One of the key reasons for us buying in Buffalo is its affordability. While the city has moved from no.1 in USA to no.3, in this variable, according to Forbes, this isn’t necessarily a bad thing. It means that demand for housing is rising higher than supply, which is always good for landlords. It means that investors have taken notice of the city and put their own money in there, that the economy and population are growing, and it could also perhaps mean that locals are buying more houses for owned occupation.
The city has a long way to go before it ceases becoming one of the most affordable cities in USA, but as an existing long term landlord, it’s a good feeling to see it begin that journey.
In the 2013 “On Numbers” index measuring the long-term economic health of all 102 metro areas, Buffalo ranked 27th. This was obtained as an average between its 55th place for the short-term undistinguished outlook before the “Buffalo Billion” program and its 8th place in terms of long-term economic potency. The short term having already passed, our investors might wonder how the city fares in 2015 and in the near future.
The housing market in Buffalo has always been an interesting feature. During the recent financial crisis, it avoided a crash and house prices even managed to experience steady growth. This is a clear indication that the housing market is not overvalued and that the city’s economy is not experiencing a financial bubble.
The current major industries of the city are financial services, technology and education, with examples of recent developments being the Buffalo Niagara Medical Campus, the Inner Harbor and the Central Business District. By greatly developing the required infrastructure for just a few fast-growing industries, Buffalo seems to define its own competitive advantage and become increasingly independent of taxpayer handouts.
The “Buffalo Billion” program, which aims to bring roughly $1 billion in public funding to the city, so far has extended beyond being a government spending program – it provided the leverage needed by the private sector to harness the area’s natural advantages: its proximity to Canada, the water supply needed by the industry and the clean and affordable energy provided by the hydropower plants.
This attracted energy and technology leaders, such as SolarCity, IBM and AMRI to kickstart local construction projects with a total price tag of $16.6 billion. All these efforts are also aimed at reducing the below-average socioeconomic indicators such as unemployment, poverty rates and low population growth. In this still-early stage of economic recovery, the city has seen an 8,500 increase in the number of jobs.
However, a sensible analysis of Buffalo’s economy should also look beyond the number of erected cranes in the city. What good are all the new buildings in an area if they are not well suited to the needs of the inhabitants?
Despite population only beginning to grow again recently, after stagnation over the last five decades, local amenities such as the microbreweries, bike sharing schemes, sporting activities and the exotic food & drink scene have been the main attractions of recent graduates. The educated population has thus increased by 34% over a 12 year period. And with the cost of living being 11% below national average, it is not hard to imagine that the “Buffalo Billion” developments will have a big enough talent pool to fuel their growth.