Houston topped a list of the best cities for residential real estate investments as pent-up demand and a growing economy overshadowed the cloud of lower oil prices, a new report showed.
HomeVestors, the Dallas-based company that runs the “We Buy Ugly Houses” franchise, and Local Market Monitor, a national real estate forecasting firm, identified markets where home prices are likely to increase at a good rate over the next few years. It looked at markets with above-average population growth (4 percent or better), current job rate growth of 2 percent or better and low unemployment.
The nation’s economy is growing at the fastest rate since 2000, which translates into a good market for residential investments either for rent or resale.
“The Top 10 markets for real estate investment all have a common thread: a fast growing economy, which means more jobs and more renters,” Ingo Winzer, president and founder of Local Market Monitor, said in an announcement. “This also means that rent and property values will be increasing in many markets because housing construction has been at very low levels for years and can’t possibly catch up with the increased demand.”
Houston, Austin and Dallas took the top three slots, with Denver and Orlando rounding out the top five.
“Texas continues to be a sure bet when it comes to real estate investing. Lower oil prices may slow some areas, but the diversified economy and pent up demand for real estate will help to mitigate the impact on rental markets,” David Hicks, HomeVestors co-president, said in an announcement. “Places like Austin and Dallas have rapidly growing technology and financial sectors that make the oil slump less significant.”
All top five markets have a median home price below $300,000.
San Jose and Oakland ranked Nos. 6 and 8, respectively.
“California has higher home prices, but the state is growing again, both in jobs and population. Because most of these markets are no longer underpriced, investors in these markets are likely to see more of their gain come from price appreciation and less from a long-term rental stream,” HomeVestors co-president Ken Channel said.
Growing tech sectors and a quality of life helped propel Seattle to No. 7 and Portland to No. 10, while a rapidly growing population and high rents took Miami to No. 9.