“The pandemic and the prospect of working remotely have spawned an exodus from New York and San Francisco to sunnier, more-affordable cities. Few have benefited more than Austin,” WSJ writes.
Why Is That?
- No State Income Tax
- Short and Mild Winters
- Plenty of Social Distancing Space (Roomy Homes, Backyards)
- Remains Cheaper Than San Francisco, Brooklyn and Manhattan After Building Tens of Thousands of Apartments in the Last Decade
Business relocations to Austin are expected to create roughly 10,000 jobs. It’s the highest single-year figure on record and plays a huge role in restoring a local economy ravaged by Covid-19.
With populations between 200,000 and a million, mid-size cities are growing, showing “work-from-home policies aren’t undermining all of urban America.”
- But it also demonstrates what many people are looking for in a post-Covid-19 world — more affordability, space and job opportunities in hot industries like tech.
- Examples include Sacramento, Charlotte, Phoenix and Salt Lake City.
Even big-name companies have “planted flags in Austin after receiving local tax incentives.” Tesla plans to build a factory outside of Austin that could create 5,000 jobs. Others include Tomo Networks and Hermès.
- Airbnb stays 28-days or longer grew 57% in Q3 compared to a year ago.
The Final Word: Austin has some challenges — for one, a lack of adequate public transit. But the city has undertaken a yearslong, $7 billion rail and bus project, among other changes. New apartment construction continues to grow in Austin greater than anywhere else, relative to its housing market.
- “For every person who moved to the Bay Area from Austin between April and October, 2.9 people moved in the other direction, according to an analysis from LinkedIn,” a 39% increase from the year prior.
My real estate investment partners and I saw this trend back in 2016, seeing Austin, Nashville, and a host of other cities as growing second cities that will take market share from large, over-taxed urban areas. This has played out very profitably for us over the past 5 years.
While much of the price appreciation is already earned, I don’t see the trend slowing down, and these markets still compare favorably against high-cost, high-tax traditional urban centers.