Tough COVID rules have created one of the most significant migrations of the US population and commerce we’ve ever seen. If those restrictions and mandates are rolled back, will it be enough to halt or even reverse these real estate trends?

Florida, Texas, and Tennessee have been some of the biggest beneficiaries of this activity, as well as other southern states. Now the biggest losers of residents and businesses are talking about relaxing some mask mandates in some of the toughest cities and states. Will it make a difference?

Pausing Mask Mandates

California, New York and Illinois are some of those that have driven away the most residents, property owners and businesses over the past couple of years. Now they seem to be coordinating on allowing some mask mandates, for some people, in some situations to expire.

This may be directly in contradiction to the current advice and guidelines from WHO and the CDC. Though they are really still just now catching up with most of the rest of the country which has not enforced masks.

Governors in these states may finally be feeling the pain of losing voters, tax revenues, businesses and investment dollars.

Will It Last?

This is an important question to ask. How long this pause will last may make a big difference in real estate trends and related capital flows.

The latest data from the CDC and WHO shows that the best face masks may offer even more protection from infection and transmission of the omicron variant of COVID, than the protection many have from their vaccine shots. In fact, some may argue that simply letting the vaccinated go maskless may be a major driver of the recent huge spike in COVID cases and deaths.

If that is accurate, any relaxing of COVID rules may not last very long at all. Don’t get caught changing your real estate investing business plan, only for it to be shut down again.

It is also worth considering all of the motivation and dollars to keep this crisis, or a similar one going. Pharma and tech companies stand to lose tens and even hundreds of billions of dollars in value, profit and cash flow if COVID is over. Pfizer alone found investors weren’t happy and its stock sliding when it recently announced it may only make $54B from vaccine shots and pills this year. CVS has also forecast its COVID testing business and shot administration may fall by 40% to 80% this year.

Migration: Will It Change?

Some may realize they want to go home after this news. Fewer may feel the same urgency to leave their home states if rules are being relaxed. Though much more of their decision may be  resting on vaccine mandates and passports and living costs.

Many have moved, and realize they’ve been missing out on better life and better financial dynamics.

Others will never forget how they were victimized, were not allowed to see family members in the hospital, and their businesses were broken. They won’t go back. Though it is true that in this generation we also suffer from severe memory loss and short sightedness, and some may quickly forget the past couple of years.

Summary

A rollback of mask mandates may moderate and slow the recent tidal wave of migration between states. Still, affordability will be a big driver of movers. Especially with extreme inflation at work. These changes may not last either.

In conclusion, it may still pay to be diversified between these types of states with varying approaches to rules to keep up your real estate deal flow and profits.

 

Big cities with big tax bills have fallen out of fashion. People are leaving in droves and flagship retailers are closing their doors. What does it mean for your real estate business?

It only makes sense. Now that you no longer need to pay through the nose to be in an expensive city to have a job, why wouldn’t you move, get a 3 bedroom home with a yard, and get to keep thousands of dollars a month in your pocket, instead of blowing all your income on a microloft?

New technology and new ways of working are creating the biggest shift in the economy and where people are choosing to live since the industrial era began. That means a huge change in demand for real estate, property values, and where the opportunity is.

According to data from the IRS, wealthy millennials who are under 35 and make over $100k a year are leaving states like New York for more affordable pastures. CT, MA, PA, MD and DC are also seeing wealth millennials leave in at high rates. They are leaving for states like Florida and Texas with lower taxes and better weather.

By now we should all also be keenly aware of the housing affordability crisis in America. HUD Secretary Ben Carson recently appeared on TV, seeming to promote deregulating zoning laws and encouraging the building of more manufactured homes and tiny homes as the solution. Another report from Smart Asset reveals the the cities where renters can actually afford the rent and live on their own. Ohio and Nebraska top the list, both having two cities in the top 10. Cincinnati topped the list with an average monthly rent of just $569. Warren Buffett’s home town of Omaha is also in the top 10.

What does it mean for real estate investors and businesses? Chances are that there are going to be an increasing number of players fighting over less and less business in big high tax cities. We’re also seeing the impact in epicenters like Manhattan, where retailers are fleeing, condo inventory is piling up and landlords are giving away months of free rent to try and lure new tenants.

On the other hand, emerging destinations could offer a lot of growth potential, but lack real estate professionals who really get today’s investors, buyers and renters who are moving in. Can you partner up or expand to benefit from these trends?