Before you start buying and selling investment properties this year, figure out which markets best suit your strategy. Today, we’re going to be dividing cities based on whether they’re a buyer’s or seller’s market. The US housing market 2019 has got cities favoring each side of the investment market; start your search in the mentioned cities depending on what seems attractive to you.
Before we list these cities, however, let’s clear up a couple of things.
What Is a Buyer’s Market?
It’s the preferred market for when you’re buying an investment property. A buyer’s market is sometimes referred to as a soft market because real estate market trends favor the buyer. Mainly, we’re talking about supply and demand. When investors say they’re searching for a buyer’s market, it means they’re searching for a location in which the supply of houses for sale exceeds the demand. These are favorable conditions for homebuyers and real estate investors who are looking for a good deal because it means they have multiple options to go through and have the upper hand in negotiations.
A buyer’s market is characterized by houses for sale at low listing prices (sometimes even lower selling prices) and longer days spent on the market. Competition among buyers is low and sellers typically need to sacrifice the higher price points as they need to compete to attract buyers to their properties.
What Is a Seller’s Market?
Flip the scenario; now the demand for houses for sale is exceeding the supply leading to a hard market for buyers. Buyers are competing to quickly find and close on any properties they find listed in this market. Sellers can take advantage of the high demand and push up house prices. Selling an investment property in this type of market would be smart as property prices are up and you can get the house off the market quickly.
The US Housing Market 2019: Buyer’s or Seller’s Market?
So the consensus for the US real estate market as a whole: is it a buyer’s market or seller’s market? According to Zillow, market inventory is not keeping up with today’s demand for housing and the US is a hot seller’s market. Of course, that doesn’t mean that every market within the country favors sellers, as local real estate market trends can change the game depending on your location.
Mashvisor will give you a list of six US cities and help you determine which markets are best for you based on not just it’s inventory levels and price points, but also key return on investment metrics such as rental income and cash on cash return.
Buyer’s Markets in the US
1) New Orleans, LA
New Orleans is a strong buyer’s market and will be perfect for a successful long term investment, as its home values have appreciated over 40 percent over the last ten years. Both traditional rentals and Airbnb rentals perform quite well considering the average data for the city. Keep in mind to check out Airbnb regulations in any city mentioned before settling on a short term rental strategy as they can make things much more difficult or much more simple.
- Median Property Price: $444,742
- Price per Square Foot: $244
- Price to Rent Ratio: 23
- Days on Market: 110
- Monthly Traditional Rental Income: $1,596
- Traditional Cash on Cash Return: 2%
- Monthly Airbnb Rental Income: $3,336
- Airbnb Cash on Cash Return: 6%
- Airbnb Occupancy Rate: 50%
2) Miami, FL
The Miami housing market is ready for buyers to invest in its real estate. There was a rise in median home sales of 5 percent, but real estate investors should also know that Miami homes for sale sold at around 4 percent below the list price (according to Redfin). Check out the data to see how rental properties are currently performing in this buyer’s market.
- Median Property Price: $575,287
- Price per Square Foot: $349
- Price to Rent Ratio: 20
- Days on Market: 165
- Monthly Traditional Rental Income: $2,442
- Traditional Cash on Cash Return: 1%
- Monthly Airbnb Rental Income: $3,434
- Airbnb Cash on Cash Return: 3%
- Airbnb Occupancy Rate: 55%
3) Tampa, FL
Tampa is currently a buyer’s market, but it might not be for a long time. Investors should start searching for rental properties quickly as a Tampa real estate investment is bound to turn over a good profit. This is due to the fact that it is a hot tourist location and rental demand is high (over half the Tampa population- 53 percent is renters).
- Median Property Price: $374,466
- Price per Square Foot: $188
- Price to Rent Ratio: 19
- Days on Market: 74
- Monthly Traditional Rental Income: $1,707
- Traditional Cash on Cash Return: 2%
- Monthly Airbnb Rental Income: $2,940
- Airbnb Cash on Cash Return: 5%
- Airbnb Occupancy Rate: 54%
Seller’s Markets in the US
1) Cincinnati, OH
Cincinnati is a hot seller’s market but can still be considered one of the best places to invest in real estate as the cost of living and housing are still below the national average. Property prices aren’t as high as you would expect but projected returns are solid, so it seems that even though it is a seller’s market, buyers can still find investment opportunities here. Check the data out:
- Median Property Price: $254,040
- Price per Square Foot: $117
- Price to Rent Ratio: 16
- Days on Market: 65
- Monthly Traditional Rental Income: $1,322
- Traditional Cash on Cash Return: 3%
- Monthly Airbnb Rental Income: $2,419
- Airbnb Cash on Cash Return: 7%
- Airbnb Occupancy Rate: 51%
2) Philadelphia, PA
This is another hot market that shouldn’t be overlooked. The Philadelphia real estate market is a strong seller’s market which has proven to not be an issue for buyers, as competition in this city carries on. The distinct thing about Philadelphia is the fact that the most common property type of housing is row houses and other attached homes. This isn’t a market where single-family detached homes are popular, so don’t go searching for them here. Let’s see how rental property investments are performing:
- Median Property Price: $306,991
- Price per Square Foot: $394
- Price to Rent Ratio: 18
- Days on Market: 79
- Monthly Traditional Rental Income: $1,457
- Traditional Cash on Cash Return: 3%
- Monthly Airbnb Rental Income: $2,032
- Airbnb Cash on Cash Return: 4%
- Airbnb Occupancy Rate: 50%
3) Huntsville, AL
Huntsville is a strong market and is looking forward to an influx of job opportunities with news of a new Mazda manufacturing plant estimated to bring in about 4,000 new jobs. This is great for the Huntsville housing market as real estate and rental demand is expected to go up even higher.
- Median Property Price: $253,897
- Price per Square Foot: $99
- Price to Rent Ratio: 17
- Days on Market: 65
- Monthly Traditional Rental Income: $1,263
- Traditional Cash on Cash Return: 3%
- Monthly Airbnb Rental Income: $1,543
- Airbnb Cash on Cash Return: 4%
- Airbnb Occupancy Rate: 61%
That concludes our list of a few US seller’s and buyer’s markets. Now if you’re wondering, “Should I buy in a seller’s market?” we have the answer for you. If you’ve got the right tools, you can make a smart real estate investment in any market. Mashvisor is one platform with services for anything you need along your real estate investing journey. To learn more about how we will help you make faster and smarter real estate investment decisions, click here.