The Great Suburban Migration of 2020 and Its Effect on Private Lenders

The Great Suburban Migration of 2020 and Its Effect on Private Lenders

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A byproduct of 2020’s multitude of crises was a mass migration from major cities and urban centers to the suburbs, rural areas, and other states altogether.

With remote workplaces becoming the norm, many broke the ties to their employers’ physical location and no longer felt compelled to live near their work, and others were determined to leave states they viewed as being in decline. While we could spend days discussing the policies that triggered this mass exodus, let’s focus on the business impact these demographic changes will have on private lenders.

Time to Expand

First, private lenders must start concentrating on states such as Texas, Arizona, Nevada, Florida, Tennessee, Utah, and Idaho. These states have received an influx of transplants from both California and New York, and thus opportunities abound surrounding lending. As a private lender, if you don’t lend there already, it’s time to consider it.

It’s important to note that entering new states will require gaining familiarity with the local licensing, usury, and foreclosure regulations.

Add Additional Market Cities

Second, private lenders must start entertaining secondary and tertiary market cities in their home states if they have been concentrating on metro cities only. For example, the city of San Francisco will not produce nearly as much opportunity as the surrounding suburbs. This has been the truth for many years but has recently been accelerated thanks to COVID-19 and California’s restrictive lockdown policies.

Follow the Money

Finally, private lenders should follow the money. Joe Rogan and Elon Musk weren’t the only high-net-worth personalities to move out of California. Major companies are exiting, too, and that means their high-paid executives will follow. Technology companies like Oracle have already made the public determination to move out of California, while financial services companies and investment banks are rumored to be considering it as well.

For example, Goldman Sachs reportedly is moving some of its offices to Texas and Florida. What does this mean? Not only will new homeowners be moving to these regions, but also expect a significant number of high-net-worth investors to take the leap. This will further force private lenders to concentrate their marketing and origination efforts in these new states.

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Copyright 2022 GERACI LLP
All Rights Reserved
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