We recently compiled a report on the 25 Popular Small Towns to Live in the US and in this article we will look at the most popular small town.
Small Town Charm Versus the Big City Hustle
According to a Bloomberg report, the remote work dynamic that emerged during the pandemic amidst which Americans left big cities for towns continued in 2023. Migration to areas with a population under 250,000 was the highest among other locations. This trend implied that Americans were willing to choose a smaller town over a bigger city once they had geographic flexibility in terms of work. Those who migrated from other areas into America’s small towns and rural areas surpassed net migration into larger areas. Net in-migration for areas with 250,000 to 1 million people was recorded at 266,448. On the contrary, a modest gain was seen in areas with 1 million to 4 million people.
Previously, the US Census Bureau revealed that three-fourths of the country’s incorporated places had fewer than 5,000 people in 2019 while an estimated 206.9 million lived in an incorporated place out of the total 328.2 million people. This confirms America’s status as a nation of small towns.
The Largest Homebuilder in America
D.R. Horton, Inc. (NYSE:DHI) is a renowned American home construction company that holds the legacy of serving as the largest homebuilder by volume in the United States since 2002. It constructed its first home in 1978 and reached the milestone of 1 million homes in 2023. The homebuilder has an extensive reach with operations spanning 119 markets in 33 states including small towns such as St. Augustine and Beaufort. Other than engaging in the construction and sale of homes priced between $200,000 and over $1,000,000, the company provides single-family and multi-family rental properties. In addition, D.R. Horton, Inc. (NYSE:DHI) has title services, mortgage financing, and insurance agency services to offer to its homebuyers. The firm was successful in closing 87,801 homes in homebuilding operations, 6,248 single-family rental homes, and 2,536 multi-family rental units in rental operations as recorded for the 12 months ended March 31.
D.R. Horton, Inc. (NYSE:DHI) remains dominant by efficiently navigating the housing market conditions in America, which has long been a victim of high prices and soaring mortgage rates. Meanwhile, the rate lock-in effect has disabled existing homeowners from selling their houses since they will have to pay a higher mortgage on a new home. The Fed has projected just one rate cut this year after announcing three rate cuts for 2024 in December. This implies elevated rates for a longer period which brings an advantage to homebuilders such as D.R. Horton, Inc. (NYSE:DHI) since the primary issue in the US housing market is limited supply. During the earnings call, CEO Paul Romanowski mentioned that the company is well-positioned to capture more market share by keeping a supply of 45,000 homes in inventory. Even if the mortgage rates decline, the increased demand for new construction will potentially foster the company’s performance in a market that is already short of several million units. Other than resuming the historical average of four months from start to complete construction, the firm closed 22,548 homes thereby driving home sales revenues to $8.5 billion as compared to 19,664 homes closed during the previous year. Understanding the affordability concerns of American homebuyers, D.R. Horton, Inc. (NYSE:DHI) incentivized using mortgage rate buy downs and brought down the prices and sizes of homes.
On April 18, D.R. Horton, Inc. (NYSE:DHI) reported strong earnings for the second quarter of fiscal 2024 with earnings per share of $3.52, ahead of estimates by $0.45. The company’s revenue for the quarter amounted to $9.11 billion, up 14.23% year-over-year and ahead of revenue consensus by $873.17 million. Despite confronting sticky inflation and mortgage interest rates, net sales orders of the company climbed 46% from the first quarter and 14% year-over-year. While the gross profit margin on home sales revenues improved by 30 basis points from the December quarter, the firm remains optimistic for it to be similar or even greater for the third quarter.
The stock is currently trading at 10 times its forward earnings, relatively cheap to its sector PE of 17x. The current interest rate conditions, lack of crucially needed housing inventory, and robust financial results as a longstanding market leader reflect growth prospects for D.R. Horton, Inc. (NYSE:DHI). Over the past 10 years, DHI has grown its top line by 18% and its bottom line by 25%. While we acknowledge the potential of D.R. Horton, Inc. (NYSE:DHI) to continue growing at double digit rates for years to come, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Our Methodology:
In order to compile a list of the 25 popular small towns to live in the US, we did a sentiment analysis on Reddit. First, we aggregated the list of popular towns by sifting through 5 online rankings. Next, we used Reddit to find 10 threads that asked people about the most popular towns to live in the US. We read and analyzed all the comments and added the upvotes for each town on our list. Lastly, we shortlisted the towns that had at least a total of 150 upvotes. Our next step was to include only ‘small’ towns. Hence, we acquired the populations of the shortlisted towns from the US Census Bureau. Please note that we screened towns with a population under 50,000, thereby representing small towns. Since the population requirements as stated by the US Census Bureau for towns within different US states vary and large cities typically have populations greater than 50,000, we have considered all those towns which have populations under 50,000. Finally, we ranked the towns in ascending order of their most recent populations as cited by the US Census Bureau.
Note: This list is not exhaustive and does not reflect our opinion. The ranking is solely based on the opinions of Reddit users.
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The Most Popular Small Town to Live in the US
1. Key West, Florida
Total Population: 26,444
Key West is the southernmost point in the contiguous United States and ranks at the top of the 25 popular small towns to live in the United States. The island serves as one of the most popular vacation destinations in the country. Outdoor and recreational activities including diving, snorkeling, fishing, boating, and sightseeing are local attractions. One of the greatest perks of choosing Key West as a permanent destination is getting to witness the tropical climate year-round. Those looking for a vibrant nightlife or dining can visit the famous Duval Street. Some of the Key West beaches that can be visited include Smathers Beach, South Beach, and Simonton Street Beach. The town is walkable with a lot of shops. History lovers can also enjoy historic places such as The Truman Little White House and Ernest Hemingway House. The average Key West home value currently stands at $1,103,074. The town has been recommended for those who wish to have a laid-back island-style living.
To learn about other popular small towns, check out our free report on the 25 Popular Small Towns to Live in the US.
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Disclosure: None. This article is originally published on Insider Monkey.