The real estate market expanded as the COVID-19 pandemic progressed, leaving many with terrible financial problems. Still, homeowners and real estate investors benefited from the hard economic conditions. According to CoreLogic, homeowners with mortgages in the United States increased their equity by $1 trillion between September 2019 and September 2021.
COVID-19 caused rising prices and homes to spend less time on the market, which has had a significant impact on the current state of real estate. That said, there are many metro regions that remain great places to invest in property due to continuous population and economic growth, especially in the current situation. Here;s a look at the top 10 most-lucrative markets to invest in real estate:
Raleigh/Durham, North Carolina
The Raleigh/Durham region is one of the best investment opportunities in rental real estate in the future with the high-tech employment in the area’s Research Triangle.
Although one-third of Americans rent their homes, Raleigh and Durham have a 43% and 52% rental rate, respectively—due in part to the huge student population, but also to the younger generation that comes here for work. More reasons to invest in Raleigh/Durham are:
- Raleigh and Durham’s median home prices are $340,303 and $304,217, respectively, and have climbed significantly in the recent year.
- The Research Triangle offers a wide range of job opportunities; in fact, Raleigh is only second to Austin in terms of technology job opportunities.
Austin’s housing market is a prescription for success, with low availability, rising prices, high demand and a burgeoning job sector. Samsung, Tesla and Apple have all benefited greatly from the city’s tax incentives for enterprises that migrate here, either completely relocating (Tesla) or creating big operations (Apple).
Austin has seen a 45% decrease in relocations since 2020, yet Texas continues to recruit new residents.
- Austin has a 4.2% unemployment rate, which is much lower than the national average.
- The cost of living in Austin is much lower than in San Francisco.
- Although rents are steadily rising, the typical monthly rent remains affordable at $1,431.
Austin’s real estate market is a strong long-term investment, with property values up more than 90% since 2012.
If you want to buy a home for less than the national average, remarkably any city in Florida is a decent bet, but Tampa is at the top of the list considering the amount of employment growth the Tampa urban area experienced last year. Despite COVID-19, the Tampa Bay area managed to gain over 30,000 jobs last year, fueling high home 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 immediate vicinity to the beach and year-round pleasant weather.
Additionally, Florida has no state income tax, enabling citizens to keep more of their hard-earned money each year.
Nashville has consistently placed in the top 10 metro areas for job creation and economic growth in recent years and is noted for having occupations in a wide range of industries, including health care, manufacturing, tourism and music. The Wall Street Journal placed Nashville second in metro region job growth (after Austin, Texas) and first in the country for the lowest unemployment rate in early 2020.
Nashville is noted for its fantastic restaurants, music scene, entertainment and nightlife, in addition to work prospects, yet the standard of living is higher in Nashville than in other metro regions such as Atlanta, Georgia, and Charlotte, North Carolina.
Still, homeownership— and a happy lifestyle—is within reach for young professionals with a median income of at least $85,000, making it rare among major metro areas with interesting features. Nashville is also one of the hottest spots 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, the data show that Cleveland is still reasonably inexpensive. The average selling price is substantially lower, nearly $180,000. Cleveland’s pricing may appeal to first-time homebuyers as more enterprises move to the cloud.
Jobs, income and population are all increasing in Cleveland, but the fact that over half of the city’s residents are renters is particularly relevant for real estate investors.
With inexpensive property prices, Ohio would appeal to both novice and experienced investors, but with a 20%+ increase in home values over 2020, those who wish to buy should do so before the end of 2022 to take advantage of developing home equity.
Las Vegas, Nevada
During the Global Recession, the Las Vegas property market was erratic, with the worst falls in the country. The nation’s recovery has been quick, thanks to a variety of factors such as no state taxes, low cost of living and a diverse business climate. It’s also a straightforward shift for Californians who are able to work from home.
- Las Vegas is seeing unprecedented population growth. According to the most recent census, its population has increased by 14.53% since 2010. The metro area has a population of roughly 2 million.
- In the United States, Las Vegas is now one of the most active seller’s markets.
Home values in Phoenix have increased by almost $100,000 over the past year, from $350,000 in January 2020 to $457,00 in January 2021. This rise is largely due to a surge in demand from remote employees and retirees looking for more space for their money.
“While housing prices are slightly higher than the national average, Pay scale data reveals that the cost of living in Phoenix is 5% lower than the national average, implying that your money will go further,” says Joshua Blackburn of Evolving Home.
Phoenix is on the list of “top trending” real estate markets because of a six-figure price increase, but the state’s largest city has a lot to offer its inhabitants. With a growing number of tech employment, restaurants and nightlife, it’s clear to see why so many people choose to relocate to Phoenix.
One of Dallas’ economic strengths is its diverse economy, which generates work for people of all income levels. Renting is more inexpensive than owning, and rental demand has surged considerably in recent years. It has one of the lowest homeownership rates in the country.
- Dallas’ population is booming; in fact, Frisco, roughly 20 minutes north of Dallas, is listed No. 6 on WalletHub’s ranking of the fastest-growing regions in the U.S.
- 9 percent of city residents rent their apartments or homes, compared to the national average of 33 percent.
- The average monthly rent in Dallas is $1,276, which is up 2% over the previous year.
Charlotte, North Carolina
Charlotte’s population and job growth have been fueled by the finance and technology industries. 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 in the last year, the median house price of $302,570 remained affordable.
- The median apartment rent has risen by 6% to $1,259 per month.
- It is the single most influential banking center in the United States, after New York City, and its financial prowess draws IT investment.
Denver saw a tremendous population explosion following the legalization of cannabis, and it is currently growing at a rate of over 2% per year.
While the housing market is extremely competitive all through the pandemic, Colorado home prices just hit new highs in February 2021, thanks in part to the city’s lowest supply ever. Even though COVID-19 has 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 house value growth.
However, if you’re willing to rent, work from home full-time or compete in a rising market, Denver is well valued the move, consistently rating at the top of multiple “best cities to live in” lists.
Grant McDonald has more than three decades of experience in the real estate industry and more than a decade in the real estate finance space. He is currently Vice President—Corporate Development at 14th Street Capital.