In the third quarter of 2018, a Zillow Survey interviewed 100 experts about their US housing market predictions for the next 5 years. This group was comprised of housing market analysts, investment strategists, and economists, among others. According to predictive analytics, 76% of the experts said that homebuyers and real estate investors will not experience a buyer’s market. Their opinion was based on two factors: housing inventory and housing price appreciation. The market forecast showed that while investment properties have appreciated by up to 7.6%, housing inventory has dropped sharply across many major markets. Limited housing supply and high real estate prices mean that investors will be facing seller’s markets in the US housing market.
When thinking of where to invest in real estate, many investors make the blunder of focusing on the hottest real estate markets experiencing those trends. These are the areas which everyone is talking about in popular magazines or social media. Since these hot markets have performed well in past years, it is assumed that they are the best places to invest in real estate.
However, in the past few years, more and more people have been migrating from primary markets to satellite towns and small cities (secondary markets). According to a recent study by the PwC, populations of Los Angeles, Chicago, and New York City will increase at a rate of just 0.2% in the next five years. However, smaller cities such as Boise, Charleston, and Phoenix will grow at a rate of 1.6%. Therefore, savvy investors and property managers can take advantage of this trend by focusing on the emerging real estate markets.
Here are some of the up-and-coming real estate markets that investors should look out for. These emerging real estate markets have been selected based on real estate data from Mashvisor’s investment property calculator.
Charlotte, North Carolina
Home to over 800,000 people and the largest city in North Carolina, Charlotte is one of the emerging real estate markets. Its metropolitan area boasts about two and a half million residents. Charlotte not only boasts affordable real estate markets, but it is also a very vibrant location for business. Therefore, any investor that wants to buy and hold, renovate and flip or invest in single-family properties, condos, or multi-family properties will find this city worth exploring for real estate appreciation.
- Traditional Rental Income: $1,535
- Traditional Cash on Cash Return: 1.2%
- Median Property Price: $414,654
- Price per Square Foot: $197
- Average Days on Market: 82
- Price to Rent Ratio: 23
- Walk Score: 35.49
Related: What You Need to Know About Charlotte Real Estate
Columbus, Ohio
Columbus, Ohio is also among the emerging real estate markets to look out for. With a population of 900,000 people, it is the 14th largest city in the United States. The Columbus housing market is actually much larger than most investors think. With the inclusion of the suburbs, the Columbus real estate market adds up to about two million people.
- Traditional Rental Income: $1,188
- Traditional Cash on Cash Return: 1.4%
- Median Property Price: $241,114
- Price per Square Foot: $140
- Average Days on Market: 68
- Price to Rent Ratio: 17
- Walk Score: 41.56
Start looking for a profitable Columbus investment property right now.
Denver, Colorado
Over the last 10 years, Denver has continued to be one of the secondary markets to watch out for in the United States. According to the recent report by PricewaterhouseCoopers and Urban Land Institute on Emerging Trends in Real Estate, Denver is ranked at position 8 out of 79 metropolitan areas. The report reveals the reasons why Denver is considered one of the emerging real estate markets:
- A growing convention and tourism market that has boosted the hospitality industry
- Growth of Denver International Airport as a recognized international airport
- Availability of key parcels in the city
This Emerging Trends in Real Estate report is compiled based on surveys and interviews of developers, fund managers, lenders, property companies and real estate investors.
- Traditional Rental Income: $2,021
- Traditional Cash on Cash Return: 1.6%
- Median Property Price: $515,033
- Price per Square Foot: $300
- Average Days on Market: 56
- Price to Rent Ratio: 21
- Walk Score: 54.41
Nashville, Tennessee
The Emerging Trends in Real Estate report by Urban Land Institute and PwC ranked Nashville at No. 5 among the emerging real estate markets. This is the city’s highest ever position in the history of the 40-year-old report. The report notes that though gateway markets have become more transparent and competitive, high growth non-gateway markets (secondary markets) are known to have much less competitive environments. As a result, emerging real estate markets such as Nashville have continued to benefit from these major economic and demographic shifts.
- Traditional Rental Income: $1,704
- Traditional Cash on Cash Return: 1.8%
- Median Property Price: $433,219
- Price per Square Foot: $4,721
- Average Days on Market: 112
- Price to Rent Ratio: 21
- Walk Score: 36.96
Fort Worth, Texas
The Emerging Trends in Real Estate report ranked Fort Worth top in the emerging real estate markets. According to the report, several factors have made this city the place for real estate investors to watch. The relatively low cost of doing business, low cost of living, and tax efficiency have continued to attract residents and investors alike. In addition, the population growth rate of Fort Worth is expected to be more than double the national average. With a population growth skewed towards younger people, Fort Worth is expected to continue ranking high among the emerging real estate markets, thus making it one of the best places to buy a rental property.
- Traditional Rental Income: $1,601
- Traditional Cash on Cash Return: 1.3%
- Median Property Price: $289,793
- Price per Square Foot: $136
- Average Days on Market: 60
- Price to Rent Ratio: 15
- Walk Score: 35.04
Other emerging real estate markets to look out for include Clearwater, Las Vegas, Orlando, Phoenix, Sacramento, San Antonio, Tampa, and San Diego. To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.