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.

front door with lock box
•••

 Chris Hondros, Getty Images

Since the housing market crashed in 2008, 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 the strength of local economies 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, like the strength of the local economy and housing regulations.

Las Vegas

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 8% in the last 12 months (as of December 2020). But there is still room for growth, as the median home price ($328,000 as of March 2021) is still below the national average ($353,048 as of March 2021). It’s a popular place for retirees, and more than 300,000 people had moved into Nevada as of 2018 (since the 2010 census), making it one of the fastest growing states in the country in 2018.

Dallas

Prices rose 8.4% (as of December 2020) year-over-year. There’s not as much room for price growth in Dallas because median home prices ($394,000 as of March 2021) are higher than the national average. Dallas has a strong local economy with a strong corporate base, but the unemployment rate (owing to the COVID-19 pandemic) is slightly higher than the national average as of February 2021.

San Francisco

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 2.4% year-over-year as of December 2020. 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.

Seattle

The seat of King County is similar to San Francisco, in that builders aren’t keeping up with housing demand. There’s growth in Seattle that has allowed prices to rise 14% (as of December 2020). The median home price in Seattle is $750,000. There may be few bargains, but the economic conditions should be 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 projected that prices would rise another 7-8% in 2018, thanks to an influx of 8,500 new households. As of December 2020, prices have risen 15.9% year-over-year.

Nashville

Home values in Nashville have continued to rise since 2012, with a March 2021 value at $326,000, according to Zillow. 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 2021 was $355,000, in line with the national average of $353,048.

Palm Beach, Florida

The median price for single-family homes in Palm Beach County hit $440,000 in March 2021, which is higher than the pre-recession peak of $395,300 in 2007. Prices for condos and townhomes, meanwhile, hit a median price of $245,000 in March 2021, or 23.1% higher than the same time a year ago. While there may not be enormous room for price growth, homes in Palm Beach are still overpriced by an average of 18.32%, according to a December 2020 study by the Florida Atlantic University's College of Business.

Orlando

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 $285,000 in March 2021, a 12.4% increase since March 2020, according to the Orlando Regional Real Estate Association. So, prices are on the rise, but still below the national average. Population and job growth in Orlando are projected to be strong into 2030, suggesting there is a lot of room for growth. Norada Real Estate Investments expects home values to increase 10.1% in the next year.

Denver

The median price for a residential property in Denver hit $500,000 in March 2021. Despite coming off a pandemic, Denver's market is seeing a lack of supply, which is keeping prices on the rise. Coming off the pandemic, the unemployment rate is at 7% (as of January 2021). Prices rose 12.36% since March 2020. Zillow projects home values to reach $564,000 in March 2022.

Raleigh, NC

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 (the cost of living index was 95.1 in 2019). That bodes well for the real estate market here. The Triangle Multiple Listing Service reports a 10.8% increase in prices compared to March 2020. But, the median home price in March 2021 was $317,900, making it a better value than places like San Francisco and Seattle.