Best U.S. Housing Markets for Real Estate Investing

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Top 10 lists of the best housing markets are published each year. Reputable sources are tracking housing market trends crunch and compile the key data. And not surprisingly, most of the same cities pop up on multiple lists year after year.

Many businesses use this data to target marketing strategies and identify areas of potential expansion. These lists can be helpful to real estate investors too.

On a macro level, the data can help you find ideal locations to check out and buy investment properties.

The three most important things in real estate investing have always been and continue to be “location, location, location.” After all, you can't move a property.

So, what locations in the U.S. offer the best investment possibilities in 2022?

What to Look for in a Real Estate Location

If you're a real estate investor looking for monthly rental income and a high potential for annual appreciation, it's wise to study the data from multiple sources. You're interested in investing where rents are steadily increasing. You want the local economy to be healthy and stable, where job opportunities are growing. For example, a city where a large industry is moving in will likely experience a demand increase for rental housing. Your rental property should be cash flow positive. And of course, you want market price appreciation.

You'll steer clear of cities that don't have the trends you're looking for. A city with high home prices is likely not an area where the monthly rental income will cover the mortgage, insurance, and taxes of owning a buy-and-hold investment property.

Top 10 lists offer some insight into metropolitan areas where real estate investors might consider buying rental properties that provide annual cash flow and potential market appreciation. That is not the only research you'll want to do, but it's a start.

My Criteria

Following is what I look for when considering where to invest. I want to invest in a real estate market that is:

  • on Zillow's Top 10 Housing Markets for 2022,
  • ranked high in stats showing the Best Places to Find a Job,
  • in a state that's ranked in the top 10 most economically stable,
  • ranked as one of the top 10 cities for growth, employment, and business opportunities,
  • where rents rose last year and are predicted to increase in 2022, and
  • where there's an attractive ratio between median home price and average monthly rent.

The Top 7 Cities for Real Estate Investors in 2022

Based on these criteria, here are the top seven cities for real estate investors to consider in 2022:

Top Cities for Real Estate Investors in 2019
Top Cities for Real Estate Investors in [sc name=date type=year]
  1. Dallas, Texas — Dallas is still very affordable. It ranked #7 on Zillow's Top Ten Housing Markets with a median home price of $237,800. It also boasts a stable economy. Dallas ranks as the 12th best place to find a job, and rents are increasing.
  2. Orlando, Florida — In large part thanks to Disney, Orlando takes the #1 slot for the best place to find a job. Employed renters can consistently pay rent. And Orlando takes the #2 spot on Zillow's Top Ten Housing Markets.
  3. Denver, Colorado — Denver ranks #3 on Zillow's Top Ten Housing Markets. It has a stable economy and available jobs. And rental prices have had double-digit increases over the last 12 months. Affordability may be an issue as the median home price is $403,800. It'll take more capital to buy an investment property in Denver.
  4. Nashville, Tennessee — Nashville is one of three finalists in the Amazon expansion plan, which could bring employees to the region. Housing is affordable at a median price of $252,200, and rents are respectable at $1,499 per month. Rents increased last year by 15.3%. And you might expect further increases as demand for rentals outpaces supply due to the influx of Amazon job opportunities.
  5. Atlanta, Georgia — Atlanta shows promise for rental property investors. It takes the #4 spot on Zillow's Top Ten Housing Markets and #16 of the best places to find a job. With a median home price of $215,000, you could buy several properties for the price of one in other cities. This helps to avoid the risk of having all your eggs in one basket.
  6. Minneapolis, Minnesota — Minneapolis holds the #5 spot on Zillow. It is ranked in the top 20 best cities in which to find a job. The median home price makes this location affordable. And the average rent increased by 11.7% in 2018.
  7. San Diego, California — This is just one of several California cities that consistently makes Zillow's Top 10 List year after year. The median home price in San Diego is still affordable concerning rental income to purchase price. Neither San Francisco nor San Jose can make such a claim. Whereas it costs $1.2 million to buy a home that you could rent for $3,521 monthly in San Jose, the median home price in San Diego is less than half that and grosses a higher average rent of $3,573. Plus, the average rent increased by 13.2% in 2018.

Other Great Cities for Real Estate Investments

Second Tier Recommendations are cities that are either on Zillow's Top 10 Housing Markets for 2022 or have other attractive qualities on the other Top 10 Lists that are worth investigating further.

  • San Jose is Zillow's top pick and shows up on the list year after year. It seems to me that the California real estate market is cooling, but there are likely still some good buys for investors to find properties below the median list price of $1,251,200.
  • Washington, D.C., is ranked as the #1 Most Stable Economy, in large part because of the abundance of government workers. Economic stability and high employment are a big plus for rental property owners.
  • Jacksonville, Florida, holds the #9 slot on Zillow's Top 10. Additionally, the median home price is very attractive, offering a high monthly rent similar to the top 7 cities identified.
  • While Boston didn't make Zillow's Top 10, it is #3 on the Most Stable Economy list. And it is the seventh best place to find a job. Also, rental rates are proportionate to purchase prices.
  • San Francisco has been on Zillow's list year after year. This year it ranks as #3 of the best places to find a job. It also ranks high in a stable economy and opportunities for growth, employment, and business opportunities. So, savvy investors might find opportunities for cash flow and continued market appreciation in San Francisco.

Please note that the analysis — and the conclusions offered in this article — are incomplete. This should not be taken as a blanket recommendation of where to buy rental properties. Relevant data points like the quantity and condition of rental properties available for purchase, for example, are not considered. This data simply gives you a starting point of cities you might think first when starting your due diligence.

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Ruth Lyons

Trading three decades of financial publishing experience in the corporate world for a life of personal and financial freedom as a freelancer in 2012, Ruth is passionate about helping others take control of their personal finances and to become aware and educated on their options as self-reliant individuals. Disenfranchised with the high cost and lackluster performance of her IRA, college savings and other retirement accounts handled by a full-service broker, Ruth moved her retirement money to a self-directed IRA in 2015. Ruth holds an MS in Finance from Johns Hopkins Carey School of Business (1991) and a Business Management degree from University of Maryland (1984). You can follow Ruth on: Twitter

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