New, healthy housing markets are emerging in the midst of continued improvement in the job market. Which markets present the most opportunity for investors?
HomeVestors and Local Market Monitor recently identified the ten best markets for real estate investors for the first quarter of 2016 based on cities with increased job opportunities in the last year. The report showed that the overall national average increase was 1.9 percent.
At the top of the list for investors is the Dallas-Plano-Irving, Texas metro area, San Antonio, Texas came in second , and Grand Rapids-Wyoming, Michigan took third, but their numbers were strong, according to the data. Wrapping up the top five best cities for real estate investors are Orlando, Florida follows and Atlanta-Sandy Springs-Marietta, Georgia.
"Good job growth is driving prices higher in our markets, mainly in business services but also tourism (Orlando, San Antonio), finance (Charlotte, Dallas) and manufacturing (Grand Rapids),” said Ingo Winzer, President and Founder of Local Market Monitor.
HomeVestors and the Local Market Monitor also based the ranking on markets that will be good rental markets and where home prices are likely to rise at an increased rate over the next few years. Other important criteria considered includes markets where:
- the population has been growing at above-average rates with growth coming from people moving there in search of jobs;
- the current rate of job growth of two percent or better; and
- there is low unemployment, so that new jobs will be filled by people who move there, not by unemployed people who are already there.
Although home prices have recovered in Texas, California, and Florida, the report predicts that some markets in these states will be over-priced in another year and could potentially endure the risk of a boom and bust down later.
"Over the last year, we have seen an increase in population and job growth,” said David Hicks, HomeVestors Co-President. “However, housing prices are increasing significantly faster than incomes. As a result, home sales are slowing, limiting the housing demand. Therefore, investors need to be careful where and when they invest.”
Winzer agreed, “Prices are still at or below the income price—and a couple of years away from being too high. Yesterday's opportunity becomes today's risk once prices move higher than they should. This is especially true for investors in rental properties and especially now that the deep discounts at which properties could be bought have largely disappeared.”
Ken Channell, Co-president of HomeVestors said, "Investors always need to think hard, but in this environment they also can't afford to think too long."
HomeVestors and Local Market Monitor 's first-quarter 2016 top 10 markets for real estate investing:
1. Dallas-Plano-Irving, Texas
2. San Antonio, Texas
3. Grand Rapids-Wyoming, Michigan
4. Orlando, Florida
5. Atlanta-Sandy Springs-Marietta, Georgia
6. Charlotte-Gastonia-Concord, North Carolina
7. Salt Lake City, Utah
8. Nashville-Davidson-Murfreesboro, Tennessee
9. Tampa-St. Petersburg-Clearwater, Florida
10. Phoenix-Mesa-Scottsdale, Arizona
Click here to view the full report.