The old saying about real estate and location is still true. All you have to do is look at the range of home values in different states to see the proof. Visit NAR’s Median Home Value map, and you’ll find that Lincoln County, Nebraska has a median home price of $131,000 while Whatcom County, Washington is $325,00, and Santa Clara County, California is $922,000.
But deciding where to invest is not about picking the city with the priciest properties. You want an area where a modest initial investment can net you a healthy profit because home values are starting to rise. There are several factors that go into these assessments.
How to Spot a Hot Market
Successful investing often involves getting good at predicting which cities and which neighborhoods will experience home value increases in the future. You want to look for affordability and growth.
News and statistics to track include:
- Home prices and values and existing-home sales
- Population and household demographics
- Housing affordability index
- New industries coming into an area
- Zoning and infrastructure changes
- Days on the market
- Development projects like new commercial development or city projects
Which Regions are Booming?
The National Association of REALTORS® forecasts for 2017 predict Western metro markets will likely see higher price and sales increases than the rest of the country. Tucson, Portland, and Los Angeles were among NAR’s top housing markets for 2017 due to job growth, consumer confidence, and population. These areas have lots of millennials and baby boomers, affordable rents, and low unemployment. Also, millennials may dominate Midwestern markets due to strong affordability.
Based on price and sales gains, the NAR forecasted the top 10 housing markets in 2017 will be:
- Phoenix-Mesa-Scottsdale, AZ
- Los Angeles-Long Beach-Anaheim, CA
- Boston-Cambridge-Newton, Mass.
- Sacramento–Roseville–Arden-Arcade, CA
- Riverside-San Bernardino-Ontario, CA
- Jacksonville, FL
- Orlando-Kissimmee-Sanford, FL
- Raleigh, NC
- Tucson, AZ
- Portland-Vancouver-Hillsboro, OR-WA
Which Cities Offer a Good Return on Investment?
Often the best investment opportunities are markets that aren’t yet swamped with eager investors. These are places where you can get a good return on investment without big risks. As you’ll note in the list below, most of the average home prices are below $300,000.
Forbes Best Buy Cities for 2017 include:
- Dallas, TX: average home price $233,000
- Jacksonville, FL: average home price $225,000
- Orlando, FL: average home price $219,000
- Seattle, WA: average home price $416,000
- West Palm Beach, FL: average home price $313,000
- Salt Law City, UT: average home price $277,000
- Tampa – St. Petersburg, FL: average home price $213,000
- Nashville, TN: average home price $249,000
- Fort Worth, TX: average home price $206,000
- Grand Rapids, MI: average home price $166,000
The top five cities are forecasted to exceed the national average for the next 3 years.
Sacramento, San Diego, Las Vegas, Phoenix, and San Antonio appeared in the top 20 cities.
Major factors in these calculations included:
- Home price growth
- Job growth
- Affordability: home price vs. income
- Population increase
- Home price forecast
Smart, profitable decisions grow from preparation and good information. Keep your eye on important housing, population, and development news to stay ahead the trends and invest in those markets with the best bang for your buck.
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