The Best U.S. Cities to Invest in Real Estate
If you are looking to invest in real estate, here is where to do it.
It’s been about a decade since the housing market crashed, but it appears that real estate has recovered in many parts of the country. Interest rates are still historically quite low and prices are on the rise in cities across the country. That bodes well for investors.
There is a dearth of housing supply in many locations that is propping up prices, and there is some concern that things are getting too pricey in some cities. But local economies are also strong and may help investors turn nice profits if they can afford to buy now.
Here’s a look at 10 of the best cities to invest in residential real estate now. This is a subjective list based on a variety of different data points, most notably the S&P 500 CoreLogic Case-Shiller Real Estate Index, as well as the strength of the local economy and housing regulations.
There was a time when Nevada was seen as Ground Zero for the collapse of the housing sector, but prices have rebounded. Prices are up more than 11 percent in the last 12 months (as of April 2018), but there is still room for growth, as the median home price is still below the national average. It’s a popular place for retirees, and more than 300,000 people have moved into Nevada since the 2010 Census, making it one of the fastest growing states in the country.
Prices rose about 7 percent in 2017, outpacing the national average by a full percentage point. There’s not as much room for price growth in Dallas because prices were already rising for several consecutive years. But Dallas has a strong local economy with a strong corporate base and low unemployment. That bodes well for the housing market.
Tight regulations on new housing production keep prices high in the Bay Area, so it’s not an easy market to break into if you are an investor. (Or if you simply are looking for an affordable place to live.) That said, those who do own real estate will make out quite well. Prices rose about 10 percent in 2017 and have a five-year annualized return of more than 11 percent. You won’t be buying low if you invest in San Francisco, but there’s no indication that prices are going to crash down, either.
The seat of King County is similar to San Francisco, in that builders aren’t keeping up with housing demand. There’s job growth, population growth, and income growth in Seattle that have allowed prices to rise more than 12 percent in the last year. The average home price in Seattle is more than $400,000. There are no bargains, but the economic conditions are healthy enough to keep the housing market strong.
Salt Lake City
Utah has a lot going for it. Great mountains, wonderful leisure activities, and a growing tech economy. The Salt Lake Board of Realtors reported that housing sales in Salt Lake City in 2017 were the third highest on record. The median sales price for a single-family home ($325,000) rose 10 percent in 2017. Realtors project that prices will grow another 7-8 percent in 2018, thanks to an influx of 8,500 new households. A family with a median income can still afford about 65 percent of the homes in Salt Lake County, meaning that the market is not close to overheated.
The Tennesseean reported that home prices in this southern city are 47 percent higher than a decade ago. A fast-growing population is fueling housing demand, and supply hasn’t kept up. That has boosted prices and allowed homeowners to reap some big profits last year. There is some concern that homes in Nashville may be overvalued, but for now, investors are cleaning up. The median sale price of a home in Nashville in March 2018 was $305,000, well outpacing the national average of $240,000.
Palm Beach, Florida
The median price for single-family homes in Palm Beach County hit $348,000 in March of 2018, which is a high point since the crash a decade ago. Prices for condos and townhomes, meanwhile, hit a median price of $177,000, or 9 percent higher than the same time a year ago. There may not be enormous room for price growth, but homes in Palm Beach aren’t yet overvalued.
If you are looking for better value in Florida real estate, Orlando may be the place. The median home price of homes in Orlando was $233,000 in March, a 6 percent rise over a year ago, according to the Orlando Regional Real Estate Association. So prices are on the rise, but still not much more than the national average. Population and job growth in Orlando are projected to be strong, suggesting there is a lot of room for growth. Realtor.com predicts the home prices in Orlando to jump by 6.9 percent.
The median price for a single-family home in Denver hit a record $407,00 in March of 2018. There is some concern about the market getting overheated, but a lack of supply is keeping prices on the rise. It also helps that Denver has one of the lowest unemployment rates—a mere 3 percent—among major cities. Prices rose more than 7.5 percent over the last 12 months, and Realtor.com projects price growth of 6.5 percent in 2018.
Cities in North Carolina’s research triangle have a lot going for them economically. There’s a young and educated workforce that is flocking away from the coasts because things are more affordable. That bodes well for the real estate market here. The Triangle Multiple Listing Service reports a 9.3 percent increase in prices compared to March of last year. But, the median home price is about $264,000, making it a better value than places like San Francisco and Seattle.