CMV: Housing prices gains in the most popular metros will outpace price gains over all other metros over the long-term.

I'm a long-term buy-and-hold investor. Arguably, the most important part of which is choosing your location. I want to fact-check my current belief and get your opinions, whether they support or go against it.

My belief is that the most popular metros that people have historically moved to (NYC, SF, LA, Boston, Miami, DC, etc) will continue to grow and outpace the rest of the country over the long-term. I don't care about the recent migrations to TX, AZ, etc. I'm talking about the ideal locations that people frequently talk about in subreddits like r/samegrassbutgreener. The places that people from overseas know about and want to visit and move to, and the places where the highest density of jobs and skilled workers live.

Currently, you can buy a 3BR house in Cleveland, OH for a little over $100k. The same house in Palo Alto, CA would cost around $3M. I don't think that the gap is going to close. In fact, I think that it is going to widen. Why?

1. The most popular cities have immutable traits that will always make people want to move (and stay) there. Coastal California will always have the best weather. NYC will always be NYC. Cities that dominate an industry (like LA for entertainment, SF for tech, NYC for finance) will probably continue to do so.

2. Value/ "cheap" cities have gains that are short-lived. We saw this with Austin. It was supposed to be a "cheap" tech hub and to displace San Francisco. It worked until it wasn't cheap anymore. Now house prices have tanked and a lot of tech is downsizing/ moving out.

3. They have the most name recognition. Carmel, IN is often rated as a great place to live. It just might be. Most people aren't even going to consider moving there because they've never been to Indiana. Some foreigners who immigrate to the USA might not even know about its parent city, Indianapolis. The same goes with your favorite quant suburb in <insert state that most people have never been to>. Almost nobody is going to move across the country (or world) to a small town that they're never heard of, even if it is a great place to live. But plenty will move to NYC or LA, etc, even if they've never been there before.

4. Density of talent. These cities are competitive and attract highly-skilled workers that can afford the costs to live there. This competition compounds and breeds higher-skilled workers, new jobs, and new companies. The companies and innovations that define the world are almost definitely going to come from these cities. With that comes money, and rising house prices.

5. Remote work. You might argue that remote work goes against this. If you can live in Sioux Falls, SD and make an SF tech salary, then housing prices should level out across the board. I don't believe that this is true, simply due to the network effects of big cities. You may be able to work a job at a passable level remotely from a cheap city. But someone who is really pushing to the higher levels of their career and/ or growing a business, the benefits of living in a major city will make doing so more likely to succeed. As with the above, those who succeed have more to spend, and house prices will continue to rise in the most popular major cities.

Interested to hear your thoughts and if you agree or disagree.

submitted by /u/Ok-Cartographer-5544
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source https://www.reddit.com/r/RealEstate/comments/1x6y4n5/cmv_housing_prices_gains_in_the_most_popular/