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Best Cities to Buy Real Estate
The US real estate market forecast in 2020, during the pandemic sees a very different landscape for home buyers and rental property owners.
The pandemic is changing the way people feel about where they live and work. It’s changing how they will do their jobs and how they feel about high density living. The pandemic and remote work trend toward is encouraging buyers and renters to begin searching in rural areas and smaller cities is taking hold.
More people will be working from home and that opens up the possibility of moving to another city.
You can learn more about the best cities to buy real estate in below.
Which City or Town Could I Move To?
Buyers will be asking not about big city neighborhoods, but rather which towns or cities they could move to and grow their business in. There will be questions about lifestyles, job opportunities, and remote work security. There are risks. However, overall, everyone including corporate managers are opening to the idea of remote work. Hiring or outsourcing could offer companies big savings and let them access better talented contractors.
And banks have a different perception of mortgages too. They’re tightening restrictions to avoid big losses due to home owner job losses. We’re back to work, however many workers won’t be going back to their former employment. Bi
If you look at the housing market stats for San Francisco real estate, Tampa/Sarasota real estate, Florida real estate, Los Angeles real estate, Denver real estate, Boston real estate, or Atlanta real estate, you can see that single detached houses are up. Check the prices of houses for sale and you’ll see that trend, even during a recession.
For lower house prices, you’ll need to search for opportunities in smaller, outlying cities and towns.
Which Cities/Towns Have the Qualities You Seek?
What to Look for in the Best City to Buy Income Real Estate:
- lowest vacancy rate
- rising working age population
- rising developments
- lowest price to rent ratios
- rising number of millennials or baby boomer retirees
- growing economy
- good metro GDP
- lots of US based companies
- local restrictions on new construction
- located in the heartland or south region
- lower purchase prices
- lower property taxes
- lower state taxes
- better schools
- better lifestyle
- lower crime
- lower pollution and quick commutes
The exodus of workers and businesses from California is a trend.
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.
Danger Signals for Buyers
The US trade situation and political strife between the democrats and President Trump are macroecomic factors to weigh carefully. A global recession has impacted the US short term. If he protects US business, then heartland cities will continue their growth.
Additional potential anti trust action against the FAANG tech giants could also bring a better outlook for small businesses and reduce the trend to the Bay Area. California businesses are moving to Texas, North Carolina, Arizona, and even Georgia to reduce taxes, and business costs.
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Make sure others learn about the once in a lifetime opportunity in real estate investment with rental properties, and which cities might be best to invest in as rental income property.
Where Are the Renters?
Is 2019’s top cities relevant anymore? To a certain extent they are. By 2021, a Corona Virus vaccine will have ben developed and life will return almost to normal. If business continues to return from China, it will bode very well for small cities, particularly in the heartland.
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 and the Covid 19 pandemic. Even as subways, airlines, trains, buses gear up for the long daily commutes, we may turning more to a commute free trend where pollution and time waste are reduced.
Here’s Milken Institute’s 2020 selection of best cities:
- San Francisco-Redwood City-South San Francisco, California
- Provo-Orem, Utah
- Austin-Round Rock, Texas
- Reno, Nevada
- San Jose-Sunnyvale-Santa Clara, California
- Orlando-Kissimmee-Sanford, Florida
- Boise City, Idaho
- Seattle-Bellevue-Everett, Washington
- Dallas-Plano-Irving, Texas
- Palm Bay-Melbourne-Titusville, Florida
And Milken chooses their top 10 Small Cities:
- Bend-Redmond, Oregon
- Grants Pass, Oregon
- Logan, Utah-Idaho
- St. George, Utah
- Coeur d’Alene, Idaho
- The Villages, Florida
- Idaho Falls, Idaho
- Gainesville, Georgia
- Sebastian-Vero Beach, Florida (13)
- Bellingham, Washington (17)
Cities that Are Rated as Declining:
TABLE 4. BIGGEST DECLINES AMONG ALL CITIES
(Based on change in rankings)
City Rank 2020 Rank 2018 Rank
Iowa City, IA 150 57 -93
Manhattan, KS 156 76 -80
Kokomo, IN 126 51 -75
Hammond, LA 132 61 -71
Lawrence, KS 116 46 -70
Appleton, WI 139 69 -70
Bowling Green, KY 108 39 -69
Dover, DE 118 49 -69
Lansing,MI 154 89 -65
Albany, GA 160 98 -62
Battle Creek, MI 181 120 -61
Jacksonville, NC 183 122 -61
Pittsfield, MA 142 86 -56
Kahului-Wailuku-Lahaina, HI 88 34 -54
Monroe, MI 152 99 -53
Grand Forks, ND-MN 192 140 -52
Hagerstown-Martinsburg, MD-WV 169 119 -50
Montgomery, AL 174 127 -47
Kankakee, IL 72 26 -46
St. Cloud, MN 104 58 -46
Panama City, FL 117 71 -46
Lubbock, TX 131 86 -45
Grand Rapids-Wyoming, MI 73 29 -44
Indianapolis-Carmel-Anderson, IN 106 63 -43
Columbia, MO 93 50 -43
Source: Milken Institute (2020)
Houses for Sale – The Ultimate Home Search Source
Wallethub: Best Places to Buy a House
Wallethub the mortgage rate website conducted a study of the best cities to buy a house. The study is a year old, but when the economy returns, the conditions from last year will be similar to expected for 2021.
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.
Here’s Realty Trac’s most recent outlook on the best US cities to invest for rental property income
Complicating your investment decision is another set of statistics from Realty Trac that shows the west still has the highest returns currently but the green zones are predicted to perform better.
How about a 32% Yield on a Single Family Home?
(Screenshot above courtesy of RealtyTrac single family rental market reports
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||
(for a $1,000 Rental)
|1||San Francisco, California||45.9||551000|
|4||Los Angeles, California||38.0||456000|
|5||New York, New York||35.7||428000|
|7||San Jose, California||34.7||417000|
|8||Long Beach, California||34.6||415000|
|9||Washington, District of Columbia||32.0||384000|
|11||San Diego, California||30.3||363000|
|14||Jersey City, New Jersey||26.3||316000|
|16||Chula Vista, California||25.8||310000|
|17||Santa Ana, California||25.3||303000|
|22||Colorado Springs, Colorado||22.8||274000|
|24||Raleigh, North Carolina||22.4||269000|
|27||Albuquerque, New Mexico||21.9||263000|
|31||New Orleans, Louisiana||21.4||256000|
|32||Virginia Beach, Virginia||21.1||253000|
|34||Newark, New Jersey||21.0||251000|
|39||St. Paul, Minnesota||20.0||239000|
|42||Durham, North Carolina||19.5||233000|
|43||Las Vegas, Nevada||19.3||232000|
|45||Greensboro, North Carolina||19.1||229000|
|48||Oklahoma City, Oklahoma||19.1||229000|
|50||Charlotte, North Carolina||18.1||217000|
|53||Kansas City, Missouri||17.4||209000|
|56||St. Louis, Missouri||16.7||200000|
|64||St. Petersburg, Florida||15.8||189000|
|65||Fort Wayne, Indiana||15.5||186000|
|68||El Paso, Texas||15.4||185000|
|71||Fort Worth, Texas||14.8||177000|
|74||San Antonio, Texas||13.7||164000|
|76||Corpus Christi, Texas||13.1||158000|
|79||Buffalo, New York||10.7||128000|
What About the Local Economies?
Millken research reveals the cities with the best performing economies in December 2016. Florida cities are showing a marked rise. Recent reports focus on the apartment rental prices in San Francisco, Sacramento, and San Jose as offering outstanding returns for investors.
And this is Milken’s list of worst performing cities, likely the ones you might avoid.
In this video below, Mike Hambright talks about apartment rental markets, and how to make money from cash flow and property value appreciation.
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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