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In the last article in this series, we described the market mechanisms that evolved over decades and led to the nation’s current hosing crisis. We described the scope of the issue, and who is most affected. But there’s one more piece of information that’s key to understanding the problem today: Not all cities are suffering equally.
It’s relatively easy to point to the metro areas with the traditional markers of a housing crisis. Low inventory and expensive median home prices are the primary characteristics. Places like San Francisco, Denver, Austin, and Seattle all share these challenges. Prospective homebuyers in these cities are all too familiar with the frustration of browsing Zillow and realizing their budget might stretch a lot further if they were to move to another part of the country.
But while many individuals see only challenges in these metro areas, certain forward-thinking companies like True Life Capital see opportunity.
Competitive cities, after all, are where the need for inventory is greatest. That’s basic supply and demand. But not all in-demand cities are created equal. In order to actually deliver on the need for more inventory, other factors must be aligned as well.
True Life Capital begins its search for target markets by looking at those areas statistically more likely to attract millennials and other first-time buyers. In our last article, we described how a cratering of the starter-home market helped cause the current inventory crisis. More housing is needed across the board, but more specifically, “entry-level” housing (homes measuring 1,400 square feet or less) is in especially high demand by millennials and other first-time buyers. Many of True Life Capital’s markets—including Seattle, Raleigh, Denver, and Austin—rank on the Meyers Research Millennial Desirability Index, which tracks cities that draw millennials in high numbers.
In addition to expensive housing markets, supply shortages, and high desirability among millennials, True Life Capital also seeks to target cities with high rates of new home construction. The reasoning is simple: What’s the point of entering a market if new homes aren’t being constructed there? Many of True Life Capital’s target regions—including Austin, Denver, Raleigh, Sacramento, and Southern California—ranked among the top U.S. cities for new home construction in 2023.
Finally, to solidify its strategy, True Life Capital employs a proprietary algorithm that analyzes thousands of data points to identify areas of high potential, often right down to the city block. This data-based solution helps ensure that the firm’s investments remain well positioned for returns. It’s the “cherry on top” that seeks to remove as much risk from the equation as possible, ensuring that dollars and effort are maximized in the firm’s quest to solve the supply-demand imbalance in the housing market.
Related: The True Life Companies: Helping Millennials Reach Home Ownership
True Life Capital is a division of The True Life Companies, LLC. Securities offered through Orchard Securities, LLC. Member FINRA/SIPC. Neither True Life Capital nor The True Life Companies, LLC is in any way affiliated with Orchard Securities, LLC.