“… it is necessary to invest time to personally visit and evaluate each one—there are many qualitative factors affecting your final decision that can’t be wrapped up in neat columns of data.”
On the other hand, if real estate prices have been growing for a long period of time, there is a risk that prices could peak and consolidate for a period of time.”
An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.
Part One in a 4-Part Series.
Part Two: Taking Calculated Risks
What about you?
It’s time to clarify your own priorities.
There are not shortages of best places lists, but what is the best fit for you personally?
- To what type of place do you want to relocate?
- What type of boomtown would be a wise investment?
The challenge and the opportunity lying before you falls into two parts.
First, use quantitative data to research potential towns that interest you for your own bucket list.
Second, Harry Dent says
it is necessary to invest time to personally visit and evaluate each one—there are many qualitative factors affecting your final decision that can’t be wrapped up in neat columns of data or expressed in a terse written description.
Is there a threshold below which or above which you should look for?
For the first, Dent cautions you as you consider towns with fewer citizens.
As a general rule, you will want to invest in a small town only when it has a minimum population of 3,000; an even safer bet is 5,000 people.
If the town has between 3,000 and 5,000 people, make sure that there are solid plans for growth and that it offers some qualitative advantages over other areas before investing in it.
Another rule of thumb.
The growing towns following their development strategies often take off after reaching a population of 20,000.
The next threshold Dent identified was 50,000.
The critical mass for many new growth cities (or formerly small towns) making the transition to a growth city, is often around 50,000.
But, that’s not all.
At each of those minimum population thresholds you will also want to find out if their continuing growth trend is growing or, better yet, accelerating.
This is a strong indicator that real estate is appreciating, not depreciating, and confirms that you have selected a town that other investors find attractive as well.
Absolute population growth or even population growth as a percentage can be misleading, though.
A better measure is relative growth calculated over the last 10 years.
How does it compare to the rest of the country, state or region in which the town is located.
To calculate the relative growth, simply divide the town’s population growth for each year by the population growth of the country, state or county for that same year, and then plot the figure on a graph.
Before Google and Wikipedia, you’d have to spend a tremendous amount of time at the library sorting through statistics from the U.S. Census Bureau.
And, then you’d have to visit or subscribe to reports from state and local agencies, and from demographic marketing companies.
Now most of that information exists online at two or three sources.
For future projections, you might have to dig a little.
I’ve grown to depend on city-data.com
By collecting and analyzing data from numerous sources, we’re able to create detailed, informative profiles of all cities in the United States. From crime rates to weather patterns, you can find the data you’re looking for on City-Data.com.
For a snapshot, Wikipedia usually provides the top-level statistics, as it does for Mammoth Lakes.
As of the 2010 United States Census, the population was 8,234, reflecting an increase of 1,141 from the 7,093 counted in the 2000 Census.
And, if Mammoth makes the first cut consult Wikipedia for a little more detailed data.
In this case what the 2010 Census revealed.
The population density was 325.4 people per square mile (125.6/km²). The racial makeup of Mammoth Lakes was 6,643 (80.7%) White, 29 (0.4%) African-American, 49 (0.6%) Native American, 128 (1.6%) Asian, 5 (0.1%) Pacific Islander, 1,151 (14.0%) from other races, and 229 (2.8%) from two or more races. Hispanic or Latino of any race were 2,772 persons (33.7%).
But, if projected population data are available, plot future years as well.
Let’s say you’ve done you homework researching your bucket list.
And you discover that the town has grown in the past, but it is not growing faster than the surrounding regional area.
Red flag.
While not always included in other Wikipedia’s pages, for Mammoth Lakes a sidebar tracks population growth from each Census beginning in 1880 (473) through 2010 (8234) or an increase of 16.1% from 2000.
Wikipedia’s sources project for last year in 2015 a drop of 3.5% from 2010 to 7946 residents.
It is not a genuine growth town.
In all categories of boomtowns you’re considering, with the exception of areas that appeal to affluent retirees, look for growth in job markets and a rising level of income.
Without the growth there simply isn’t enough money circulating to boost real estate prices.
- Are there extenuating circumstances?
- An economic downturn that all resorts suffered?
- Does that signal a buying or investment opportunity?
Dent says
Even in a growing resort area with a large percentage of retired homeowners, you would expect to see job and income growth for the people who provide goods and services to the town.
Dent recommended engaging demographic marketing firms for economic and job data.
In addition to providing past data, they can give you good estimates for 25 years into the future, based on demographic factors and business and employment trends.
Today that once expensive knowledge can be found online.
As more powerful “Big Data” cloud technologies aggregate it for you.
No matter what the source, you should review data for an entire county as a reliable way to evaluate a single town.
“But, only when that town comprises most of the county’s population,” Dent says.
“Or, such data also can help you easily identify high growth counties in which to look further for high growth towns.”
Searching on City-Data.com for “Mammoth Lakes” and by Mammoth’s zip code “93546” yield slightly different, but useful data sets.
I’m not sure why, but you should consider both when you are serious.
And, another search of “Mono County” shows you all the growth comparison calculations you’ll need plus the distance to nearby towns and nearby zip codes to explore.
All within minutes.
If you find growth in the town’s real estate prices, Dent says treat it as a simple positive indicator.
“Strong appreciation indicates that other people think this town is a good investment, too.
On the other hand, if real estate prices have been growing for a long period of time, there is a risk that prices could peak and consolidate for a period of time.”
Steps:
21) Spend the time to find the best place to live and invest. It will be worth your while. The great thing about living where others spend their vacation is the year round quality-of-life.
22) Selectively evaluate the best quality-of-life communities to live in and weigh the tradeoffs of risk and rewards for accruing real estate appreciation along a progression of rural and small towns that meet what your pocket books can afford.
