some of the others you mentioned, thanks  

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @Jacob Humiston thanks for the charleston insight, I've visited enough to know its a great area with lots of attraction form young millennials. Sunny, beaches, laid back, charming, and the historic district has a European vibe to it. Its a great city and I always wished that when I was at SCAD it was the Charleston School of Art and Design instead. It's said that Charleston and Savannah are 'sister cities" - Charleston would definitely be the prettier one. 

    AS far as industry, it does seem limited for jobs compared to DC but do you feel optimistic for future development? I don't keep up on local news or politics/policies that would drive companies to migrate there. Hopefully, the area will mimick to a degree what Texas did to attract more businesses. I've read articles on North Charleston, where Boeing and other industry is located, as being in the top 10 for renting in the nation. Perhaps it was Charleston in general. Anyway, it seemed like North Charleton was a new area being rebranded and built up to accommodate sprawl. I used to hear 10 years ago that North Charleston was the ghetto?

  • Rental Property Investor · Charleston, SC · Member since 2019 · 38 posts · 21 votes
    6y

    @Brandon Schaffner

    Agreed on everything you said about Charleston! We plan on hitting Savannah when this is all over to have fun. Good to know the differences. I have not heard of the sister cities before. I have been here for almost a month! But did tons of research before I moved from DC to Charleston.

    Yes sir! North Charleston and Summerville seems to be the places to be for up&coming. So NICE houses are very affordable 200k in “Park Circle” (North Charleston) but outside of that is starting to be rebranded. Summerville is a ways out there but that’s where most Volvo and Boeing families are living and commuting too and from. I think now is the time to get in there before prices go up in upcoming years.

    As for the job market outside of Boeing, Volvo, and the Navy base/State Department. I have no idea!

  • Real Estate Agent · Member since 2019 · 167 posts · 72 votes
    6y

    @Brandon Schaffner the appeal to Chattanooga and Knoxville are the outdoorsy lifestyle and college universities.  Chattanooga actual had terrible air pollution not that long ago and so the mayor and residents wanted to do something about it and they turned the city into a clean city and has since become a haven for mountain biking, hiking, white water rafting, fishing, etc.  They are both close to Smoky National Park which is the most visited national park in the country.  I would akin Chattanooga as far as lifestyle and amenities to Boulder, Boise, Ft. Collins, Jackson Hole, etc. (not skiing or resort-y, but outdoorsy, etc.)

  • Investor · Johns Island, SC · Member since 2014 · 120 posts · 41 votes
    6y

    Unfortunately there are no nice houses in Park Circle for 200k anymore.  If you find one let me know. 

    I live in Charleston but have shifted focus to Savannah since there are still deals under 150k. 

    I recommend Savannah if your goal is to build a portfolio of cash flowing properties. 

  • Real Estate Agent · Pittsburgh, PA · Member since 2014 · 822 posts · 255 votes
    6y

    @Brandon Schaffner Thanks for opening this discussion up. Good to hear from everyone about various markets. Pittsburgh, PA has really reinvented itself from the "Steel City" to the "Tech city". Major players have planted roots here like Amazon, Google, Ford/Argo AI, Duolingo as well as dozens of smaller start-ups fueled in part by Carnegie Mellon's influence. You may have read recently about Carnegie Mellon Universities' research into providing microneedle drug delivery patches for the Covid-19 vaccine. Beyond that there are many infrastructure initiatives slated for Pittsburgh in the coming years such as plans to develop the former Civic Arena site with housing, offices, hotels etc., work has already started on the hotel that will be part of a larger development called the Esplanade near the Rivers Casino. Also the high speed Hyperloop though I hear that is a couple of decades away. Bottom line is that where there is construction, generally you'll find a city that is booming. 

    Already many neighborhoods have seen a huge revitalization and this has attracted not only many businesses but investors as the demand for housing has increased. Pittsburgh's population had been declining in recent years, but remember we are an "older population" city so stay tuned to the 2020 census. I now see Pittsburgh being filled with a lot of younger medical and tech people interested in making a good living here. Investors also see this as a huge opportunity to buy properties to rent to people of all ages including the young urban professionals coming to the city. Pittsburgh has always had a strong medical influence and now that is being combined with the uprise in technology. 

    Investors are attracted to Pittsburgh as the buy-in is a lot more conducive than other, more saturated markets. Of course finding the right property that can cash flow with strong returns on those investments, while doable, takes research and education. This town changes street by street so having an advocate that really knows the city is advisable. Currently we are still on a "stay at home" mandate so while seeing properties is basically physically impossible, many are still doing their online research and even making offers site unseen. That's where having an inspection contingency might be advisable. 

    Now with all of that said, of course Pittsburgh's economy, as well as the rest of the country, has been dramatically affected by the Coronavirus. But Pittsburgh has always been a resilient city that, I feel, will bounce back stronger than ever.

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @Gary Swank I actually lived in Pittsburgh in 2006-07 and have been back to visit friends as I am a PA native and also I worked as a contractor there for a DOD robotic company (2011). Although the city is not for me I highly recommend your info to anyone reading this, Everything Gary says is correct. Although I would stubbornly never admit it to anyone that personally knows me due to my own Pennsylvania biases,  it is a fantastic city to live if you are younger. The leaps and bounds it made since I lived there to even 2011 were impressive. I think as the city becomes younger as you mentioned it's only going to get better. Part of the cities tech revolution is robotics-based and Carnegie Mellon is and always be a fantastic anchor for the area.

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