"Savvy real estate investors can still find hidden gems in affordable metros across the country," according to a new report on the top 10 markets for real estate investors from Realtor.com. The report focused on less obvious but very promising markets, especially in the Midwest and Northeast.
The markets identified shared certain characteristics. They had low vacancy rates and strong demand, demonstrating affordability, growth potential, rising rents and sustained buyer demand. These markets also had almost double the page views of the average nationwide, with home prices on average 21.7% lower than the national average.
Rental vacancy rates were similarly lower, averaging 4.8% year to date compared to the national average of 6.6%. "Furthermore, 13.8% of buyers in these markets were investors in Q1 2024, one percentage point below the national average, but up 4.4 percentage points from 2019 levels," the report noted.
Dayton, OH topped the list of best investment opportunities. Buyers have noticed, with investment activity increasing over the past five years. Other Midwestern metros to make the list were Cleveland, Pittsburgh, and Grand Rapids. Here prices have climbed but mortgage payments remain below the typical U.S. monthly average.
"These regions offer investors a prime chance to secure steady rental income and tap into growing demand, making them attractive for both seasoned and first-time investors alike," commented Hannah Jones, Realtor.com senior economic research analyst.
Traditional investment hubs like the South and West are experiencing affordability challenges and rising inventories. The effect has been to focus attention on the Midwest and Northeast. The only Southern city to claim a spot on the top 10 list was Knoxville, and among Western cities only Fresno and Albuquerque did so even though prices here were higher than in other highly ranked cities.
The full Top 10 list for 1Q 2024, in rank order, included Dayton, OH (investor share 13.7%), Rochester, NY (14.7%), Cleveland-Elyria, OH (17.4%) Pittsburgh, PA (13.7%), Knoxville, TN (14%), Albany-Schenectady-Troy, NY (12.4%), New Haven-Milford, CT (13.6%) , Buffalo-Cheektowaga, NY (11.8%), Grand Rapids-Kentwood, MI (7.1%), Columbus, OH (19.4), Fresno, CA (19.5%), and Albuquerque, NM (10.7%).