Looking to Rent in a Metro Area? Now Might Be the Time to Strike
We've all heard the adage that it's always best to strike while the iron is hot. For the first time in the past few decades, the iron might be getting hot in the metro area you've been eyeing.
In short, COVID-19 happened. Larger cities and metropolitan areas tended and still do tend to have much stricter restrictions than their surrounding suburbs and rural areas. While some people living in those areas highly support these restrictions, others do not.
In addition, many people lived in higher-cost metro areas because they had jobs in these regions. Many in-person jobs have been either furloughed or eliminated. In many cases, employees got to keep their jobs, but they were required to work remotely. Keep in mind that remote workers can work from anywhere with an Internet connection, which opens up the rest of the country for them.
What Does This Mean For Rent Rates?
Keep in mind that these lower rent rates are contingent on where, specifically, you are looking to rent. In more liberal urban areas, typically more restrictive COVID-19 restrictions have been put in place, and in areas where more restrictions have been put in place, there's been more of an exodus.
If you are OK with current restrictions in place in your dream metro area, now is the best time it's been for decades to look at rent rates in those regions. Let's take New York City, for example. Due to recent civil unrest, a lack of employment opportunity, and worries about public safety, many people have either permanently or temporarily fled the City. This has left rent rates in Manhattan the lowest they have been since just after the 2008 recession, when many fled the high-cost area because they lost their jobs.
This is one of countless examples of rent rates in higher-cost areas going down. However, it's still best to ensure that you'll be making enough money to cover what the normal cost of living is, since it will likely shortly return to this.
What Should I Keep In Mind?
First, remember that these areas have generally lost huge amounts of revenue due to residents leaving. This has left prices lower, but recall that localities need to make up this money somehow. Unless it's an area like Las Vegas, where much of the local industry is made up from tourism income that's picking up and has no income tax, chances are that you will see taxes go up.
Unfortunately, taxes are going up in these areas where they weren't exactly low to begin with. The tax rate could prove to be a much worse burden than you anticipated if you don't do thorough research beforehand. If you live in one of the seven states with no income tax, for example, and you move to New York City, you will go from paying 0% of your income to the state to likely around 10-20%, depending on your income.
If the remaining amenities of the City are worth this tradeoff to you, more power to you. Just make sure that you aren't going to be ripping yourself off before you commit to such a move.
Which States Will Give Me the Best Deal?
In general, as we said, states will be looking to make up this missing revenue from COVID-19 restrictions they put in place from new and existing residents through higher tax rates. We recommend first looking at states that do not have an income tax, as this will help ensure that this is one tax that can't be raised on you. However, keep in mind that there's always a way a state will get tax money from you.
Texas, for example, has no income tax. However, next to New Jersey, it has some of the highest property tax average rates in the country, making its overall tax burden not insignificant. The states that have no income tax where you may be able to find cheap housing in metro areas are: Tennessee (as of 2021), New Hampshire (this state also has no sales tax!), Texas (but be wary of their high property taxes), Wyoming (this state is very isolated), Washington State (this state has a very high tax burden just about everywhere besides income tax), South Dakota (very low tax burden overall but somewhat isolated), and likely more states to come as they become more desperate for residents!
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