Best Cities to Buy Real Estate

Buyers and investors have a complex question to answer in which cities/states to buy a home or rental property.

The housing market is tight from single family homes to apartments in most major cities. A wave of people have left the urban regions for the suburbs and beyond. But is this a lasting trend, or will it reverse over time?  It’s likely that the loss of faith in government and cities is shaping buyer attitudes, which is why the new cities you see below become their destinations.

 

New opportunities to buy a home or invest in residential real estate appear constantly. And the cities that offer the best value for buyers has remained fairly consistent over the last 5 years. And as you’ll see from the charts below, changes do occur. California has lost its glitter for sure, yet that may change with the end of drought and a stronger economy in 2024 for the tech sector.

And at a time when most buyers can’t afford or finance a purchase, other investors/buyers with resources are in a good position to capitalize on that. The rental market is highly constrained and in the right cities, tremendous rent yields are possible.  And if 2024 is a breakout year for real estate, you can expect your new property to appreciate.

The key question for investors is which are the best cities to buy property? The calculations could take quite a lot of date and parameters.  You may want to take some time to assess the factors below which can make you more aware of which cities and states are viable.

If you’re buying for yourself and your family, you have different guidelines and goals vs property investors who are interested in appreciation and highest rental yields.

Which Cities/Towns Have the Qualities You Seek?

The matter of price vs rental yields, employment growth, taxes, vacancy rates are key signals that will color estimates of value in cities and states both.

For homebuyers who want to reside in a particular city, of course will see home prices, rent prices the may have to pay, crime rates, school quality, good neighborhoods, and strong employment levels as most important. From Florida to Tennessee to Texas to Idaho and Washington, the face of buyer desire has changed in America.

What to Look for in the Best City to Buy Income Real Estate:

1. lowest vacancy rate
2. rising working age population
3. rising developments
4. lowest price to rent ratios
5. rising number of millennials or baby boomer retirees
6. growing economy
7. good metro GDP
8. lots of US based companies
9. local restrictions on new construction
10. located in the heartland or south region
11. lower purchase prices
12. lower property taxes
13. lower state taxes
14. better ratings for schools
15. lifestyle rating
16. lower crime rating
17. lower pollution and quick commutes

Which cities and states offer the best employment outlook, lowest taxes, fewest regulations, large millennial population, and a pro business climate?  Texas might be first in line, especially as the price of oil has climbed back up to $35 a barrel.

Which State is Most Attractive?

The climate, cost of doing business, state business incentives, presence of labor, and tax costs in each state comes into the calculation.  Georgia, Texas, and Michigan would definitely rise to the front of the line. However, cities in North Carolina, Idaho, Texas, Florida, Illinois, Pennsylvania, Colorado, Miami Florida, Boston, Massachusetts, and Ohio also offer potential savings for New York and California companies who are looking to relocate.

Milken Institute’s look at the Best Cities

Milken Institute conducts an investigation of the best big and small towns to consider. This year’s ranking takes these factors into consideration:

• Job growth
• Wage growth
• Short-term job growth
• High-tech GDP growth
• High-tech GDP concentration
• Number of high-tech industries

Yet Milken didn’t appear to take into account the non-employment factors in relocation — namely remote work. Even as subways, airlines, trains, buses gear up for the long daily commutes, we may turning more to a more commute free trend where pollution and time waste must be reduced.

At the same time, many corporations are pushing employees hard to return to headquarters to work in person. This has affected migration in the country.

The best cities are situated in states with lower population density offering lower taxes and either lifestyle or employment/career advantages.

Here’s Milken Institute’s 2023 selection of best cities:

And Milken chooses their top 10 Small Cities:

Cities that Are Rated as Declining:

Source: Milken Institute (2023 report)

Wallethub: Best Places to Buy a House

Wallethub the mortgage rate website offers an extensive look at America’s best cities in 2023 from many perspectives.  However, there is little pertaining to buying homes and rental property nor which will be the best cities in 2024.  Big picture view however, is that great, worthy cities of living and being a landlord in, affordability, economic health, educations, and lifestyle are very important factors.

Best Small Cities to Live in America

Best Cities for Rental Income Property

For rental property investment buyers, the rules that govern the best places to buy are similar as with young home buyers — employment stability, jobs outlook, migration trends, state GDP, city economic outlook, and house prices. For landlords, cap rates, price to rent ratios, rent price trends, and projected maintenance costs come into the picture.

Cities where it’s Better to Buy than Rent

This buy/rent difference stat is important for those want to wait to rent, and for investors who might want to avoid cities where it’s cheaper to buy.

Top 80 Cities and their Potential for Passive Rental Income ROI

These converted stats in this chart from Smart Assets are very insightful. They used U.S. Census data, to calculate the price-to-rent ratio in every U.S. city with a population over 250,000.

This is their list of 80 US cities below with the worst potential for rental property income investment appearing at the top (The ones at bottom such as Detroit have better potential, unless employment fails to recover in Michigan).

	US Cities with Population above 250k	Price-to-Rent Ratio	Home Price (for a $1,000 Rental)
1	San Francisco, California	45.9	551000
2	Honolulu, Hawaii	40.1	481000
3	Oakland, California	38.5	462000
4	Los Angeles, California	38.0	456000
5	New York, New York	35.7	428000
6	Seattle, Washington	35.1	421000
7	San Jose, California	34.7	417000
8	Long Beach, California	34.6	415000
9	Washington, District of Columbia	32.0	384000
10	Anaheim, California	31.3	375000
11	San Diego, California	30.3	363000
12	Portland, Oregon	29.3	351000
13	Boston, Massachusetts	28.7	344000
14	Jersey City, New Jersey	26.3	316000
15	Denver, Colorado	26.0	312000
16	Chula Vista, California	25.8	310000
17	Santa Ana, California	25.3	303000
18	Sacramento, California	24.3	291000
19	Miami, Florida	23.4	280000
20	Austin, Texas	23.4	280000
21	Atlanta, Georgia	23.0	276000
22	Colorado Springs, Colorado	22.8	274000
23	Bakersfield, California	22.5	270000
24	Raleigh, North Carolina	22.4	269000
25	Riverside, California	22.4	268000
26	Lexington, Kentucky	22.0	264000
27	Albuquerque, New Mexico	21.9	263000
28	Chicago, Illinois	21.6	259000
29	Henderson, Nevada	21.6	259000
30	Chandler, Arizona	21.5	257000
31	New Orleans, Louisiana	21.4	256000
32	Virginia Beach, Virginia	21.1	253000
33	Fresno, California	21.0	252000
34	Newark, New Jersey	21.0	251000
35	Minneapolis, Minnesota	21.0	252000
36	Anchorage, Alaska	20.9	251000
37	Phoenix, Arizona	20.3	244000
38	Louisville, Kentucky	20.1	241000
39	St. Paul, Minnesota	20.0	239000
40	Plano, Texas	19.9	239000
41	Stockton, California	19.5	234000
42	Durham, North Carolina	19.5	233000
43	Las Vegas, Nevada	19.3	232000
44	Nashville, Tennessee	19.1	230000
45	Greensboro, North Carolina	19.1	229000
46	Mesa, Arizona	19.1	229000
47	Lincoln, Nebraska	19.1	229000
48	Oklahoma City, Oklahoma	19.1	229000
49	Wichita, Kansas	18.4	221000
50	Charlotte, North Carolina	18.1	217000
51	Cincinnati, Ohio	18.0	216000
52	Aurora, Colorado	18.0	216000
53	Kansas City, Missouri	17.4	209000
54	Tulsa, Oklahoma	17.2	206000
55	Omaha, Nebraska	16.7	200000
56	St. Louis, Missouri	16.7	200000
57	Orlando, Florida	16.6	199000
58	Tampa, Florida	16.6	199000
59	Tucson, Arizona	16.3	196000
60	Philadelphia, Pennsylvania	16.3	196000
61	Dallas, Texas	16.2	194000
62	Laredo, Texas	15.9	191000
63	Columbus, Ohio	15.9	190000
64	St. Petersburg, Florida	15.8	189000
65	Fort Wayne, Indiana	15.5	186000
66	Baltimore, Maryland	15.5	186000
67	Arlington, Texas	15.5	186000
68	El Paso, Texas	15.4	185000
69	Indianapolis, Indiana	15.4	184000
70	Houston, Texas	15.3	183000
71	Fort Worth, Texas	14.8	177000
72	Jacksonville, Florida	14.3	172000
73	Milwaukee, Wisconsin	14.2	170000
74	San Antonio, Texas	13.7	164000
75	Toledo, Ohio	13.3	159000
76	Corpus Christi, Texas	13.1	158000
77	Memphis, Tennessee	12.3	147000
78	Pittsburgh, Pennsylvania	12.0	144000
79	Buffalo, New York	10.7	128000
80	Cleveland, Ohio	10.5	126000
81	Detroit, Michigan	6.3	75000

There are so many real estate investment opportunities in the US and in Canada too. Hopefully, my amateur US housing forecasts, predictions and unguaranteed advice will help you find those opportunities for the best upside in cash flow, safety and equity appreciation. Be careful with any investment. Do your due diligence.  

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