Small Towns, Big Returns: The Surprising Rise of Small Town Real Estate

In the ever-evolving landscape of real estate, a surprising trend is emerging: small towns are outperforming large metropolitan areas. It's a shift that's catching many off guard, but for those paying attention, it's a goldmine of opportunity. Let's dive into why this is happening and why you, as an investor or realtor, should be paying close attention.

1. The Remote Work Revolution

The first and perhaps most significant driver of this trend is the rise of remote work. The COVID-19 pandemic accelerated a shift that was already underway, freeing millions from the confines of office spaces in crowded cities. Now, with a laptop and a good internet connection, people are discovering they can work from anywhere – and they're choosing small towns. These areas offer a better quality of life, more space, and often, a lower cost of living. This shift is not a temporary blip; it's a fundamental change in how we work and live.

2. The Affordability Factor

In major cities, the cost of living has been skyrocketing for years. Housing prices in places like New York City and San Francisco have reached levels that are simply unattainable for the average person. Small towns, on the other hand, offer a much more affordable alternative. You can get more house for your money, and the cost of living is generally lower. This affordability is attracting not just individuals and families but also investors looking for markets where their dollars go further.

3. Quality of Life and Community

There's something to be said for the quality of life in small towns. These communities often offer a slower pace, less congestion, and a stronger sense of community. For many, the appeal of a close-knit community, where neighbors know each other and local businesses thrive, is a refreshing change from the anonymity of big city life. This sense of community is not just good for the soul; it's good for real estate values.

4. The Economic Diversification of Small Towns

Small towns are no longer the one-industry locales they once were. Economic diversification is bringing new life to these areas. From tech startups setting up shop in rural areas to manufacturing plants and distribution centers, small towns are becoming economic hubs in their own right. This diversification not only creates jobs but also adds to the appeal of these areas as places to live and invest.

5. The Tourism and Lifestyle Appeal

Many small towns are also capitalizing on tourism and lifestyle. Towns with historical significance, natural beauty, or unique cultural offerings are becoming destinations in their own right. This tourism appeal translates into real estate demand, both for primary residences and for vacation homes or rental properties.

6. The Long-Term Investment Perspective

From an investment perspective, small town real estate offers a compelling long-term growth story. While the appreciation might not be as rapid as in some hot urban markets, it tends to be more stable and sustainable. For investors looking for steady, long-term growth, small towns offer an attractive proposition.

7. The Impact of Infrastructure Development

Infrastructure developments, like improved transportation links and internet connectivity, are making small towns more accessible and connected. This connectivity is key, as it opens up these areas to a broader population and makes them more viable as places to live and work.

8. The Demographic Shift

Finally, demographic shifts are playing a role. As baby boomers retire, many are looking to downsize and move away from the hustle and bustle of city life. Small towns offer the perfect solution, with the amenities and community feel that this demographic is seeking.

The Next Gold Rush: Small Town Real Estate

1. New Richmond, Wisconsin: The Midwest's Rising Star

Let's start with New Richmond, Wisconsin. Nestled in the Great Lakes region, this town of about 10,000 is on the cusp of a real estate boom. Why? It's simple: location, location, location. Close to Minneapolis and Saint Paul, Minnesota, it's perfectly positioned for growth. Think of it as the next suburban hotspot, following in the footsteps of its neighbors, Hudson and River Falls. In the past five years, the median home value here has jumped from $228,000 to $351,000. That's not just growth; that's a trendsetter in the making.

2. Sandpoint, Idaho: Where Nature Meets Opportunity

Next up, Sandpoint, Idaho. This town of 9,000 is a hidden gem, sandwiched between the Schweitzer Mountain ski resort and Lake Pend Oreille. It's a magnet for remote workers and retirees, drawn by its outdoor activities and quaint lifestyle. The numbers speak for themselves: home values have nearly doubled from $303,000 in 2018 to $601,000 today. For investors, this means one thing – opportunity.

3. Bisbee, Arizona: A Bohemian Rhapsody in Real Estate

Bisbee, Arizona, is more than just a town; it's a statement. With a population of just under 5,000, this historic mining town is a haven for artists and retirees. Its unique architecture and vibrant arts scene make it a standout choice for those seeking something different. In five years, home values have almost doubled, from $118,000 to over $212,000. That's not just growth; that's a cultural and financial renaissance.

4. Ketchum, Idaho: A Skier's Paradise & a Real Estate Edge

Ketchum, Idaho, may be small, with just over 3,500 residents, but its real estate market is anything but. Known for world-class skiing and outdoor recreation, it's a hotspot for those seeking a balance between work and play. In the last five years, the median home value has skyrocketed from $700,000 to $1.34 million. This isn't just a market; it's a goldmine for the right investor.

5. Apalachicola, Florida: Coastal Charm with Investment Potential

Finally, let's talk about Apalachicola, Florida. This coastal town, with a population of just over 2,200, is a picture of historic and maritime charm. Its real estate market is on the rise, with values increasing from $167,000 in 2018 to about $308,000 today. For those seeking waterfront and historic properties, Apalachicola is not just a destination; it's an investment.

Embracing Change with Gratitude: A New Perspective on the Housing Market

In the ever-changing landscape of the housing market, October 2023 has brought us a unique blend of challenges and opportunities. As mortgage brokers, it's essential to approach these changes with a mindset of gratitude, understanding that every shift brings new possibilities for growth and success.

October witnessed a 1% month-over-month increase in pending home sales, reaching the highest level in a year on a seasonally adjusted basis. This resilience, despite a 4.8% drop from the previous year, is the smallest annual decline in almost two years. It's a testament to the market's underlying strength and the adaptability of buyers and sellers alike. As mortgage brokers, we should be grateful for this resilience, seeing it as an opportunity to guide our clients through a market that, while challenging, is also ripe with potential.

The slight easing of the supply crunch, with new listings near a six-month high, offers more options for buyers. This increase in inventory, though modest, is a crucial step towards a more balanced market. It's a reminder to be thankful for every small improvement, understanding that each one contributes to a healthier, more sustainable market.

Approximately 20.8% of homes sold in October experienced a price drop, reflecting sellers' willingness to adapt to market conditions. This flexibility is something to be grateful for, as it creates a more negotiable environment, benefiting both buyers and sellers. The increasing trend of sellers offering concessions, including repairs and mortgage-rate buydowns, is another positive sign, indicating a market moving towards greater balance and cooperation.

Many buyers, sidelined by high mortgage rates and prices, are returning to the market driven by life events such as new jobs or family changes. This human element reminds us to be grateful for the personal stories behind each transaction, seeing our role as not just facilitating a financial process but also helping people navigate significant life transitions.

The slight decrease in mortgage rates towards the end of October, potentially contributing to the uptick in pending sales, is a glimmer of hope. As mortgage brokers, we should be thankful for these moments of relief, however small, and use them to encourage and motivate our clients.

While the increase in deal cancellations, reaching the highest rate on record, might seem daunting, it also presents an opportunity. It's a chance to educate our clients about the realities of the market and to provide the reassurance and guidance they need to navigate these uncertainties.

The variations in market dynamics across different metros, from North Port, FL, to Tacoma, WA, offer valuable insights. These regional differences remind us to be grateful for the diversity of the market, understanding that each area presents unique challenges and opportunities.

As we navigate the complexities of the current housing market, let's do so with a sense of gratitude. Each challenge is an opportunity to learn, grow, and improve our services. Let's be thankful for the resilience of the market, the adaptability of buyers and sellers, and the chance to make a positive impact in people's lives through our work.

Hot Take on the Sitzer/Burnett Commission Lawsuit: What You Need to Know

Let's talk about the Sitzer/Burnett commission lawsuit and what it means for you.

First off, the jury had their say on October 31st, but we didn't get the judge's final word then. Now, the court's hinting that we won't see the judge's injunction until Spring 2024. They're giving time for all those legal back-and-forths and the final judgment.

Here's the timeline: The court's latest order, filed just this Tuesday, says the defendants have to get their post-trial motions in by January 8, 2024. Then, the plaintiffs get six weeks to respond, with their deadline on March 18th.

Once all these motions are sorted out, there's a 30-day wait before the final judgment comes down. This means the real estate industry might be hanging on until April or May 2024 to understand the full impact of this injunction for Sitzer/Burnett.

And you can bet, once that judgment is out, the defendants are going to appeal. They're not messing around either – Keller Williams has Paul Clement from Clement & Murphy on their side, and NAR's got Gregory Garre from Latham & Watkins.

So, what's my advice? Just like I said when the jury verdict came out, keep your cool and keep moving forward. Nothing in this case is going to change how you earn your commissions this year. Sure, there's a lot of legal jostling to come, and it's going to take time to sort through.

While there's a real chance that NAR, KW, and the other big brokerage firms might come out on top, don't count your chickens before they hatch. It's smart to start implementing best practices now, just in case there are changes to the commission system down the road.

In the meantime, get ready. This legal tussle is just getting started. Stay sharp, stay informed, and most importantly, stay ahead of the game. Remember, in real estate, just like in life, it's all about being prepared for every possibility.

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