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.

Screenshot courtesy of Brookings Institute.

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.

Florida, Illinois, Pennsylvania, Colorado, Miami Florida, Boston, Massachusetts, and Ohio also offer potential savings for New York and California companies.

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.

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?

As mentioned above, they’re in California, New York, Florida, Texas, Arizona, and Los Angeles. Small cities are gaining mention.

Best Performing Cities Report. Screenshot courtesy of Milken Insitute.

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

See more on all housing markets including California on the US Housing report.

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 to Buy a House. Chart courtesy of Wallethub.

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.

Screen capture Courtesy of Realty Trac

How about a 32% Yield on a Single Family Home?

Best Cities to Single Family Rentals USA. Chart courtesy of Attomdata.

(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	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

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.

Chart courtesy of Milken Best Cities Report 2019

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.