American Consequences - August 2020

the national average of 6% over the last year, and has the highest net domestic migration and net international migration of any state in the nation. This translates into a strong demand for housing. Another great example is my current hometown of Seattle. Washington is one of only seven states in the U.S. that doesn’t levy a personal income tax. The Seattle area in particular has a booming local economy fueled largely by the corporate growth of Amazon and a steady influx of tech-related companies attracted to the area by the strong talent pool and lower cost of living than Silicon Valley. In the last 10 years, the Seattle real estate market appreciated a staggering 80.83%. To invest successfully in real estate, you must focus on the underlying value and consider whether 10 years from now it’s an investment that you’ll be happy to have. I would wager that those who purchased in Seattle 10 years ago are quite pleased with their return on investment today... Real estate is, and will always be, intrinsically local. Some housing markets will get hit hard by the COVID-19-induced economic shutdown, while others will continue to thrive as if the shutdown never happened.

The richest men and women in the world have made their fortunes in various ways, but there is one common theme for many of them... real estate was a core focal point of their investment strategy. As a matter of fact, of all the ways the ultra-rich made their fortunes, real estate outpaced every other method 3-to-1. The often-touted Warren Buffett adage couldn’t be more true right now... “Be fearful when others are greedy. Be greedy when others are fearful.” In the midst of the current economic turmoil, certain types of real estate have emerged as attractive prospects, and opportunistic investors are taking advantage by smartly investing in the right assets, at the right time, in the right places. IDENTIFY RECESSION- RESISTANT HOUSING MARKETS One of the main principles of real estate is that there really is no such thing as a national housing market. Real estate is, and will always be, intrinsically local. Some housing markets will get hit hard by the COVID-19-induced economic shutdown, while others will continue to thrive as if the shutdown never happened. Not surprisingly, many of the states with the highest appreciating real estate markets over the past year have a few things in common – low or no state income tax, high-paying jobs, good quality of life, and high net migration that has outpaced housing supply. For example, Florida has no state income tax, has enjoyed home-price appreciation above

American Consequences

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