OMG! Sell b/c Net Migration Losses!! (except you got it wrong)
Before I start this discussion, I wanted to post the link to the Article with the title "Population migration patterns: US cities Americans are abandoning" but don't go to the link YET. Wait until you read this post first then go to the link: US Cities America is Abandoning
From the Article, it states: "The 50 cities where the most people are moving away from can primarily be found in the Northeast, Midwest, and West Coast, particularly in states like Illinois, Michigan, Ohio, and New York. Among the cities where people are leaving in droves are places such as Chicago, Detroit, St. Louis, New York, and Los Angeles."
When you look at the statistics that are posted in the article for New York Metro, you see the following:
10. New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
- Population decrease due to migration, 2010-2017: -21,503
The NY MSA, a huge area, had a decrease between 2010 and 2017 of a whopping 21,503!! OMG!! SELL!!! Real Estate Prices will completely fall and you will lose everything!! The SKY IS FALLING!!!!!!
But wait Chicken Little!!
When we actually look at the prices of Real Estate, that's not what we actually have seen.
While I don't think one should take their personal experiences into account for fear of extrapolating a biased opinion, I see this scenario done ALL the time here on BP, especially when I see postings involving places like NYC where people are saying I wouldn't invest here because my personal experience shows that it is un-affordable.
YES... that is true... it is un-affordable.... when you do it ALONE, by yourself. But if you use the laws of Partnerships, like Syndications, Investing with your friends and family, or just putting together a Venture Partnership, what was previously un-affordable can now be achievable!
I form partnerships normally in order to buy Brooklyn, NYC properties and I had bought several properties in NYC during the 2010 to 2017 period.
Again, I want to state that this is my PERSONAL results so I don't want you to think this is the overall results in a vast area called the NYC MSA. Here is the results of my properties that I have bought within 2010 and 2017:
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Year: 2013 (locked in Contract, bought in 2014)
Type: 3 Family (2 Floor Thru's and 1 Duplex Garden Apt), Brownstone
Location: Bed-Stuy, Brooklyn
Price: $900k
Renovation: $350k
2018 FMV: $2 Million for an increase of $2 Million minus $350k minus $900k = $750k
Cash Flow Increase from 2013: over $4k per month increase! Rents skyrocketed!
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Year: 2015
Type: 3 Family (3 Floor Thru's with a Garden), Brownstone
Location: Bed-Stuy, Brooklyn
Price: $1.35 Million
Renovation: $30k
2018 FMV: $1.65 Million for an increase of $1.65 Million minus $30k minus $1.35 Million = $270k
Cash Flow Increase from 2015: over $600 per month increase. Not bad, most of the rental increases already happened a year earlier.
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Year: 2017
Type: 3 Family (3 Floor Thru's with a Garden), Victorian House, Multi-Family
Location: Ditmas Park, Brooklyn
Price: $1.71 Million
Renovation: $45k
2018 FMV: $1.90 Million for an increase of $1.90 Million minus $45k minus $1.71 Million = $145k
Cash Flow Increase from 2017: We increased rents by adding value and duplexing the basement for an increase of $600 per month.
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SO............ my personal experiences seems to be far different than those that are really stating that these higher priced MSAs are not good for investing.
BUT, as you can see, I have been incredibly successful by investing in these higher MSAs, but in my specific locations in Brooklyn, looking for higher rental appreciation and value appreciation as well as a large supply of great tenants and low crime.
When I now go back to the article, which really is a bit misleading from the Headlines, here is the remaining part of the New York area statistics that I left out above:
10. New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
- Population decrease due to migration, 2010-2017: -21,503
- Population change, 2010-2017: +3.9% (19,566,480 to 20,320,876)
- Natural growth, 2010-2017: 1,811,927 births, 1,035,505 deaths
- Median home value: $426,300
Yes, the Chicken Littles are correct, there is a NET MIGRATION OUT in the 7 year statistics of around -21,503. The average, 21,503 / 7 year = 3,702 per year OUT.
That's FINE..... as long as you then look at the Birth and Death rates as well. Taking that into account, you get 1,811,927 births minus 1,035,505 deaths = 776,422 added to the population or 111k per YEAR added to the population.
Take into account that the general population outside of the opiod addiction areas are living longer. Seniors are choosing to stay at home, keeping those properties out of the supply chain.
If we then ask the question, what is the quality of the population that leaves and the population that is staying and growing?
Generally, those that are leaving, a large percentage happen to be priced out of the market. They cannot achieve salaries that can help support their lifestyles as everything in the City increases dramatically.
The population that is staying are then benefiting from their higher equity as their home prices increase as well as their ability to achieve higher salaries from those jobs that require a skillset for it.
With the higher equity, if they owned, they are then able to send their children to higher quality of schools which we know are expensive today.
When those kids come back, they want to stay, mostly because it's a great place and they can afford it by going to these quality schools and Universities.
ANYWAY, I think you get the point.
I have been seeing this trend for the last 21 years investing in Brooklyn, NYC. It's a fantastic trend in order to reap the rewards on a Real Estate Investment basis.
I do think that everyone are entitled to their opinions, however. If you hold a different opinion especially, I would really like to understand why you do think otherwise.
I would especially like to hear from those that HAVE invested in NYC over the last 10 years (2008 to now) and have an opinion that it was really NOT good. I haven't really heard that opinion from someone who had, but I welcome that as well.