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Why Everyone’s Googling “Best Small Towns to Move To” – And What Real Estate Investors Should Know
If you’ve been getting a headache just thinking about rent prices in major cities, you’re not alone. A growing number of young Americans are ditching the high cost of urban life and heading toward small towns — and it’s starting to make waves across the real estate world.
Over the past few years, especially since the COVID-19 pandemic, Americans aged 25 to 44 have been quietly reshaping the housing map. In a shift that would’ve sounded impossible just a decade ago, more young adults are now moving into rural areas, not out of them.
Small Towns Are Booming Again
According to recent U.S. Census Bureau data, two-thirds of the population growth in the 25–44 age group between 2020 and early 2024 happened in rural counties or areas with fewer than 1 million people. That’s a massive flip from previous trends, where big metro areas with 4+ million people took the lion’s share of growth.
This new migration trend is turning once-forgotten small towns into real estate goldmines. Investors are taking note, and for good reason — these areas are affordable, growing, and filled with opportunity.
Why Are Young People Moving to Small Towns?
Let’s be real — city life is expensive. Rising rent, higher taxes, inflated grocery bills, and overall cost-of-living pressure have sent younger Americans searching Google for “affordable places to live.” But it’s not just about escaping the financial burden.
A few key factors are fueling this migration:
- Remote and hybrid work: Many professionals now only need to be in the office a few days a week.
- Lower costs = higher savings: Living in a small town can help renters and homeowners save faster and build wealth.
- Quality of life: Nature, less traffic, and space to breathe are hard to beat.
And despite the push from some companies to return to the office, the shift hasn’t slowed. In fact, it picked up in 2023 — defying trends from the 2010s that heavily favored big cities.
What This Means for Real Estate Investors
For real estate investors, this is a rare moment. Towns that were once overlooked are now experiencing population booms — and they’re ripe for investment. Think affordable housing prices, increasing demand, and room for appreciation.
If you’re looking to invest:
- Start with strategy: Choose towns with growth indicators like population influx, infrastructure development, and proximity to larger hubs.
- Target commutable towns: Places within an hour of major cities are ideal for hybrid workers.
- Look into short-term rentals: Nature trails, lakes, and charming downtowns are tourism magnets.
Take Boston, Pennsylvania, for example. Nestled along the scenic GAP Trail near Pittsburgh, one investor grabbed a property for just over $50,000 and turned it into a successful short-term rental. Not only did the renovations pay off financially, but the location’s popularity with bikers and outdoor travelers keeps bookings steady.
Don’t Overlook the Tech Boom
Here’s a twist: the AI and data center explosion is creating a second wave of rural demand. Massive companies are building tech infrastructure in out-of-the-way areas to tap into cheaper land and natural energy sources. These projects need workers — and workers need places to live.
Major players are pumping over $200 billion into data center development, and it’s sparking demand for electricians, construction crews, and long-term housing.
In smaller cities like Abilene, Texas, tech growth is fueling a mini-revival: new jobs, expanding housing developments, and commercial services are springing up to support AI-driven businesses. This kind of long-term investment opportunity doesn’t come around often.
Final Thoughts: Big-City Burnout Is Real
Big cities will always have their allure — nightlife, jobs, culture. But they’ve also priced out much of the middle class. For many young Americans, moving to a smaller city isn’t just a lifestyle choice; it’s a financial necessity.
If you’re a real estate investor (or thinking of becoming one), now’s the time to look where most people aren’t: the small towns and rural markets that are quietly thriving. Combine affordability, demand, and tech-driven growth, and you’ve got a recipe for long-term wealth.
In the previous post: “Is Now a Better Time to Invest in Real Estate Debt or Equity?“
Why Everyone’s Googling “Best Small Towns to Move To” – And What Real Estate Investors Should Know
Has the U.S. Housing Market Finally Begun to Thaw After the Pandemic?
It seems like the housing market might be showing signs of life. According to a recent report from Redfin, pending home sales in early October have seen their largest year-over-year rise since 2021, with a 2% increase in the four weeks ending October 6.
This news is likely to be welcomed by real estate investors who have felt the market has offered limited opportunities over the past few years. However, it’s important to take a cautious approach—one promising statistic doesn’t necessarily indicate a broader trend.
Is the Housing Market Truly Recovering?
Let’s explore the different factors at play.
Interest Rate Reductions: A Critical Factor or a Red Herring?
The Redfin report links the surge in pending sales to the Federal Reserve’s much-anticipated rate cut announcement in mid-September. According to Redfin, this announcement prompted buyers to re-enter the market in late September, despite mortgage rates having already been falling for weeks before the cut.
This psychological boost is crucial. Although buyers were aware of the falling rates beforehand, many seemed to be waiting for a formal signal to act. This could be attributed to a lingering fixation on the ultra-low rates of 3% to 4% that buyers enjoyed before 2022.
Any rate cut announcement serves as a nudge for prospective buyers, making them feel that now might be the right time to purchase, even if mortgage rates had been decreasing already. In an unstable mortgage market, such announcements hold significant influence.
However, mortgage rates are just one piece of the puzzle when analyzing housing market performance. As noted by Investopedia, the real estate market is driven by four primary factors: interest rates, demographics, economic conditions, and government policies.
Demographics: Shaping the Market
During the pandemic, demographic shifts had a profound effect on U.S. real estate, with major population movements like the Sunbelt migration fueling booms in cities such as Phoenix and Austin, which later became unaffordable for many.
Age is another key demographic factor, and the millennial generation’s pent-up demand continues to be a driving force behind the rise in home purchases. Despite the challenges of the past few years, millennials who have longed to become homeowners are now entering the market in greater numbers, as more properties become available.
Rising Inventory: A Sign of Stabilization
A key factor contributing to the market’s stabilization is the growth of housing inventory over the last year. The pandemic had a significant impact on the availability of homes, with sellers hesitant to list properties due to COVID-19 restrictions and, later, higher mortgage rates.
Some homeowners, particularly those upgrading to larger homes, found it financially challenging to sell and take on higher mortgages. Others, however, simply chose to wait for a more favorable market.
Although the latest Realtor.com report shows that inventory remains down by 23.2% compared to pre-pandemic levels, we are seeing an upward trend. For instance, new listings have been rising since last year, with a 5.7% year-over-year increase for the four weeks ending October 6.
As of September 2024, some states have even surpassed their pre-pandemic inventory levels, including Tennessee, Texas, and Idaho, with others, like Washington, close behind.
Vulnerabilities in Certain Regions
However, not all regions are showing positive signs. For example, some areas, particularly those affected by extreme weather, have seen inventory spikes not because of market recovery, but due to homeowners trying to offload damaged properties they can’t afford to repair.
For instance, regions like Florida and North Carolina, hit by hurricanes, have experienced increases in home listings, but these may reflect a response to climate-related challenges rather than market health.
Opportunities for Investors
Investors should be discerning when choosing markets, focusing on regions where inventory is growing due to increased home construction rather than climate-related distress. States like Idaho, Utah, North Carolina, and Texas, which are building new homes, offer potential, though caution is needed in areas prone to natural disasters.
The Midwest and Northeast, meanwhile, still face significant challenges in recovering to normal market conditions. These regions have lower rates of new construction, meaning inventory remains scarce, which could present both opportunities and difficulties for investors.
The Bottom Line
The U.S. housing market is showing signs of recovery, but the situation remains complex and varies by region. Interest rates play an essential role in unlocking the market, but investors should also consider other critical factors, such as homebuilding trends, climate risks, and government policies. While the market is heading in the right direction, it’s crucial to examine regional differences carefully before making investment decisions.
In the previous post: “Is Now a Better Time to Invest in Real Estate Debt or Equity?“