The real estate boom: Investing in rural areas and small towns

20 May 2020

In the real estate market, a new trend in the purchase of rural areas and small cities housing is clearly visible. More and more buyers prefer them to urban apartments, as this is justified from a practical and economic point of view. 

Consider the main factors that determine the dynamic demand of such real estate and form a growing interest in it from both ordinary citizens and owners of investment capital.

Real estate boom during quarantine

Investing in small towns
Investing in small towns

As of March, the average annual change in the number of views of housing in small towns and rural areas for seven days increased by 115% and 88%. The number of page views of real estate in urban metro areas with a population of 1 million people over the same period decreased by 10%.

The sharp increase in interest in rural areas has not yet led to an increase in actual sales, but the decrease in expected sales was less significant in small cities and rural areas (by 20% and 11%) than in large urban areas (down by 26%).

According to these data, it can be said that the housing market in small towns and rural areas will better withstand the storm due to coronavirus stops than in large cities. We can also see an increase in property sales in these less populated areas in the long run, as home buyers hope to leave cities or just buy a second home, which they can return to when city times become difficult.

Multi-Family Update

A representative of the National Real Estate Investor recently announced that multi-unit rental rates have already fallen, which is unprecedented this season. According to him, the cost of renting an average apartment in the United States since March decreased by 0.23%.

Housing Wire’s Julia Sokol reports on the impact of the CARES Act on an apartment building. Apartment owners who paid their mortgage payments on time as of February, but are now facing financial difficulties due to the pandemic crisis, may seek temporary patience by sending requests to their creditors.

Multi-family construction has been hit hard by the ongoing crisis. According to the NMHC survey, 55% of respondents reported construction delays. Of those experiencing construction delays, 76% of construction firms also reported that they had delays in issuing permits, and 59% said they saw delays in launching. Also, 62% of respondents said they experience construction delays due to a local or state moratorium.

Buying property in rural areas and small towns for living

Everyone wants to be healthy and live long, a prerequisite for which is life in an ecologically clean area. Calmness, clean air, the absence of a large traffic flow, a measured rhythm of life – all this helps to calm the nervous system, restore the normal functioning of all organs and systems of the body.

The main thing is to find the right place to live, in which a good ecological situation is combined with developed infrastructure and transport accessibility.

The easiest way is to choose the appropriate options by contacting a real estate agency or other professional market players. Experienced realtors are well aware of the suburban real estate market and will help determine the choice based on the individual needs and wishes of the client. Working with good specialists, you can become the owner of suburban real estate, even with a small budget.

Buying housing in rural areas and small towns as an investment

Real estate in small towns and rural areas is in great demand not only because of the desire for a healthy lifestyle in areas with good ecology. Owners of investment capital also show great interest in suburban real estate, rightly considering it an excellent object for investment.

Invest in rural areas
Invest in rural areas

The most popular are townhouses and cottages in the dynamically developing suburban areas of the capital and other large cities. Developed infrastructure, which creates comfortable living conditions, relative proximity to the metropolis and forms a high attractiveness for such housing. Therefore, there is every reason to increase prices over time. This is the basis for earning on investments in suburban housing.

In addition to passive income from natural positive price dynamics, investors can earn on the lease of acquired objects, which will provide additional income and shorten the already short payback period of the project.

Moreover, the lack of affordable housing forces more and more families to leave large cities and move to suburbs and rural areas. As a result, prices for apartments and houses are currently growing at the fastest rates in medium and small settlements, as well as in rural areas.

The additional attractiveness of real estate outside the capitals in small and rural cities is provided by the growing interest of investors and buyers to live in a more environmentally and socially prosperous suburb. In terms of interest in real estate, in terms of attractiveness, rural areas and housing of small towns confidently overtake a noisy capital with polluted air.

A modern person begins to invest in comfort and lifestyle, and not in square meters. Regardless of the class of housing, such as comfort or business, a new building in the suburbs in itself does not cause such interest as comfortable living in it. What is meant by a comfortable life?

By investing in such housing, a person gets the necessary amenities and already developed infrastructure in the form of medical and educational institutions, fitness centers, park areas, recreation places and others. It is clear that in connection with this, the costs of the developer are also growing, but they will surely pay off.

What is happening with real estate now

Quarantine and disappointing forecasts on the spread of coronavirus naturally caused unrest among housing investors in small towns. Developers felt this especially sharply in the first half of April, when sales and customer activity subsided even among large players.

The activity of customers was partially restored with help of digital sales tools. Large developers launched consultations through popular instant messengers, online object reviews and provided the opportunity to sign contracts remotely.

It is expected that pent-up demand in the primary market will partially begin to convert into sales as soon as the activity of medium-sized and small businesses begins to recover in the world.

The demand structure followed the trends of previous years: the demand from the economy class and outdated concepts switched to comfort and business class, as well as complex projects and large projects like smart towns. The slogan of the market has moved from “sell square meters” to “sell lifestyle.”

Now, many experts in the real estate sector in their forecasts are of the opinion that lower prices for rural areas and small towns housing should not be expected. Previous demand trends continue and most of the sales will be concentrated among the strongest market players with modern and well-developed housing concepts.

The impending crisis will only strengthen these trends, because the buyer will become even more picky, and will give preference to projects with an additional cost in the form of infrastructure and a well-thought-out concept – such projects will most likely only increase in value over time.

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