The culture surrounding the ‘hipster’ lifestyle has a major impact on local real estate markets, and mostly in a positive way, according to RealtyTrac, who has released a special report ranking the top zip codes for rental returns in what the company calls ‘hipster hot spots’ – where at least 20% of the population is between the ages of 25 and 34.
‘Thanks to an influx of trendy restaurants, bars, coffee shops and other amenities, a neighborhood branded as hipster is likely to see property values and rental rates rise while vacancies and foreclosures decline,’ says Daren Blomquist, vice president at RealtyTrac.
‘As a nascent hipster market emerges, it can be an extremely appealing target for real estate investors looking to make some quick fix-and-flip profits or to purchase rental properties that provide a steady cash flow and the promise of strong appreciation going forward,’ he adds.
RealtyTrac analyzed zip code-level data to identify established and emergent hyper-local hipster markets where investors can realize solid returns on rental properties while also enjoying low vacancy rates that ensure they won't have much down time between renters, says the company.
Using data from the Census bureau, RealtyTrac says the report narrowed the nation's zip codes down to 83 hipster-heavy markets where at least 20% of the population is between the ages of 25 and 34 and where at least 20% of the population either walks to work or takes public transportation to work.
The 83 zip codes were also limited to those where at least 50% of the homes are occupied by renters and where the rental vacancy rate is 5% or below. The zip codes were then ranked by gross rent yields, which is the annual net income – based on fair market rents from the U.S. Department – divided by the median sales price for the zip code, explains RealtyTrac.
Among those 83 hipster-heavy zip codes, 17 posted gross rent yields of more than 5%. Topping the list was the 55101 zip code in St. Paul, Minn., where 35% of the population is in the hipster age range and 72% of all housing units are occupied by renters. The gross rent yield in the 55101 zip code of Saint Paul is 14%.
Three other Minnesota zip codes made the top 25 list, all located in the city of Minneapolis. New York and Virginia each contributed four zip codes to the list as well.
Other top zip codes were in Pittsburgh; Seattle; Brooklyn, N.Y.; Chicago; and San Francisco.