2nd Tier Blues

We have noted that real estate investors are increasingly adding 2nd-Tier Cities to their portfolios – the downside? Names like Nashville, Columbus, and St. Louis are now among the 10 regions with the strongest rent growth in the second quarter of this year. The very people that have made Duluth, Minnesota Outdoor Magazine’s “Best City in the United States” and Nashville the “Country Music Capital” may soon not be able to afford to live there. Seniors, musicians and artists, and many young people cannot afford to live where rent now eats up 30% of their income. Economists say landlords are able to pass on large rent increases because of strong demand. Job opportunities and quality of life are drawing residents relocating from expensive cities in the Northeast and West coasts. Will developers embrace smaller, less expensive units, which cities like New York have experimented with, or as “The New York Times” asks, “Will Nashville Renters Sing the Blues?”