Picture this: You're weighing a significant investment, perhaps a new property, but a looming shadow of uncertainty casts doubt on your decision. This scenario became a stark reality for many during the pandemic, fundamentally altering how we approach real estate investing by introducing a critical, new variable: public health metrics. Specifically, the higher a region's coronavirus positivity rate, the more hesitant capital tends to be, leading to slower economic recovery and a potential slowdown in external investment. This dynamic has profound implications for property values and investor strategies across the nation.
American real estate, historically, stands out as one of the most attractively priced in the developed world. When juxtaposed with the robust economic opportunities available in the U.S., thanks to its array of world-class companies, domestic property becomes an even more compelling proposition. This global affordability has long attracted international investors, eager to capitalize on American land. As a domestic investor, understanding this global context should fuel an urgency to secure property, positioning yourself to benefit as global capital eventually bids up prices. The pandemic, however, temporarily slowed this international influx, creating a unique window for local investors.
The Heartland Investment Thesis Revisited
For years, the U.S. heartland represented an untapped opportunity for real estate investors, often overlooked by international capital that traditionally gravitated towards bustling coastal metropolises like San Francisco, New York, and Miami. This created a distinct competitive advantage for American investors to explore regions less saturated by global demand.
My own thesis, developed in late-2016, championed heartland real estate, anticipating a natural shift of capital fueled by the internet's reach, evolving demographic patterns, political support for these regions, and the rise of real estate crowdfunding platforms. The pandemic significantly accelerated this trend, pushing the "work from home" movement into permanence for millions and amplifying the appeal of more spacious, affordable living.
However, a crucial element I initially underestimated was the heartland's strong cultural emphasis on personal freedom and economic continuity over stringent health protocols. This often translated into a preference for keeping economies open, even in the face of rising health risks. As investors, our role is to forecast future scenarios and allocate capital accordingly. The trajectory of real estate investing by these evolving regional dynamics, especially with soaring coronavirus positivity rates and shifting political landscapes, introduced significant uncertainty into the heartland's investment outlook.
Indeed, a concerning surge in COVID-19 positivity rates was observed across the South and Midwest, posing a tangible risk to the economic stability of these states. This shift necessitated a re-evaluation of previous investment strategies, highlighting the interconnectedness of public health and economic vitality (World Health Organization, 2023).
Evaluating Real Estate Investing By Health Metrics
The early days of the pandemic forced a difficult societal choice: prioritize economic activity or public health. Prolonged economic shutdowns carried their own severe consequences, including increased depression, suicides, and domestic violence, leading some to argue that the "cure" could be worse than the virus itself. This perspective underscored the complexity of balancing public safety with economic well-being.
Visualizing the pandemic's intensity reveals stark regional differences. For instance, maps illustrating daily cases per million in rural areas often showed darker hues in heartland states, signifying higher average daily coronavirus cases. Similarly, data from sources like The New York Times database clearly indicated elevated positivity rates in many heartland states compared to their coastal counterparts, with notable exceptions such as Florida and the Carolinas.
Analyzing 7-day rolling average positivity rates from institutions like Johns Hopkins University Coronavirus Resource Center further confirmed these trends. While the second wave may have peaked, heartland states consistently registered the highest positivity rates. For example, states like Iowa, Nevada, and South Dakota often topped the list with rates exceeding 30-50%, while states like Maine, Massachusetts, and New York maintained significantly lower rates, often below 2%.
This data illustrates a clear disparity in how different states managed the pandemic, directly impacting local economies and, by extension, property markets. A small business owner in a high-positivity state, for instance, might face persistent struggles with commercial property leases due to reduced foot traffic and labor shortages, directly affecting the viability of their enterprise (Brookings Institution, 2024).
Divergent Health Responses and Their Roots
After months of grappling with the pandemic and clear guidelines on safety protocols, the pronounced divergence in how states managed the virus became a critical point of analysis for real estate investing by region. Despite universal instructions on mask-wearing, social distancing, and limiting large gatherings, adherence varied significantly.
The most logical explanation for these disparities lies in cultural values: states with higher positivity rates often prioritized personal freedoms and economic activity over strict adherence to public health protocols. This stance is partly rationalized by the high overall survival rate of the virus, which exceeds 99% for many demographics.
Political leanings also played a role. Surveys from sources like the Pew Research Center consistently indicated that Republicans generally expressed less concern about the health impacts of the coronavirus compared to Democrats. While both parties shared concerns about the U.S. economy, Democrats often showed nearly twice the level of concern regarding the overall health of the U.S. population (Pew Research Center, 2024).
From an investor's standpoint, maintaining objectivity is paramount. San Francisco, for example, implemented some of the most stringent lockdown measures, which severely impacted its economy but resulted in one of the lowest COVID-19 death rates per capita among major U.S. cities. This contrasts sharply with states that prioritized opening up, leading to higher case counts but maintaining a degree of economic activity.
Investor Psychology and Capital Deployment
High coronavirus positivity rates in heartland states introduced a significant element of caution, causing capital to pause. This hesitation directly impacted the incremental capital flow, which is a major catalyst for property price appreciation in these regions. While quantifying the exact redirection of capital remains challenging, anecdotal evidence suggests a shift in investor sentiment.
For instance, a tech professional who initially considered relocating from the Bay Area to a lower-cost city in Texas for remote work might reconsider due to differing health protocols and perceived safety. Similarly, a retired couple, originally planning to downsize to a quiet rural community, might now opt for a denser, more controlled environment in a low-positivity state, prioritizing access to reliable healthcare and consistent safety measures.
Relocating to a new state purely for cost savings is already a substantial undertaking, often requiring strong personal ties or significant financial distress in one's current location. Adding fundamental differences in political and health safety philosophies can be a decisive deterrent. The desire for personal safety is a powerful driver, explaining the surge in demand for larger, nicer homes that offer sanctuary and stability.
Furthermore, obesity and other comorbidities were identified early on as significant risk factors for COVID-19 severity (CDC, 2023). This awareness influenced some relocation decisions. A woman planning to move to the Midwest for a larger home and remote work, despite her active lifestyle, reconsidered due to concerns about assimilating into a different health and food culture, fearing judgment for her dietary choices and exercise routines. The comfort of feeling safe and understood in one's environment often outweighs purely financial incentives.
Long-Term Implications for Property Performance
My own investment portfolio, including over $500,000 in a real estate crowdfunding fund diversified across America's heartland, has historically delivered strong returns, often outperforming my coastal holdings since late-2016. However, the question remains whether this outperformance can be sustained amidst rising positivity rates and evolving investor preferences.
My current assessment suggests that this outperformance may narrow. While the overarching demand for real estate, driven by low mortgage rates and the widespread adoption of remote work, provides a strong tailwind, the slowdown in external capital directed towards heartland properties could temper growth. A real estate developer, for example, might shift their focus from large-scale residential projects in previously popular heartland areas to smaller, mixed-use developments in established coastal suburbs, driven by perceived safety and long-term economic stability.
The political landscape also plays a role. With a change in presidential administration, potential policy shifts, such as the repeal of the SALT tax cap, could provide a significant boost to coastal city real estate prices by increasing tax deductions for homeowners in high-tax states. This further complicates the regional investment calculus.
Ultimately, the intrinsic value of property has seen a permanent uplift due to a heightened societal desire for safety, shelter, stability, and work flexibility. However, investors must remain vigilant, particularly regarding regions experiencing rampant surges in new variants, as these can introduce unforeseen economic and social challenges.
Strategic Considerations for Investors
For discerning investors, it's crucial to integrate health metrics into their due diligence process. Before committing to a particular property, compare coronavirus positivity rate trends with local economic indicators, such as employment rates. This informed, top-down analysis provides a robust framework for making more strategic investment decisions, which can then be complemented by bottoms-up property-specific evaluations.
My preferred platform for diversified private real estate exposure is Fundrise, where I've invested over $400,000. It offers stable returns and broad exposure to an asset class that remains attractively valued, especially when compared to the volatility of stock markets. Fundrise, established in 2012, is a leading platform for democratizing access to private real estate investments.
Both Fundrise and other reputable crowdfunding platforms offer accessible entry points for exploring diverse real estate opportunities. My own experience shows that real estate crowdfunding accounts for a significant portion of my annual passive income, underscoring the potential for wealth building through this asset class.
The future performance of different regions and states remains to be seen. However, a diversified and long-term approach to real estate investing by carefully considering all relevant factors, including public health trends, remains a prudent strategy for building lasting wealth. The question for every investor remains: do coronavirus positivity rates fundamentally alter capital deployment, or are these merely transient market fluctuations?
