REI and market population

[Gabriel T.]

I noticed most of the discussions on here involve the biggest cities and metro areas in the country; DFW (7.2m metro population), Houston, Chicago, Atlanta, Seattle, Denver, San Francisco, San Diego, Columbus, Indianapolis, Detroit, Memphis all have populations over 1m. When any market is discussed it is usually about appreciation vs. cash flow. It goes without saying the bigger your market the more opportunity, but what are pros/cons of investing in smaller areas?

As someone just starting to learn about real estate I wonder about how market population affects people's strategies. What are the differences in big/small markets and how do small market investors make up for a smaller population?

[Andrew Johnson]

Gabriel T. Static population numbers can be misleading. Cleveland is still a large metro area but their population has been on the decline since, what, 1960? So you have older housing stock, not as many residents, etc. You can see similar situations in other places in the U.S. as well (easy example: Buffalo, NY). It doesn't mean these are objectively bad investor markets or that they will never appreciate but just "being larger than 12,000" doesn't guarantee appreciation.

Smaller markets do often have the risk of being tied to a single employer or major industry. Some of those are riskier than others. Since you're in Little Rock just look up the road at Conway. You can have some swings depending on Southwestern Energy is doing but it's not like UCA is going to up and move away. So it's a little different than the boom/busy potential of a place like Greenbrier when fracking came and has largely left.

Anyway, no giant conclusions, just food for thought. #WPS