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:
- 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 ratings for schools
- lifestyle rating
- lower crime rating
- 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:
- Provo-Orem, Utah
- Austin-Round Rock, Texas
- Raleigh, NC
- Nashville-Davidson-Murphreesburg-Franklin, TN
- Boise City, ID
- Dallas-Plano-Irving, TX
- Wilmington, NC
- Phoenix-Mesa-Scottsdale, AZ
- Fayetteville-Springdale-Rogers, AR
- Palm Bay-Melbourne-Titusville, Florida
And Milken chooses their top 10 Small Cities:
- Idaho Falls, Idaho
- Logan, Utah-Idaho
- St. George, Utah
- The Villages, Florida
- Bend-Redmond, Washington
- Punta Gorda, Florida
- Coeur d’Alene, Idaho
- Missoula, Montana
- Sioux Falls, South Dakota
- Gainesville, Georgia
- Prescott, AZ
- Bloomington, Indiana
- Wenatchee, Washington
- Burlington, North Carolina
- Twin Falls, Idaho
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
|City||Total Score||Affordability||Economic Health||Education & Health||Quality of Life||Safety|
|Fair Lawn, NJ||70.59||136||130||29||888||29|
|Saratoga Springs, NY||68.46||751||119||101||51||376|
|Castle Rock, CO||68.38||103||167||48||451||185|
|Wake Forest, NC||68.36||68||13||260||501||286|
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||
(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|
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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