Dayton has managed to remain under the radar screen of most real estate investors, which is surprising given how inexpensive the market here is. However, as the Motley Fool reports, the area is beginning to catch on with investors and buyers focusing on smaller, lower-priced markets.
Last year, Dayton ranked as one of the few smaller markets with the highest rent increases in the country, a trend that’s expected to continue this year. The Dayton Realtors association predicts another “banner year," even as sales prices begin to slightly decline.
Dayton is located in the southwestern part of Ohio and is part of the Miami Valley region just a little north of Cincinnati. Although small in size, Dayton boasts a dynamic and diverse economy driven by a wide variety of industry sectors including manufacturing, logistics, aerospace engineering, military, and government.
The city is the birthplace of Orville Wright, who along with his brother created the first motor-powered airplane and is known around the world for its numerous inventors and patents.
Keep reading to learn more about the opportunities that lie ahead in 2020 for the Dayton real estate market.
There are plenty of reasons to be optimistic about Dayton, according to a recent article in Forbes.
Downtown Dayton continues to attract Millennials who want to work, live and play without having to commute in from the suburbs. Population growth in the Dayton area is expected to be slow and steady, with more people moving into the region than leaving over the next several years.
Key Population Stats:
- City of Dayton is home to more than 140,000 residents with more than 800,000 in the four-county metro area.
- Dayton is the 6th-largest city in Ohio and the 4th-largest metropolitan area in the state.
- Counties in Metropolitan Dayton are Greene, Miami, Montgomery (where Dayton is located), and Preble.
- “Miami Valley” is used to describe the Greater Dayton metro area.
- Population growth in the Dayton Metropolitan Area was 3.5% last year, according to the Dayton Daily News.
- Median age in Dayton is 33 years vs. Ohio median age of 39.
Job growth in Dayton is expected to be brisk this year, according to a recent survey by Manpower. In fact, 26% of the employers surveyed plan on hiring more people, creating a net employment outlook for 2020 three points above Q4 2019.
Key Employment Stats:
- GDP of Dayton MSA is more than $41 billion, according to the Federal Reserve Bank of St. Louis, and has grown by 23% since 2010.
- Job growth in Dayton was 0.4% last year, according to Forbes.
- The Dayton metro area has seen 60 consecutive months of year-over-year payroll growth between October 2013 and September 2018.
- Unemployment rate is 3.6%.
- Dayton ranks second among similar sized markets for the number of new economic development projects including the expansion of the Conagra Brands plant and the F-35 fighter jet sustainment program at Wright-Patterson Air Force Base.
- Target industries in the Dayton metro area include aerospace and defense, agriculture and food processing, automotive, bioscience, cyber technology, and logistics and distribution.
- Numerous companies have their corporate headquarters in Dayton, including Reynolds and Reynolds, CareSource, Kettering Health Network, and Standard Register.
- Premier Health Partners, Kettering Health Network, Montgomery County, Sinclair Community College, and University of Dayton are the top five employers in Dayton.
- Wright-Patterson Air Force Base is the Dayton Region is the largest single-site employer in the State of Ohio.
- Dayton has a high concentration of people holding advanced degrees in the STEM fields (science, technology, engineering, mathematics) helping to fuel the region’s reputation as a STEM powerhouse.
- Major colleges and universities in Metropolitan Dayton include University of Dayton, Wright State University, Sinclair Community College, Antioch University, and the Air Force Institute of Technology.
- Nearly 25% of the residents in the Dayton Region hold a bachelor’s degree or advanced degree.
- Interstate highways I-70 and I-75 pass through Dayton, putting the region within a one-day drive of 60% of the population in the U.S.
- CSX and Norfolk Southern provide freight rail service in Dayton.
- Dayton International Airport (DAY) serves as a regional air freight hub for FedEx Express, UPS Airlines, and the USPS, with commercial passenger service provided by American Airlines, Delta, and United Express.
Real Estate Market
The Dayton-area housing market is expected to continue its “banner year” momentum in 2020, according to a report published in the Dayton Business Journal. Conditions in the market appear to be favoring rental property investors this year. Housing inventory is tight and there isn’t a lot of affordable housing available for first-time buyers, which may be one reason why more people rent in Dayton than own.
Key Market Stats:
- The median listing price of a house in the City of Dayton is $68,900 according to Zillow while the median listing price of a home in the Dayton Metropolitan/Miami Valley area is $142,750 according to Dayton Realtors (as of January 2020).
- Square foot listing price in Dayton is $54 vs. $97 per square foot in the Dayton Metro/Miami Valley metropolitan area.
- Home values in Dayton increased by 10.24% last year and by nearly 50% since January 2016 based on the Zillow Home Value Index.
- Average days on market is 79.
- During the listing period 10.4% of the houses for sale in Dayton have a reduction to the listing price.
- 27.6% of the homes in Dayton have a negative equity vs. 8.2% nationally.
- 1.9% of the homes in Dayton have a delinquent mortgage vs. 1.1% U.S. average.
- Neighborhoods in Dayton with the highest home values include Northridge Estates and Dayton View Triangle.
- Fairview and North Riverdale are two neighborhoods in Dayton with the lowest home values.
Strong Renters’ Market
Dayton ranked among the top small markets with the greatest rent growth, according to a recent article in Construction Dive. Through fall of last year, the rental market in Dayton was only one of a handful of cities with a population of 2 million or less to post rent rate increases of 4% or more.
Key Market Stats:
- Median rent in Dayton is $799 per month vs. $1,125 per month for the Dayton/Miami Valley metropolitan area.
- Rents in Dayton increased by an average of 7% over the past year, according to RENTCafé.
- 45% of the housing units in Dayton rent for between $501 and $700 per month.
- 53% of the households in Dayton are renter-occupied.
- Neighborhoods in Dayton with the lowest rents include Burkhardt, Springfield, and Arlington Heights where rents average between $567 and $584 per month.
- Neighborhoods in Dayton with the highest rents include Southern Dayton, Webster Station, and Wolf Creek where rents average $1,269 per month.
Historic Price Changes & Housing Affordability
Two key sets of data that buy-and-hold real estate investors should always review when selecting markets for rental property purchases are the historic price changes in the local market and the affordability of housing.
Changes in property price over the long term can be a good indicator of the potential for future appreciation and equity increases. Housing affordability index (HAI) is also one indicator of how strong the demand for rental property may be in a given market, everything else being equal.
However, simply because housing is affordable doesn’t always mean that more people will buy than rent. In Dayton for example, even though housing is relatively affordable there are actually more people who rent than own.
Each quarter the FHA releases up-to-date data on the change in home prices for all markets across the U.S. The most recent FHA 2019 Q3 House Price Index report for the Dayton-Kettering MSA shows:
- Since Q1 1991 homes prices have increased by 83.93%
- Over the past five years home prices have increased in Dayton by 33.74%
- Over the past year prices have increased by 5.64%
- Over the last quarter home prices in Dayton have increased by 1.66%
The Housing Affordability Index from the National Association of Realtors (NAR) is calculated by comparing median family income to the median price of an existing single-family home. When creating the index, the NAR assumes that purchases are made using a conventional loan with a 20% down payment.
The HAI from the National Association of Realtors uses 100 as a baseline affordability index number. The greater a market’s HAI is above 100, the more affordable a market is.
Based on the NAR’s latest report, the HAI for the Dayton MSA was 240.01 in 2018, the most recent year available. This means that the median family has about 2.4 times the annual income needed to purchase a median priced, single-family resale home in the Dayton metro area.
Quality of Life
The Dayton Business Journal recently reported that Dayton is climbing the list of one of the best places to live in the U.S. Cost of living is well below the national average and the city is filled with historic neighborhoods and districts. Outdoor lovers have plenty to choose from among the 20 different metro-area parks and more than 300 miles of biking trails.
Key Quality of Life Stats:
- Forbes gives Dayton high marks in cost of doing business, education and job growth, and names the city as one of the best places for business and careers in the U.S.
- Cost of living in Dayton is 14% below the national average.
- In fact, Dayton is one of the most inexpensive markets in the country, although the word is starting to get out.
- Niche.com awards Dayton “A” ratings for nightlife and diversity.
- U.S. New & World Report lists Dayton among the top 75 places in the U.S. to live and to retire, with strong rankings for value, job market, and quality of life.
- Climate in Dayton is humid continental with hot muggy summers and cold dry winters.
- Although Dayton is small in size, the city boasts a surprising number of things to do and places to visit.
- Dayton Art Institute helps the city rank as an arts destination, while the Dayton Philharmonic Orchestra, Dayton Opera, and Dayton Ballet all host performances in the Schuster Performing Arts Center.
- Wright State Raiders and Dayton Flyers are two NCAA Division I teams in Dayton.
- Miami Valley Hospital and Kettering Medical Center are the two top hospitals in Dayton, Ohio.
Get Out the Map
Where to begin your search? Roofstock created a heat map of Dayton based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels and other vital investment criteria.
DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood
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