American Consequences - August 2020

REAL ESTATE IN COVID-19 TIMES

The recent wave of riots and increased crime in big cities has been the last straw for many residents already frustrated by rising crime, rising taxes, and growing homeless encampments creeping into cities they once loved. In the two weeks after unrest began in Minneapolis and the city council vowed to abolish its police force, the number of homes listed for sale on Zillow rose a staggering 22% and apartment vacancies rose 43%. The pandemic and protests in New York City have also spurred a new exodus off the island. A real estate boom has begun on Long Island and suburbs north of the city where competition is fierce and buyers are snapping up homes in bidding wars often sight-unseen from virtual tours. This trend to suburbia will be a big win for warm, sunny states with affordable housing, lower crime and lower taxes that will likely see an influx of educated, high-paid workers. States with higher costs of living and higher taxes will need to make big changes to slow the out-of-state exodus. The biggest loser? Predictably, California.

So how do you identify the right markets to invest in for the next decade? The simplest way is to understand migration patterns and why they are occurring. THE SUBURBIA MOVEMENT One crucial trend to follow is the move to the suburbs, spurred largely by the work-from- home movement, with a boost from people fleeing major cities overcome by violent protestors, crimes waves, and defund-the- police movements. As businesses discover that they can successfully maintain a remote workforce and slash costs by eliminating physical office space, we are witnessing a fundamental change in how many businesses operate moving forward. As working remotely becomes the new norm for many, it empowers workers to choose where they want to live, instead of being anchored to their company’s physical location. Facebook founder Mark Zuckerberg recently offered his employees the opportunity to work remotely on a permanent basis, and expects half of Facebook’s workforce to transition to remote work over the next five to 10 years. The option to work remotely will likely spur a housing boom in suburbs and smaller, more affordable cities... A recent survey by Zillow found that 75% of those surveyed who are working from home due to COVID-19 would prefer to continue, so about half the time if their employer gives them the option after the shutdown ends.

IDENTIFY RECESSION- RESISTANT INVESTMENTS

Identifying the right areas to invest in is the first step. The second is to determine what type of real estate will best weather a recession and yield you the greatest returns over the long term. Industrial Warehouses COVID-19 has sparked fresh interest in industrial warehouses. Investors have discovered that most industrial tenants are in

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August 2020

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