8 Reasons the Sun Belt Trend Is Here to Stay

A demographic switch has been happening slowly behind the scenes for over a decade, but the last two years amid the coronavirus pandemic have caused a flood of residents in northern coastal cities to move south to the Sun Belt. This sunnier southern region is home to some of the fastest-growing states, including Florida, Arizona, and Texas.

Some believe this surge in people flocking south will be short-lived, but here are eight reasons the Sun Belt trend is here to stay.

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There were already long-term trends supporting the growth of the Sun Belt, but the ability to work remotely due to the coronavirus pandemic put this trend into super drive. With hybrid work becoming more popular and many companies maintaining their remote positions, people can live wherever they want. And for many, that place is the South for the reasons we'll discuss in the following slides.

ALSO READ: Why Your Hybrid Work Arrangement Could End Up Costing You

Aside from a super-hot summer season, the climate in the Sun Belt is more favorable than in the North, especially in winter. Shoveling snow from the sidewalk or off your car every day for three months gets old after 10 to 20 years.

Certain health conditions, like seasonal affective disorder (SAD) and asthma, can also be activated in colder, darker cities during winter. That makes the Sun Belt's warmer, sunnier climate an attractive bargaining chip.

The cost of living is generally more affordable than in high-density coastal cities like Seattle, New York, San Francisco, and Washington, D.C., among others. For example, the median rent in Manhattan just reached $4,000 -- a new record. In Charlotte, North Carolina, the second-largest banking and financial hub in the U.S. behind New York City, the median rent is $1,300.

However, that is changing. Red-hot real estate prices and lack of supply to meet new demand have made many Sun Belt markets unaffordable in relation to the area's cost of living. Remote workers have the benefit of earning higher salaries than the area's median income, but the affordable cost of living may not be a selling point for long.

ALSO READ: Demand for Apartments in the Sun Belt Remains Red Hot

The Sun Belt is the leading region for job opportunities, with a growing number of major employers and corporations moving their headquarters south. Over the past decade, employment in the Sun Belt has grown by 12 million jobs, while non-Sun Belt regions have only seen employment rise by nine million during that same time.

Cities like Austin and Houston, Texas; Orlando and Tampa, Florida; Raleigh and Charlotte, North Carolina; and Phoenix are among a few of the markets seeing higher occupancy rates for office space and a growing population of working-aged residents. Jobs bring opportunities, and the more jobs there are, the more likely people will stay.

City living isn't exclusive to the major hubs like New York, Seattle, or San Francisco anymore. In fact, most major cities in the Sun Belt offer many of the same amenities as a great city, including amazing food, nightlife, and cultural diversity. This is great for millennials, who comprise about half of the current workforce and seek many of these amenities where they live.

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High-density cities along the northern coast don't have much more room to grow. Residents and workers in New York City, for example, are already spilling into several surrounding states -- like New Jersey, Connecticut, and Pennsylvania -- due to limited housing pushing prices up in the city. Many Sun Belt cities don't have that issue, with plenty of room to grow extending outward from the city core.

Aside from Texas, the top 10 most expensive states for property tax are located in the North, with New Jersey having the highest state tax rate of all 50 states. Six of the 10 states with the lowest property tax also are in the South.

Property taxes are only a marginal consideration for residents to move. Still, given there are other tax benefits for states like Texas, Florida, and Tennessee, which have no income tax, a move south can lead to notable tax savings.

ALSO READ: Should Soaring Property Taxes Cause You to Move?

The Sun Belt is already home to 50% of the country's senior housing. The number of aging seniors is expected to double by 2040, meaning the Sun Belt will be one of the dominant regions to serve the aging population.

As you can see, it isn't one factor driving the Sun Belt boom, but a number of factors combined make this region an appealing place to invest. For those who don't personally live or own property in the Sun Belt, you can still benefit from its red-hot demand by investing in real estate investment trusts (REITs).

There are several REITs that provide excellent exposure to this red-hot region through a variety of commercial real estate.

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