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Regional Spotlight

Sacramento, California

California’s Capital City Remains an Anomaly…In a Good Way By Carole VanSickle Ellis Just before the start of the 20th century, the residents of Sacramento decided to enact a sea change in the local geography. Believing the “City of Plains,” as the area was called in 1855, to be too flat and swampy, locals began planting cottonwoods and imported eucalyptus trees to help dry out swampy areas and create a greener landscape. Later, locust trees, willows, elms, palm trees, and fruit trees would also become part of the program until Sacramento was no longer known for its flat, treeless plains and became known as the “The City of Trees.” By then, the city boasted “more trees per capita than Paris,” according to local historian and ecologist Paula Peper. The result of this concerted botanical effort would ultimately be one of the world’s largest, most closely managed, and highly concentrated urban forests: a living, growing example of how residents of this city prioritize certain beliefs about nature, diversity, and even energy savings. Understanding the local population’s innate drive to at least attempt to control and manage every aspect of the Sacramento landscape is crucial for investors entering this real estate market. Community planning plays an outsized role in home values in Sacramento just as it does in any municipality where urban planners (or arborists) effectively leverage government resources and funding as well as public sentiment, but the city also remains what Clint Lien, vice president of cost research and product development at residential repair-cost estimation platform The Bluebook International, Inc., calls simply “an anomaly” in the broader California landscape. “Sacramento has always been a mix of urban, suburban, and farming communities,” Lien said. “It is right on the river, the state capital, has many popular museums, and maintains a solid tourist draw. With the many resources and diversity [in the Greater Sacramento area], housing has always been considered a solid investment there, and it has generally been considered a great place to raise a family.” Lien explained that Sacramento traditionally offered Bay Area families seeking “more affordable, urban lifestyles” the opportunity to own a home or rent in an area that would otherwise be financially out of reach. Of course, Sacramento is not immune to modern problems like unaffordable housing and homelessness, which investors must bear in mind when operating in this market. “Like many other California cities, Sacramento has found itself in quite the predicament recently,” Lien said, citing fallout from the COVID-19 pandemic’s work-from-home trend, a 67% increase in the unhoused population over the past three years, and slowing new construction as problems that must be addressed in order to shore up the area’s housing market. “There is definitely a need for change, and the next two or three years will dictate how well the demand for housing and influx of community investment will play out,” he concluded. U.S. News & World Report real estate editor Devon Thorsby agreed, noting that the Sacramento area’s approved permits for new-construction, single-family residential properties came close to a five-year low in January of this year at 352. This represented a 44% drop over January 2022. “Considering that Sacramento hit a five-year peak for single-family permits in June 2022 at 989, the drop in plans for construction activity is even more stark over a relatively short period of time,” she said. Thorsby noted “builders are struggling to offload new-construction homes that have already been completed.” If history is to be believed, if any city’s population can effect lasting change on the economic and real estate landscapes, it will be the population of Sacramento. While the future of the “City of Trees” may no longer hinge on whether local policymakers favor fruit trees or hybrid sycamores, residents’ belief in their ability to improve the local economic and literal climate and track record in doing so makes any community initiatives and unusual local trends worth watching for investors. The “Two Housing Market Bottoms” Coming to Sacramento In February of this year, Sacramento appraiser and local market analyst Ryan Lundquist predicted that the local market would face “two market bottoms” in the coming months. “I recommend watching for a price [bottom] and volume bottom [that] may not happen at the same time,” he wrote on his blog. Lundquist emphasized the need for improved housing affordability in order for home sales volumes to increase, observing that as the end of Q1 2023 neared, the Sacramento market was “missing about 40% of buyers.” By June 2023, Lundquist appeared to be feeling more optimistic, calling the first half of the year “stunning,” but warning, “Sellers are still sitting back” as listings remained down about 40%. He added, “Low mortgage rates are keeping many sellers in their homes, and higher rates have been keeping many buyers from purchasing [and]… lower supply has met lower demand. Thorsby noted in March of this year that Sacramento tends to look “relatively affordable compared to Golden State counterparts San Francisco, San Jose, and Los Angeles,” but emphasized that investors using these metrics alone risk overlooking the area’s high costs compared to other parts of the country. With just over two months’ worth of inventory slightly easing tension on the buyers’ side of the equation, there is still a significant imbalance between supply and demand in the area. For renters, inventory is even tighter; the U.S. Census Bureau reported in January that Sacramento rental vacancies were below 1%. By comparison, the national housing supply is hovering around 3% and national rental vacancies are about 6%. Sacramento May be the Best West Coast Option for Many The question for investors, potential homebuyers, and sellers in Sacramento remains: When will the market actually “hit bottom” and, in this post-pandemic environment, what will that actually mean? For those who experienced the housing crash and subsequent financial meltdown in the mid-2000s and are eagerly awaiting the deals that come with a “foreclosure tsunami” type of crash to the bottom, this downturn is likely to feel very unlike their

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Philadelphia, Pennsylvania

The City of Brotherly Love Faces an “Uncomfortable” 2023 Market By Carole VanSickle Ellis When a national expert like Moody’s Analytics chief economist Mark Zandi starts your market’s year off with the observation, “We’re in the bad times,” a lot of local homebuyers get chills — and not in a good way. For real estate investors, however, those chills are something like a silver lining, and Zandi only increased investor interest in the Philadelphia area when he continued his February analysis of that market by predicting that agents, first-time homebuyers, and single-family homebuilders will not feel “all that good” in Philadelphia this year. “In 2022, potential buyers were desperate for more inventory,” recalled Axios Philadelphia analyst Mike D’Onofrio. He added, “Now, homes are hitting the market but people cannot afford them.” D’Onofrio blamed rising interest rates and a localized affordable housing crisis driving rents skyward for Philly’s looming real estate slump. Since he published this analysis in late February of this year, new data shows that median selling prices have fallen by just under 4% year-over-year at the end of Q1 2023; housing inventory on the market is up by roughly 15% year-over-year, and the average time on market is up by more than two weeks year-over-year. Furthermore, at the end of the first quarter of 2023, more than half of all homes on the market in Philadelphia sold below asking price, and most of those transactions took place in what economist Kevin Gillen described as “the lower segment of the market.” For real estate investors seeking metro-area investment opportunities, this confluence of factors could be just what the doctor ordered. With times on market nearing the two-month marker, Philadelphia sellers may feel more inclined to explore less conventional sales options in order to get deals done. As more and more homebuyers find they are no longer able to afford as much house or, in many cases, any house at all thanks to rising interest and rental rates that effectively diminish down payment savings while hiking monthly mortgage payments, the appeal of creative financing will also be on the rise. For Bright MLS chief economist Lisa Sturtevant, 2023 in Philadelphia appears likely to be “about resetting what normal looks like,” including accepting 6% interest rates as something less than cataclysmic. “The market is contracting on both sides,” Sturtevant explained. “[Fewer buyers and sellers in the market] makes for high competition within the market.” She went on to predict “the largest price correction will happen within the city” while “’second-tier’ suburbs may see a decline year-over-year in home prices [and] top-tier suburbs…continue to do well.” Darkening Clouds on the Horizon … Maybe For retail buyers in the Philadelphia area, things are looking bleak this spring, with Zandi describing the local market as being “about as weak as it gets” in May. He continued, “It is kind of consistent with the worst of sales during the peak of the pandemic when we were all shut in, or go back to the financial crisis in 08/09. It is those kinds of levels.” The issue is a troubling combination of rising interest rates and an ongoing affordability problem that local analysts say is “stifling” the market. For individual real estate investors, this could lead to some difficulty finding homeowners willing to sell at any price point — much less at a discount — but desperate buyers in the area are likely to continue to push prices upward on available inventory. For investors with access to viable deals, this will mean their properties are more in demand than ever if the current climate persists. However, it will be important to prioritize reaching potential buyers as well, since the Bright MLS Home Demand Index published in April indicates that many are giving up on the market and seeking other options. The report indicated that demand for luxury condos was the strongest this spring, followed by townhouses and single-family homes priced below $300,000. Luxury single-family homes trailed far behind the rest of the field with the lowest levels of demand. Researchers noted at time of publication that there was a 5.5-month supply of luxury condominium residences on the market and 1.4 months’ worth of mid-market single-family homes. Rising activity from institutional homebuyers in the area may also affect future inventory and demand for homes for sale instead of rent. According to reports from housing advocacy group The Reinvestment Fund (RF), roughly 20% of homes in “distressed” neighborhoods in Philadelphia are currently being sold to institutional investors and converted to rental properties. The fund’s research team defines “distressed” as areas in which there are below-average homeownership, “where both prospective buyers and current owners have struggled to access mortgage financing, [and]… in neighborhoods with low sale prices and high vacancy.” Although institutional activity can be a good thing for neighborhoods where properties are stagnating and for long periods of time and also may ultimately create more housing opportunities for residents in a market, institutional investor participation in a market raises the stakes for individual investors also working to acquire these properties in order to flip to retail buyers or rent. Zillow’s research team recently ranked the Philadelphia housing market 10th in the country for “hottest housing markets of 2023.” In that report, Zillow economic data analyst Anushna Prakash observed, “This year’s hottest markets will feel much chillier than they did a year ago,” adding, “The desire to move has not changed, but both buyers and sellers are frozen in place by higher mortgage rates, slowing the housing market to a crawl.” Zillow placed Philadelphia in tenth place behind southeastern cities like Charlotte, Nashville, Jacksonville, Miami, and Atlanta, as well as a few midwestern markets. No city west of Dallas, Texas, appeared on the list at all. In response to the ranking, local realtor Larry Flick, CEO of Berkshire Hathaway HomeServices Fox & Roach, Realtors, predicted that home prices would “remain stable” and “affordability will increase” over the course of 2023. So far, home prices have actually continued to

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Washington, D.C.

“The District” Could Face Atypical Headwinds in the Coming Months By Carole VanSickle Ellis In 1783, a mutiny of Continental Army soldiers in the new United States’ then-capital city of Philadelphia, Pennsylvania, demonstrated to the Founding Fathers that their future nation’s capital city must not, as James Madison would argue roughly five years later, “rely on any state for its own security.” Just a few years later, Article One, Section Eight of the United States Constitution would permit the establishment of a “District (not exceeding 10 miles square) as may…become the seat of the government of the United States.” At that time, the Constitution did not designate a specific area for this district, but by 1790, it had been agreed that the new national capital would be located on the Potomac River. Eventually, President George Washington selected specific lands donated by Maryland and Virginia to create the District of Columbia, residents of the area lost their representation in Congress, and the region would go its own unique way from the rest of the nation from that point forward. True to its history, the D.C. housing market usually stands out from national market trends. Historically, it has been recession-resistant to downright recession-proof, and home prices have risen relatively steadily in the area since the 1980s, although there was a dip during 2008 and 2009. Even then, however, prices did not fall as substantially as in many other major markets, and the market reached bottom in March 2009. At that point, it began to climb rapidly, only recently showing indications that it may have peaked. In January of this year, there were 31% more active listings year-over-year, but much of the for-sale inventory was a result of longer times-on-market rather than a dramatic increase in active sellers. “We are in a very unusual market where we are seeing a pullback not only on the demand side, but on the supply side,” observed Bright MLS chief economist Lisa Sturtevant. She explained, “There are fewer sellers in the market, but inventory is growing…simply because homes are sitting on the market longer than they used to.” However, she added, “The underlying fundamentals in the D.C. area are quite strong. The economy is doing well, demographic fundamentals are good, [and] I expect we will see more buyers coming back to the market in the spring along with sellers.” D.C. realtor Susan Isaacs said although spring and summer markets could be relatively strong, her brokerage is expecting the second half of 2023 to “slow considerably due to looming recession combined with the start of the 2024 election cycle.” Isaacs added that if interest rates “unexpectedly” take an early drop at year-end, this could trigger a holiday rush on home purchases. She also noted that retail buyers are currently unwilling or unable to dedicate much of their budgets to improvements after closing, so fix-and-flip investors should expect these buyers to “exercise more caution with home inspection and careful evaluation of price.” The area is also expecting a series of school-zone boundary changes, which could affect which neighborhoods are “hot” by the fall. Isaacs observed, “Redrawing school boundaries affects D.C. real estate values in a significant way…. Take away the [advantageous] school assignment, and homeowners could potentially lose tens of thousands of dollars in home appreciation value.” Subject to the Political Winds & Ongoing Pandemic Policy It is no secret that the year leading up to a presidential election tends to be a slow one in D.C. real estate. In the immediate D.C. area, in particular, home sales growth may slow to zero or even drop into negative numbers, while the broader metro area slows less but still tends to experience healthy, outsized growth the year following the election. “From the buyer’s perspective, [the] housing hunting process is expected to be more competitive [in an election year], while sellers can benefit from the anticipated busier activity,” said National Association of Realtors (NAR) senior economist and director of real estate research Nadia Evangelou. In D.C., the 2024 elections could have a particularly outsized effect on the local housing market because President Biden’s remote-work policies have resulted in D.C. boasting one of the largest remote-working populations in the country in 2023. Three-term D.C. mayor Muriel Bowser used her inaugural speech this past January to warn the president that if he refused to end telework for federal employees, her administration would be forced to find other uses for the empty government office buildings currently populating the nation’s capital. The federal government currently owns about one-third of properties owned or leased in Washington, D.C., and, prior to the pandemic, was directly responsible for about one in four D.C. jobs. Unlike many of her peers on the left side of the aisle, Bowser is demanding “decisive action by the White House to…get most federal workers back to the office, most of the time.” She said one of her goals for her third term in office will be to add 15,000 residents to downtown D.C. over the next five years and implement policies that will result in about 100,000 new residents “before it’s all said and done.” This would require the conversion of large amounts of commercial office space, something Bowser said could be an option if remote work policies remain unchanged. In March of this year, the city’s chief financial officer, Glen Lee, warned that remote work represents a “serious, long-term risk to the District’s economy and its tax base.” In his revenue projections for the upcoming fiscal year, Lee estimated the city would generate revenue under $10 billion, reducing his forecasts by a total of $500 million between FY2024 and FY2026. These losses could result in the cancelation of ambitious city projects that investors might have expected to add value to residential properties, such as access to a fare-free bus system that was scheduled to debut in July of this year. At present, the project is considered “in jeopardy” because there are no longer funds to support it. Readers should note the

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Cincinnati, Ohio

The Queen City Remains One of the Fastest-Selling Markets in the Country By Carole VanSickle Ellis When a multitude of large, urban markets began cooling off with the advent of 2023, Cincinnati, Ohio, just kept getting hotter. The midwestern city, also often referred to as “The Queen City” thanks to poet Henry Wadsworth Longfellow’s 1854 poetic reference to it as “The Queen of the West,” was ranked as one of the Realtor.com’s “most improved large markets” at the outset of this year thanks to the eternally magic combination of affordability and relative availability of housing. Of course, with most large, urban markets — including Cincinnati — battling to create new inventory, the city could not have ranked so well if it were not for the extended metro area, which boasts three of Ohio’s most affordable places to live according to a recently published report from SmartAsset and reaches into multiple neighboring states. “We measured the total cost of owning a home (using the average home cost) …throughout a five-year period, [and] that five-year cost was then measured as a proportion of median household income…to determine affordability,” explained the SmartAsset team. The group also factored in closing costs, real estate taxes, homeowner’s insurance, and mortgage rates. They determined that three of Greater Cincinnati’s neighborhoods — Delhi Hills, Northbrook, and North College Hill — all fit the bill for relative affordability in the area at this time. “That does not necessarily mean there is a ton of home stock out there,” warned City Beat contributor Katherine Barrier. She noted that rising mortgage rates and ongoing inventory issues prevent nearly all markets from offering access to a high volume of truly affordable homes. For investors active in the Cincinnati area, the strength of the local economy likely outweighs concerns about affordability. Not only does Cincinnati boast the fastest-growing economy in the Midwest, but the Cincinnati Regional Chamber of Commerce projects that the region will produce more than 1 million jobs over the next decade with “considerable growth in high-paying jobs that demand a bachelor’s degree or higher.” This trend will likely mean that buyers and renters coming into the market looking for housing will be working with acquisition budgets that exceed local affordability benchmarks. The chamber highlighted “skilled trades” and “information technology” as two sectors presenting “immediate pathways to higher-paying jobs,” and predicted nursing, software development, food preparation/service, and home health aides would see the most growth over the next decade. According to local professionals, there is still plenty of competition for Cincinnati properties, and it is only getting more intense. “Buyers who put off house hunting in the second half of 2022 are already gearing up to find the perfect home in 2023,” observed local broker/owner Brett Keppler in his report on the local area at the end of 2022. “Even with record-low inventory, life still moves on.” He noted that the volume of homes sold in the Cincinnati area in 2022 dropped by 12% year-over-year, but added, “Average sales price in Greater Cincinnati still increased by over 7%.” This contributed to record-low days on market in the city, a trend which continued through Q1 2023. A Growing Population for a Complicated Job Market Thanks to ongoing difficulties accessing inventory for sale, many members of Greater Cincinnati’s current 2.5 million-plus population find themselves compelled to settle for renting even if they ultimately plan to own their own homes. With the expectation that the local jobs market will add nearly 68,000 jobs in the next five years alone, rental property investors will find plenty of residents easily able to afford market rents in desirable locations. The key to attracting these residents lies in offering them the types of properties they find attractive. This means, in many cases, offering single-family residential options that look and feel like home in markets where most of the alternatives are located in multifamily developments. RENTCafe analyst Nadia Balint observed that in Cincinnati, like many other midwestern markets, builders are doing “a pretty good job” of keeping up with the demand for family-size units in multifamily buildings. However, the demand for single-family residences remains strong both in the retail buying and rental market. In Cincinnati, less than two-thirds of all apartment units are “family-sized,” creating opportunities for investors with an eye toward single-family rentals (SFRs) or multifamily development. The city has prioritized creating an environment designed to attract high-paying employers in the IT sector to the area, working in partnership with the regional chamber of commerce and local IT advocacy groups to sponsor programs to help current residents “reskill” in IT specialties in the wake of the COVID 19 pandemic and to lure new IT employees to the area. These programs feed growing local demand for new hires in the sector. Employers can sponsor internships and training programs, while educational institutions and government agencies can access “pipelines” of IT specialists as well. Both Ohio and Kentucky participate in these drivers, and the area is one of the most cost-friendly regions in the country when it comes to starting or supporting any type of business. In Greater Cincinnati today, these efforts extend beyond IT and into the sectors of biohealth, business and professional services, advanced manufacturing, and general technology. The region is “one of the best ecosystems for manufacturers to thrive and grow,” boasted JobsOhio, citing proximity to the Ports of Cincinnati and Northern Kentucky, previously known as the Port of Cincinnati, and the Ohio River waterway as a primary draw for all types of manufacturers from aerospace to automotive to “foods and flavoring.” At present, the Cincinnati Tri-State area boasts ongoing projects like Nestlé-Purina’s $550-million investment in its first new production facility built from the ground up since the 1970s (the largest project in the Midwest in 2020), and hygiene, infection protection, and cleaning solutions manufacturer Diversey’s $86-million production and logistics facility, which brought 300 new jobs to the area in 2021 alone. Although the rising population and growing influx of businesses is making it difficult to access

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Bellingham, Washington

The “City of Subdued Excitement” Could Turn a Corner in 2023 By Carole VanSickle Ellis Although Washington state remains the third-most expensive state in the country in which to buy a home, many analysts believe prices in the Bellingham, Washington, area might ease in 2023. Bellingham, known to locals as the restrained “City of Subdued Excitement,” has been anything but subdued when it comes to home values in recent years. With a growing population that has skyrocketed by more than 30% in the last two decades and a median home sales price that rose nearly 13% between January 2022 and January 2023, Bellingham has made headlines thanks to struggles with housing affordability rather than weakness in the market. However, although year-over-year values are still firmly situated in positive territory, monthly home sales prices have eased off since last fall. At that time, CoreLogic listed Bellingham as the market third-most-likely to face price declines, and the company reiterated that stance in its December 2022 “US. Home Price Insights” report. “The CoreLogic Market Risk Indicator (MRI)…predicts that Bellingham, Washington, is at a very high risk (70%-plus probability) of a decline in home prices over the next 12 months,” the CoreLogic economy team wrote at that time. They credited “low inventory due to seller preferences to keep affordable mortgage rates that they already have locked in, homebuyer loss of purchase power, and economic uncertainty” for slowing appreciation in Bellingham and elsewhere. Three of the top five markets in that report are located in Washington. Selma Hepp, CoreLogic’s deputy chief economist, said consumer confidence and mortgage-rate increases tend to have an outsized effect on the Pacific Census region, of which Washington state is a part. On a more positive note, she added, “Regions in the Pacific Northwest are…less [sensitive] to overvaluation of the local housing markets,” which could be good news for Bellingham. Hepp explained, “In other words, low consumer confidence and a surge in interest rates have historically been more important to the [Pacific Census] region in determining potential of home price decline.” Local Derek Buse, founding broker at Compass Bellingham, is not particularly concerned about predicted declines. He noted that although there are certain factors that have historically driven prices down in the area, such as when prices fell 18% between 2008 and 2012 in the aftermath of the 2008 housing crash, it only took the area three years to fully recover. Furthermore, those factors that were present in 2008 — rampant speculation, unqualified buyers and homeowners, and weakly collateralized mortgage loans — are not present in today’s market. “Whatcom County [where Bellingham is located] rebounded much faster than almost all the other counties in the state,” Buse observed. He added, “Our real estate market has been historically resilient when it comes to the ebbs and flows of the ever-changing U.S. economy,” citing the recession-resistant mix of “refineries, universities, [and] medical corporations that show…insulation to recession forces.” For now, as in many markets around the country, the Bellingham market is more likely to remain steady, even if appreciation rates slow or even reverse slightly, rather than experiencing a sudden drop in values. Although homes may remain on market longer and may no longer sell at peak pandemic-era values, inventory is still at a premium. In Bellingham in particular, homeowners appear reluctant to sell and, by extension, expand available inventory. At the end of Q4 2022, ATTOM Data reported that Bellingham homeowners are the longest-tenured in the country, opting to remain in their homes for nearly 10 years compared to the national average of 5.85. “Historic Insulation” Across Industry Sectors Whatcom County made its first foray into industry in the 1850s, when European settlers began mining for coal and cutting and processing lumber in the area. Toward the end of the decade, a short-lived gold rush created a population boom that did not make very many people rich but did cement the community since many would-be claim-stakers remained in the area even if they did not strike gold. By the end of the century, three railroad lines would arrive in the area, connecting the city to the national construction market. Two decades later, the Port of Bellingham was established to increase shipping at the Bellingham waterfront and create economic opportunities for the area. Although the first docks in the area had been built in the 1880s, the port brought in new shipping-related opportunities as well as tourism and, during World War II, war-related industries. The local airport grew in size and importance during this time as well. Today, the Port of Bellingham plays an integral part in the city’s Comprehensive Economic Development Strategy (CEDS) and is credited with generating $1.4 billion in annual business revenue and directly sustaining more than 8,700 jobs. In fact, 11% of the local economy’s jobs are directly or indirectly linked to the Port of Bellingham. Port leadership plays an active, forward-looking role with local economic development and has, over the past two decades, been involved in economic development projects including a waterfront office- and retail-space development and improvements and expansions to the Bellingham International Airport (BLI). Bellingham industries run the gamut from public education via the Western Washington University and two local colleges, manufacturing, including the BP Cherry Point Refinery, the first and currently only refinery in the Pacific Northwest capable of manufacturing diesel from biomass-based feedstocks, and information technology (IT), which accounts for roughly 1,200 jobs in Whatcom County according to the Bellingham Chamber of Commerce. Faithlife, a leading publisher of Bible study software, is one of the area’s largest employers, and BP announced in late 2021 that it would invest $269 million in three projects at Cherry Point intended to improve the refinery’s efficiency, reduce carbon dioxide emissions, and increase production capability. That investment is expected to create an additional 300 direct, local jobs by the end of 2023 as well as more than 200 construction jobs and several dozen engineering and “support role” jobs. Bellingham also continues to attract visitors to the area with

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Greenville-Spartanburg, South Carolina

The Palmetto State’s “Emerald City” is Still a Prime Location for Investors By Carole VanSickle Ellis The Greenville, South Carolina, real estate market has normalized, and that means the Palmetto State’s “Emerald City” is looking more alluring than ever in 2023. Ranked fifth on Realtor.com’s “Top 10 Real Estate Markets to Watch in 2023 and Into the Future,” Greenville boasts a combination of “better housing affordability, greater numbers of renters who can afford to buy a median-priced home, stronger job growth,” and more according to NAR analysts. “Job growth is robust in this area, but job growth in the information industry is even stronger,” wrote NAR’s research group, headed by chief economist and senior vice president for research Lawrence Yun. Information industry jobs, those that deal with data and its management or strategic analysis, are among the most well-paying jobs in the country at this time. These positions pay about 50% more than average, occupy prime positions in a variety of rapidly growing business sectors, and boast an employment multiplier of 5.7, meaning that for every information job in an area, nearly six additional jobs are created. In both the Greenville and Spartanburg areas of South Carolina, information employers are congregating in increasing numbers. Of course, the presence of technology and engineering companies in the Greenville-Spartanburg area is nothing new, which makes it a straightforward process to extend the state’s expertise on courting these industry sectors to information and high-tech operations. Nearly 40 years ago, Lockheed-Martin opened its first South Carolina site. Today, that location is the sole location for assembling F-16 fighter jets and is in the process of hiring to bring its employee total to 1,200. The state has long recognized the value of bringing in employers operating on the cutting edge of technology, offering millions of dollars in support to target industries and even adjusting how air and freight facilities operate in order to make companies’ existence easier and more profitable. This dedication, recently brought to bear on the information industry in particular, is paying off. Last year, Spartanburg’s BMW headquarters for North American car manufacturing announced it would make a $1.7 billion investment to begin building all-electric vehicles “for the U.S. and world markets.” BMW employs 12,000 in the Spartanburg area, and will bring in an additional 300 tech jobs to support its $700-million, 1-million-square-foot high-voltage-battery plant. “BMW and Michelin anchor a strong manufacturing base in South Carolina’s Upstate [where Greenville is located],” said local investor and broker Arn Cenedella, who specializes in multifamily and single-family residential investments. “The Michelin North American headquarters are located here as well, and dozens of manufacturing firms that support BMW, Michelin, and GE.” He noted that as new residents continue to move into the Greenville-Spartanburg area, home prices and rental rates are both still rising. “Average single-family home prices were up 18.4% in 2022 over the year prior,” Cenedella noted, “and our multifamily developments are showing a 94.4% occupancy rate with average rents at $1,340.” Bosch, a leading global supplier of technology and services, is investing $200 million in Greenville and creating 350 new jobs. Soon thereafter, Diversified Medical Healthcare, a holding entity “dedicated to providing solutions to improve patient care,” announced it would also invest $51 million to create 185 new jobs in the Greenville area. Bryan Grady, director of labor market information at the South Carolina Department of Employment and Workforce (DEW), predicted that valuable job opportunities like these are likely to increase in 2023. In fact, DEW predicted in January of this year that the number of jobs available could increase by nearly 13% by the end of 2023. “There is a wide range of occupations that will fuel this increase,” Grady observed, making particular note of healthcare-related jobs and information technology jobs. “Jobs like information security analysts and software developers [are] expected to be in high demand, as are other technical professions like supply-chain experts, statisticians, and market analysts,” he said. For Donnie Chandler, an investor specializing in the redevelopment of older homes and a realtor with Keller Williams Drive in the Greenville area, the incoming population and those households that will come to fill job positions in other roles supported by these high-tech roles represent ideal residents for his company’s “mill homes,” which, he explained, can still be purchased at discounted prices. “This often allows for enough equity after forced appreciation to qualify for the BRRR [buy, rehab, refinance, repeat] strategy, but most of the mill homes on the west side of Greenville are resold as the values have been crazy in that area,” he said. Chandler focuses on the older, lower-priced mill homes in surrounding communities as well. South Carolina’s mill homes were originally built as early as the late 1800s throughout the state to house mill workers and families. Although many of those initial structures are long gone, the mill village communities that formed in counties like Greenville and Spartanburg remained. These communities often are the last to appreciate and, as a result, are an ideal place for investors to look for deals proximal to higher-value housing and development. They also offer affordable options for new residents hoping to rent or buy near the city centers. The Perfect Combination: A Top Place to Live & Highly Affordable The Greenville-Spartanburg area is attractive to real estate investors, homebuyers, home-sellers, and employers because it is highly affordable relative to the rest of the country, is located in the temperate southeast, meaning employees can enjoy year-round outdoor activities, and offers a vast array of employment opportunities. “I have said that if people can afford to live anywhere, Greenville is the place [they] are choosing more and more,” said Jackson Herlong, chief strategy officer for Joan Herlong and Associates Sotheby’s International Realty. He added that the housing market in the Greenville-Spartanburg area is also unique because it is neither a buyers’ market nor a sellers’ market. “We are going back to normalcy,” Herlong proclaimed. “A smart, calculated marketing strategy is what you really need to sell

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