If you ask ten different experienced real estate investors what “fast growing” means, the odds are that you’ll get ten different answers.
Of course, common financial metrics used to measure how profitable a real estate investment could include cash flow, yield, and property appreciation. Generally speaking, markets with strong job growth, increasing populations, and rising rents tend to make the best markets for rental property investment.
However, the fact is that even professional real estate investors interpret data in different ways. In this article we’ll look at how four leading real estate organizations rank the fastest growing markets in the U.S.
While there’s some agreement on the best markets for investors, there are also some places to invest that may come as a potentially profitable surprise.
1. Urban Land Institute’s List
The Urban Land Institute (ULI) is the oldest and largest network of cross-disciplinary real estate and land use experts in the world. With 40,000 global members, the organization’s professionals are actively involved in issues such as housing and communities, real estate finance and investment, innovation in development practice, and shaping successful cities and regions.
For 41 consecutive years, the ULI, in conjunction with financial professional services firm PwC (PricewaterhouseCoopers) has been publishing the Emerging Trends in Real Estate report. Using criteria such as population size and growth, development opportunities, investment capital inflow, and transaction volume, the ULI ranks these 20 U.S. markets has having the best overall real estate prospects in 2021:
- Dallas/Fort Worth
- Tampa/St. Petersburg
- Salt Lake City
- Washington, DC - Northern Virginia
- Long Island
- San Antonio
- Northern New Jersey
- Cape Coral/Fort Myers/Naples
- Inland Empire
- Orange County
- Washington, DC - Maryland suburbs
Markets rated in the top ten have a strong representation from mid sized markets – such as Austin, Charlotte, and Nashville – and have also consistently attracted investment capital.
According to ULI, single family housing may be emerging as a “safe haven” in an uncertain world. In fact, single family homes targeted toward the moderate workforce renter and high income renters have the best investment prospects and the best development prospects among all residential property types in 2021.
2. Realtor.com’s List
Realtor.com is owned by Move.com, whose parent company is the publicly held mass media and publishing company News Corp, owner of assets such as Dow Jones & Company, publisher of The Wall Street Journal. The company has a long-standing partnership with the National Association of Realtors (NAR), the largest trade association in the real estate industry.
The Top Housing Markets for 2021 forecast by Realtor.com uses criteria such as supply and demand, home sales, and affordability to rank each major real estate market in the U.S. Macro economic factors used in the housing forecast include GDP, monetary policy and the Federal Reserve’s effect on mortgage interest rates, employment, consumer confidence, and the general economic outlook for the U.S.
According to Realtor.com, the top ten housing markets positioned for growth in 2021 are:
|Market||Sales Volume||Price Change|
|1. Sacramento-Roseville, CA||17.2%||7.4%|
|2. San Jose-Santa Clara, CA||10.8%||10.8%|
|3. Charlotte, NC||13.8%||5.2%|
|4. Boise, ID||9.8%||9.1%|
|5. Seatle-Tacoma, Washington||8.9%||9.7%|
|6. Phoenix,-Mesa-Scottsdale, AZ||11.4%||7.0%|
|7. Harrisburg-Carlisle, PA||14.4%||3.8%|
|8. Oxnard-Thousand Oaks, CA||12.5%||5.5%|
|9. Denver-Aurora-Lakewood, CO||12.5%||5.4%|
|10. Riverside-San Bernadino, CA||12.4%||5.5%|
The report predicts that these top ten real estate markets are primed for growth in 2021. Some of the factors these top housing markets have in common are:
- Strong housing momentum from 2020 sets up positive performance for 2021
- Buyers have more options due to fewer supply constraints
- Current low housing prices put the markets on the radar screen of both buyers and sellers
- Lower cost of housing in each market creates a low barrier to entry for both millennials and baby boomers
- Economies of these smaller secondary markets should keep growing even if the U.S. as a whole slows down
- Growth of well paying jobs spurs population growth and attracts buyers
3. RealWealth Network’s List
Founded back in 2003, RealWealth Network helps people to create wealth by having the money and the freedom to live life on your own terms. In “18 Best Places to Buy Rental Property in 2021 for Cash Flow & Appreciation” updated last December, the RealWealth researched the best cities to invest in based on job growth, population growth, and housing affordability.
After crunching the numbers, 18 metro areas in 12 states came out on top among all of the other major real estate markets in the U.S. Here are five of the best real estate markets to invest in this year.1. Albuquerque, New Mexico
Albuquerque is a great market to invest in because of its solid job and population growth, and housing affordability. The median home price in metro Albuquerque is $219,000 and the average rent is $1,180 per month.
Located in central New Mexico in the middle of the Rio Grande Valley, Albuquerque sits at the center of New Mexico’s “Technology Corridor” and is home to a concentration of high-tech private companies and government institutions. The metro population is about 915,000 residents, median household income in Albuquerque is $58,512 and the median age is 38.8 years. Single family homes make up 71% of the housing inventory, and 32% of the housing units in Albuquerque are occupied by renters.
2. Atlanta, Georgia
Population growth and equity growth are two of the best reasons to invest in rental real estate in Atlanta. The average home price in metro Atlanta is $247,000 and the median rent is $1,573. Over the past nine years, the population of the Atlanta metro area has grown by 14% while the 6-year equity growth is an impressive 50%.
Atlanta is the third-largest metro area in the Southeast, just behind the Washington DC and South Florida urban areas. Both Georgia and Atlanta are meeting the recession head on, with consumer spending down only 1.6% and new job growth only 8.9% lower than the beginning of the year.
The metro population is just over 6 million residents, median household income is $71,742, and the median age in Atlanta is 36.8 years. Single family homes make up 72% of the housing units in the market, and 36% of the housing units are renter occupied.
3. Charlotte, North Carolina
There’s something about the South that makes the region perfect for rental property investors. Just like Atlanta, the real estate market in Charlotte boasts some very impressive statistics. Population is has grown by 17% over the past nine years, while 6-year equity growth is an astounding 49%. The median home price in metro Charlotte is $249,275 and the average rent is $1,502.
With a metro population of about 2.5 million, Charlotte has seen an uptick of millennials moving to the area, something that every real estate investor loves to hear. Job growth in Charlotte was nearly 3.6% last year, while the population grew by over 1.7%. Median household income is $62,068 and the median age in Charlotte is 37.7 years. Of the over 1 million housing units in the market, 35% are occupied by renters.
4. Dallas, Texas
Six-year equity growth in metropolitan Dallas is 55%, while the population of Dallas has grown by over 18% during the last nine years, more than twice as fast as the national average. Last year alone, population growth in Dallas was nearly 1.9%, and median property values has grown by 11.1% over the past 12 months.
Despite these impressive numbers, housing is still affordable in Dallas. The average price of a home in the Dallas metro area is $263,688 and median rents are $1,563 per month.
Home to nearly 7.6 million residents, Dallas is the fourth most populous metropolitan area in the country. Many well-known, high-tech businesses are relocating to Dallas and Texas for the business-friendly environment and a much better quality of life.
Job growth in Dallas was nearly 2.9% last year, boosting median household incomes to $69,445. Median age in the metro area is just 35.2 years, and 40% of the housing units are occupied by renters.
5. Indianapolis, Indiana
Indianapolis is the 2nd largest city in the Midwest with a population of nearly 2.1 million people. The job market in Indianapolis has growth by more than 1.7% year-over-year, with median household incomes more than $61,000. Average home prices are $193,000 and median monthly rents are $1,255.
Equity growth in Indianapolis is 38% over the past six years, while median property values have increased by 4.3% year-over-year. The government here is pro-business, helping to create a vibrant job market with a cost of living that is below the national average. Median age in metro Indianapolis is 36.6 years, and 35% of the housing units in the market are occupied by renters.
4. Motley Fool’s List
Million Acres is a Motley Fool company created with the goal of making you smarter, happier, and richer through real estate investing. Earlier this year, Million Acres published “15 Real Estate Markets You Should Consider Investing in Before 2021.”
Although 2021 has already begun, experienced real estate investors know that it’s never too late to find deals in the best rental property markets. As Motley Fool notes, over the last few years the high cost of living has pushed residents and business into midsize metro areas and smaller secondary markets where job opportunities are greater and the standard of living is better.
In ranking the top metro markets for rental property investors in 2021, the company analyzed various data points including population growth, employment change, market rents, and price-to-rent ratio:
- Chesapeake, Virginia
- Norfolk, Virginia
- Rochester, New York
- Cleveland, Ohio
- Lincoln, Nebraska
- Castroville, California
- Slade, Kentucky
- Cherry Log, Georgia
- Shenandoah, Virginia
- Athens, New York
- Apollo Beach, Florida
- Stanton, Kentucky
- Kerhonkson, New York
- Two Harbors, Minnesota
- Gerton, North Carolina
Investors should note that markets with strong population growth aren’t necessarily the best for rental property investment.
For example, fast-growing metro areas such as Myrtle Beach, SC with 3.6% growth and Lakeland, FL with a 3.1% population growth rate both have low price-to-rent ratios. By contrast, some of the best markets for renter demand have price-to-rent ratios of 20.0 or higher.
How can you find rental property in your favorite real estate market?
The Roofstock Marketplace has many rental properties listed for sale in the markets mentioned throughout this article. Start browsing properties here.