Toledo is the perfect real estate market for investors looking for affordable single-family rental property in a market with sure and steady growth. With an average price per square at less than $80 for a home, it’s easy to understand why BiggerPockets recently said Toledo was the number one most overlooked real estate market.
Relatively inexpensive housing has always been one of the bright spots in Toledo, with the investment dollar going much further than other Ohio cities such as Cleveland and Dayton. Despite the low cost of housing in the city, Toledo is very much a rental market, with nearly half of the households renting rather than owning.
Toledo is in northwest Ohio, located along the shores of Lake Erie and less than a one hour drive from Detroit. The economy is powered by the transportation, manufacturing, auto assembly, education and healthcare, and glass manufacturing sectors, earning Toledo the nickname “The Glass City”.
Population and job growth in the Toledo Metro area are slow and steady. Combined with affordable real estate prices and rising rents, it’s no wonder that investors are taking notice of the Toledo real estate market in 2021.
Toledo is starting to see a slow-down in population growth, the same as most cities in Ohio. However, one demographic group that keeps coming to Toledo is millennials. In fact, 69% of the people moving to Toledo are in their 20s and 30s, helping Toledo rank 8th last year for millennials on the move.
Key Population Stats:
- City of Toledo is home to about 272,000 residents with more than 641,000 living in the Toledo metropolitan area.
- Toledo is the 4th most populated city in Ohio and the 71st-largest city in the U.S.
- Toledo MSA is comprised of Fulton, Wood, and Lucas counties (the county Toledo is located in).
- Toledo has strong economic ties to Detroit, located just 40 miles north of Toledo, and is part of the Great Lakes Megalopolis.
- Population in Toledo has declined 0.13% year-over-year.
- Median age in Toledo is 38.4 with 27% of the population between the ages of 20 and 39.
Employment growth in Toledo declined by about 0.8% year-over-year, and is now showing signs of recovery. According to the U.S. Bureau of Labor Statistics (BLS), unemployment is down to 5.6% as of October 2020. Job sectors in Toledo showing the fastest signs of rebounding include construction, information services, financial activities, and education and health services.
Key Employment Stats:
- GDP of Toledo MSA is nearly $35 billion, according to the Federal Reserve Bank of St. Louis, and has grown by more than 14% over the past 10 years.
- Job growth in Toledo declined by 0.8% last year while unemployment is down to 5.6%.
- Target industry clusters in Toledo and Lucas County include plastics and automotive components, engineering services, logistics and warehousing, biomedical and advanced manufacturing.
- Fortune 500 and Fortune 1000 companies headquartered in the Toledo metropolitan area are Dana Incorporated, Owens Corning, The Andersons Inc., Owens Illinois, and HCR ManorCare.
- Largest employers in Toledo and Lucas County include ProMedica, Mercy Health, Bowling Green State University, The University of Toledo, The Andersons, GM, HCR ManorCare, First Solar, Welltower real estate investment trust, and Marathon Petroleum Corporation.
- Some of the major colleges and universities in Toledo are The University of Toledo, University of Toledo College of Medicine and Life Sciences, Davis College, and Owens Community College.
- 90.7% of Toledo residents are high school graduates or greater, while 28.2% hold a bachelor’s degree or advanced degree.
- Interstate highways I-70 and I-80 run through Toledo and put the region within an 8-hour drive of 60% of the U.S. population.
- Toledo is a main hub and artery for freight rail lines Norfolk & Southern and CSX.
- Port of Toledo provides large freight and bulk commodity shipping service throughout the Great Lakes Region.
- Toledo Express Airport (TOL) is served by Allegiant and American Airlines providing non-stop service to Orlando, Tampa, Fort Myers, Charlotte, and Chicago.
Real Estate Market
The Toledo real estate market is currently a buyer’s market, with the supply of homes greater than the demand for homes. That’s good news for real estate investors who are looking to buy a good rental property at a fair price without getting caught up in a bidding war.
According to the most recent report from the Toledo Association of Realtors (Q3 2020) the average sales price of a single-family home in Toledo has only increased by 1% year-over-year, while the average days on market is 98.
Key Market Stats:
- Zillow Home Value Index (ZHVI) for Toledo is $84,723 through November 2020.
- Home values in Toledo have increased by 13.5% year-over-year and are predicted to grow by another 11.5% in the next 12 months.
- Over the past five years home values in Toledo have increased by more than 47%.
- Median list price of a single-family home in Toledo is about $123,000 based on the most recent report from the Toledo Association of Realtors.
- Single-family homes in Toledo are selling for 97% of the original listing price.
- Median sales price of a single-family home in Toledo is $119,775.
- Days on market (average) for a single-family home is 98.
- Average sales prices in Toledo have increased by 1% year-over-year while days on market has decreased from 101 to 98 over the same time period.
- Toledo is a buyer’s market, with the supply of homes greater than the demand for homes, according to Realtor.com.
- Of the 23 neighborhoods in Toledo, Southwyck is the most expensive with a median listing price of $174,900.
- Most affordable neighborhood in Toledo is Onyx where the median listing price of a home for sale is $15,000.
Strong Renters’ Market
MarketWatch recently named Toledo as one of the 25 cities in the U.S. where a Social Security check will easily cover the rent.
That’s probably one of the reasons why nearly half of the households in Toledo rent rather than own. It may also be why the real estate market in Toledo is strong and steady. According to Realtor.com, home prices in Toledo are projected to increase by 3.3% while sales volume in the market is expected to grow by about 3.9%.
Key Market Stats:
- Average rent in Toledo is $895 per month for a 3-bedroom unit based on the most recent research from Zumper (December 2020).
- Rents in Toledo have increased by 12% year-over-year.
- Over the past three years average rents in Toledo have increased by about 14.5%.
- Renter-occupied housing units account for 45% of the total occupied housing units in Toledo.
- Most affordable neighborhoods in Toledo for renters are Englewood, Northriver, and Birmingham where rents are $690 or less per month.
- Most expensive neighborhoods in Toledo for renters are Westgate, Franklin Park, and Beverly-Harvard where rents can go as high as $1,150 per month.
Historic Price Changes & Housing Affordability
When narrowing down the options of which real estate markets to buy property in, investors usually include data on home price changes and housing affordability in their analysis.
Historic prices changes may indicate the potential for future property appreciation. How affordable houses are to buy can help indicate the potential demand for rental property, everything else being equal.
Each month Freddie Mac releases up-to-date data on the change in home prices for all markets across the U.S. The most recent Freddie Mac House Price Index (FMHPI) report for the Toledo MSA reveals:
- October 2015 HPI: 95.97
- October 2020 HPI: 129.76
- 5-year change in home prices: 35.2%
- One-year change in home prices: 10.4%
- Monthly change in home prices: 1.1%
The Housing Affordability Index (HAI) from the National Association of Realtors (NAR) is a report showing how affordable it is to buy a home in every market throughout the U.S.
However, markets where houses are affordable aren’t necessarily bad rental markets. For example, even though homes in Toledo are very affordable to buy relative to other cities in the U.S., nearly 50% of the households rent rather than own.
This may be due to various factors including economic levels, low supply of housing inventory, and lifestyle preferences.
The Housing Affordability Index 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, everything else being equal. When creating the analysis, the NAR looks at median family income compared to the median price of an existing single-family home purchased using a conventional mortgage with 20% down.
Based on the NAR’s latest report, the HAI for the Toledo MSA was 285.3 in 2018, the most recent year available. This means that the median family has almost three times the income needed to purchase a median priced, single-family resale home in the Toledo metro area.
Quality of Life
Livability.com has long been suggesting that millennials should take a second look at living and working in Toledo, Ohio. People are friendly, the city is affordable, and there’s plenty of culture and opportunity.
A millennial-friendly city is also a great place for rental property investors. That’s because the millennials often prefer to rent rather than buy a home.
Key Quality of Life Stats:
- Forbes gives Toledo solid rankings as a best place for business and careers, cost of doing business, job growth, and education.
- Cost of living in Toledo is 13% below the national average.
- Niche.com says Toledo is one of the best places to live in Lucas County (where Toledo is located) and gives the city strong ratings for nightlife, diversity, and family living.
- Attractions in Lucas County include the Toledo Museum of Art, Toledo Zoo, Lake Erie and the Maumee River, and a vast network of forests and wetlands.
- Climate in Toledo is humid continental with four distinct seasons, warm and humid summers and cold snowy winters.
- Toledo is home to a variety of companies manufacturing glass windows, bottles, and art, earning the nickname “The Glass City”.
- U.S. News & World Report ranks Toledo among the top cities in the country to live and to retire.
- ProMedica Toledo Hospital and Advanced Specialty Hospital of Toledo are ranked as two of the best healthcare facilities in the city.
- The Automobile Racing Club of America is headquartered in Toledo and the Highland Meadows Golf Club hosts the annual LPGA Marathon Classic.
Get Out the Map
Where to begin your search? Roofstock created a heat map of Toledo 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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