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:

  1. Provo-Orem, Utah
  2. Austin-Round Rock, Texas
  3. Raleigh, NC
  4. Nashville-Davidson-Murphreesburg-Franklin, TN
  5. Boise City, ID
  6. Dallas-Plano-Irving, TX
  7. Wilmington, NC
  8. Phoenix-Mesa-Scottsdale, AZ
  9. Fayetteville-Springdale-Rogers, AR
  10. Palm Bay-Melbourne-Titusville, Florida

And Milken chooses their top 10 Small Cities:

  1. Idaho Falls, Idaho
  2. Logan, Utah-Idaho
  3. St. George, Utah
  4. The Villages, Florida
  5. Bend-Redmond, Washington
  6. Punta Gorda, Florida
  7. Coeur d’Alene, Idaho
  8. Missoula, Montana
  9. Sioux Falls, South Dakota
  10. Gainesville, Georgia
  11. Prescott, AZ
  12. Bloomington, Indiana
  13. Wenatchee, Washington
  14. Burlington, North Carolina
  15. 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
Lancaster, PA 71.04 800 215 659 10 59
Carmel, IN 70.91 30 36 197 273 27
Fair Lawn, NJ 70.59 136 130 29 888 29
Lexington, MA 70.58 405 68 4 208 7
Brentwood, TN 70.57 34 74 169 340 97
Melrose, MA 70.42 413 78 10 715 22
Zionsville, IN 69.9 3 145 177 836 103
Needham, MA 69.88 161 165 20 537 26
Portland, ME 69.82 1056 454 58 13 380
Westfield, IN 69.8 41 128 236 822 37
Milton, MA 69.72 140 427 27 674 12
Sammamish, WA 69.7 183 89 75 1164 30
Dublin, OH 69.31 10 92 719 189 131
Brookfield, WI 69.23 91 224 70 294 270
Leawood, KS 69.06 6 81 105 851 194
Apex, NC 68.93 38 20 206 586 164
Arlington, MA 68.92 750 352 8 222 8
Burlington, MA 68.85 367 27 11 488 85
Newton, MA 68.83 680 150 7 338 14
Princeton, NJ 68.71 596 114 255 84 60
Redmond, WA 68.71 604 9 81 113 374
Randolph, MA 68.58 696 456 53 1156 275
Ridgewood, NJ 68.56 262 66 24 947 15
Leesburg, VA 68.53 211 334 39 185 181
Saratoga Springs, NY 68.46 751 119 101 51 376
Fishers, IN 68.42 25 305 198 618 35
Castle Rock, CO 68.38 103 167 48 451 185
Wake Forest, NC 68.36 68 13 260 501 286
Medford, MA 68.35 888 23 16 437 80
Reading, MA 68.33 171 654 6 1088 9

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.

best-rental-income-cities
Screen capture Courtesy of Realty Trac

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.

Cities where it's cheaper to buy than rent.
Cities where it’s cheaper to buy than rent. Screenshot courtesy of SmartAsset.

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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