The real estate market grew as the COVID-19 pandemic progressed, leaving many people in dire financial straits. Still, homeowners and real estate investors have taken advantage of tough economic times. According to CoreLogic, homeowners with mortgages in the United States increased their equity by $1 trillion between September 2019 and September 2021.
COVID-19 has driven up prices and reduced time on the market for homes, which has had a significant impact on the current state of real estate. That said, many metropolitan areas remain great places to invest in real estate due to continued population and economic growth, especially in the current situation. Here is an overview of the 10 most lucrative markets to invest in real estate:
Raleigh/Durham, North Carolina
The Raleigh/Durham area is one of the best rental real estate investment opportunities in the future with high tech employment in the area’s Research Triangle.
Although a third of Americans rent their homes, Raleigh and Durham have rental rates of 43% and 52%, respectively, partly due to the huge student population, but also the younger generation who come here to work . Other reasons to invest in Raleigh/Durham are:
- Median home prices in Raleigh and Durham are $340,303 and $304,217, respectively, and have risen significantly over the past year.
- The Research Triangle offers a wide range of job opportunities; in fact, Raleigh is only second to Austin in terms of tech job opportunities.
Austin’s housing market is a prescription for success, with low availability, rising prices, high demand and a booming employment sector. Samsung, Tesla and Apple have all benefited greatly from the city’s tax incentives for companies that migrate here, either relocating completely (Tesla) or creating large operations (Apple).
Austin has seen a 45% decrease in relocations since 2020, yet Texas continues to recruit new residents.
- Austin has an unemployment rate of 4.2%, which is well below the national average.
- The cost of living in Austin is much lower than in San Francisco.
- Although rents are steadily increasing, the typical monthly rent remains affordable at $1,431.
Austin’s real estate market is a strong long-term investment, with real estate values up more than 90% since 2012.
If you want to buy a home for less than the national average, any city in Florida is a decent bet, but Tampa tops the list given the growth in urban Tampa jobs over the year. last. Despite COVID-19, the Tampa Bay area managed to gain more than 30,000 jobs last year, fueling strong housing demand.
The Tampa Bay area also has several tourist attractions such as Busch Gardens, an aquarium, a zoo, and the Tampa Riverwalk, as well as close proximity to the beach and a pleasant year-round climate.
Additionally, Florida has no income tax, allowing citizens to keep more of their hard-earned money each year.
Nashville has consistently ranked among the top 10 metro areas for job creation and economic growth in recent years and is known for having jobs in a wide range of industries, including health care, manufacturing, tourism and music. The Wall Street Journal ranked Nashville second in job growth in the metro area (after Austin, Texas) and first in the nation for the lowest unemployment rate at the start of 2020.
Nashville is known for its fantastic restaurants, music scene, entertainment and nightlife, in addition to job prospects, but the standard of living is higher in Nashville than in other metropolitan areas such as Atlanta, Georgia , and Charlotte, North Carolina.
Still, home ownership — and a happy lifestyle — is within reach for young professionals with a median income of at least $85,000, making it rare among major metropolitan areas with compelling features. Nashville is also one of the hottest locations for young professionals, making it ideal for real estate investors looking to get into the rental market.
Low availability is pushing average asking prices in Cleveland properties above $300,000, however, data shows Cleveland is still reasonably cheap. The average sale price is significantly lower, close to $180,000. Cleveland prices may attract first-time home buyers as more businesses migrate to the cloud.
Jobs, incomes and population are all growing in Cleveland, but the fact that more than half of the city’s residents are renters is especially relevant for real estate investors.
With cheap real estate prices, Ohio would attract both first-time and experienced investors, but with home values up more than 20% from 2020, those looking to buy should do so before the end of 2022 to take advantage of the development of the equity in their property.
Las Vegas, Nevada
During the global recession, the Las Vegas real estate market was erratic, with the worst falls in the country. The nation’s recovery has been rapid, thanks to a variety of factors such as no state taxes, low cost of living, and a diverse business climate. It’s also a simple change for Californians who can work from home.
- Las Vegas is experiencing unprecedented population growth. According to the last census, its population has increased by 14.53% since 2010. The metropolitan area has approximately 2 million inhabitants.
- In the United States, Las Vegas is one of the busiest sellers’ markets today.
Home values in Phoenix have increased by nearly $100,000 over the past year, from $350,000 in January 2020 to $457,000 in January 2021. This increase is largely due to an increase in asks remote employees and retirees looking for more space for their money.
“While housing prices are slightly above the national average, pay scale data reveals that the cost of living in Phoenix is 5% lower than the national average, implying your money will go further. “, says Joshua Blackburn of House in progress.
Phoenix is on the list of “hottest” real estate markets due to a six-digit price increase, but the state’s largest city has a lot to offer its residents. With a growing number of tech jobs, restaurants, and nightlife, it’s clear to see why so many are choosing to move to Phoenix.
One of Dallas’ economic strengths is its diverse economy, which generates work for people of all income levels. Renting is cheaper than owning and rental demand has increased significantly in recent years. It has one of the lowest homeownership rates in the country.
- Dallas’ population is booming; in fact, Frisco, about 20 minutes north of Dallas, is ranked #6 on WalletHub’s ranking of the fastest growing regions in the United States.
- 9% of city residents rent their apartment or house, compared to a national average of 33%.
- The average monthly rent in Dallas is $1,276, up 2% from the previous year.
Charlotte, North Carolina
Charlotte’s population and job growth has been fueled by the finance and technology sectors. The city’s 25 colleges and universities also contribute to the city’s youthful population. Property taxes are lower here than in other IT clusters, making it easier to buy a home.
- Despite a 16.4% increase over the past year, the median home price of $302,570 has remained affordable.
- Median apartment rent rose 6% to $1,259 per month.
- It is the most influential banking center in the United States, after New York, and its financial prowess attracts IT investment.
Denver has experienced a tremendous population explosion following the legalization of cannabis, and it is currently growing at a rate of more than 2% per year.
With the housing market extremely competitive throughout the pandemic, Colorado home prices just hit new highs in February 2021, thanks in part to the city’s weakest supply. Even though COVID-19 is having a significant impact on the city’s employment rates, this inventory issue is one of the factors why Denver will outperform the national average for home value growth.
However, if you’re ready to rent, work from home full-time, or compete in a rising market, Denver welcomes the move, consistently ranking high on “best cities to live” lists.
Grant McDonald has over three decades of experience in the real estate industry and over a decade in real estate finance. He is currently Vice President of Corporate Development at 14th Street Capital.