Best Cities for Real Estate Investment in 2021

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PWC, a massive accounting & consulting firm, has recently published its Emerging Trends in Real Estate report for 2021. You can find the full report here. In the report, PWC highlights how the COVID-19 pandemic has affected office, retail, hospitality, and, more relevant for us, residential sectors as well as best cities for real estate investment in 2021.

Here are a few key trends from that report:

  1. “Industrial properties, data centers, and single-family homes are expected to rise in value, while retail and hospitality will see the largest decline.” 
  2. Work from home dynamics has shifted people away from major cities and into the suburbs, which negatively impacts office real estate but is actually a positive development for the residential sector. 
  3. Interest rates are expected to remain low for the remainder of 2021, keeping borrowing costs for investors down. We must keep in mind the increased interest rate risk that the current rate environment brings. 
  4. Housing remains an issue with limited supply. 

These are just a few facts to consider if you are designing a portfolio with real estate allocation or are planning to become a rental property investor.

In the report, PWC listed the top 10 best cities for Real Estate Investment. We will expand on that report with average statistics and what to expect if you are considering any of the following cities.

Best Ten Cities

Raleigh, North Carolina
Raleigh, North Carolina

Raleigh

Raleigh is the capital of North Carolina and one of the fastest-growing cities in the country. Together with Chapel Hill and Durham, Raleigh makes up the triangle area. There are multiple major companies that sit in between these three cities, making the Raleigh housing market one of the most in-demand areas in the country. With recent news that Apple is setting up a corporate headquarters in the Research Triangle Park (RTP) on the western edge of Raleigh, the housing market in this area is only going to continue to grow.

The most popular neighborhood in Raleigh is Northeast Raleigh which includes subdivisions such as Brier Creek. These houses provide residents with access to great schools and numerous shopping and dining opportunities. A few statistics include:

  • Average House Price: $477,440
  • Average Rent: $1,287 per month
  • Average Capitalization Rate: 2.2 percent for Raleigh overall, with 3.4 percent in Northeast Raleigh
  • With more companies moving to the area, the housing market in Raleigh will only continue to grow.

    Austin, Texas
    Austin, Texas

    Austin

    Austin is the capital of Texas and one of the fastest-growing cities in the country. Austin provides residents with access to a variety of shopping and dining opportunities, warm weather, and great schools. Austin has a strong, vibrant economy that is driven by numerous tech companies moving to the area. Some of the biggest companies that have set up shop in Austin include Apple, Amazon, PayPal, Nintendo, and 3M.

    One of the most popular neighborhoods in Austin is Allendale, which provides an established neighborhood that is just a few minutes away from downtown. This is a great way to enjoy the space of the suburbs without making the commute difficult.

    A few housing statistics in Austin include:

  • Average House Price: $523,100
  • Average Rent: $1,431
  • Average Cap Rate: 0.7 percent (slightly higher for condos)
  • The Austin housing market should remain strong in the future.

    Nashville, Tennessee
    Nashville, Tennessee

    Nashville

    Nashville is the capital of TN and one of the largest cities in the country. Nashville is home to Vanderbilt University, one of the top universities in the world, and is considered the home of country music. Home to the Grand Ole Opry, which doubles as the Country Music Hall of Fame, there is a lot to offer for people of all ages. Nashville enjoys a diverse and rapidly-growing economy, creating numerous opportunities for real estate investors. Nashville is also a popular place for companies looking to provide high-paying jobs.

    Hillsboro Village is one of the top neighborhoods in Nashville. It is nestled between Vanderbilt University and Belmont University, providing residents with access to a trendy area to live and work.

    A few statistics on the Nashville housing market include:

  • Average Home Price: $435,900
  • Average Rent: $1,420
  • Average Cap Rate: 1.9 percent (similar to condos and townhomes)
  • Expect to see the Nashville housing market continue to increase.

    Dallas, Texas
    Dallas, Texas

    Dallas

    Dallas, TX is a large city located at the northern edge of the state. Dallas is a cultural hub that doubles as a commercial and transportation center. Dallas is a large metropolitan city with a diverse population. It is one of the largest cities in the country and provides residents with access to numerous major attractions including the Dallas Cowboys and the Dallas Mavericks.

    Preston Hollow is one of the top neighborhoods in Dallas, providing residents with access to numerous shopping and dining opportunities along with great schools and easy commutes.

    A few statistics on the Dallas housing market include:

  • Average Home Price: $411,500
  • Average Rent: $1,276
  • Average Cap Rate: 1.4 percent
  • The Dallas housing market should remain strong in the coming years as well.

    Charlotte, North Carolina
    Charlotte, North Carolina

    Charlotte

    Another one on the list of best cities for real estate investment in North Carolina is Charlotte, NC. It is one of the fastest-growing cities in the country. Sitting on the border of North and South Carolina, Charlotte is a city known for its strong network of job opportunities, its easy commute, and its low cost of living (when compared to other large cities). Charlotte has numerous industries that dominate its economy including finance, healthcare, and insurance. Charlotte also has a high standard of living due to its job opportunities and relatively light traffic.

    The top neighborhood in Charlotte is Ballantyne, which is home to subdivisions such as Piper Glenn. These areas provide residents with access to South Park Mall, strong schools, and a myriad of shopping and dining opportunities. Charlotte will only continue to grow in the future.

    A few statistics on the Charlotte housing market include:

  • Average Home Price: $435,448
  • Average Rent: $1,321
  • Average Cap Rate: 2.4 percent
  • Expect to see Charlotte continue to grow quickly in the coming years. The housing market will continue to remain strong.

    Tampa,Florida
    Tampa, Florida

    Tampa

    Tampa, FL is one of the largest cities in the state. Tampa is a part of the larger St. Petersburg and Tampa Metropolitan area, usually called Tampa Bay. The city is known for its warm weather and beautiful beaches. It is largely supported by an economy that thrives on finance, insurance, real estate, and pro sports (such as the Tampa Bay Bucs and the Tampa Bay Rays). Bank and telecom companies provide exceptional jobs for the residents in the area.

    One of the best neighborhoods in Tampa is the Tamp Channel District, which provides easy access to water, short commutes, and great jobs. There are also plenty of shops and restaurants in the area.

    A few statistics on the Tampa housing market include:

  • Average Home Price: $412,800
  • Average Rent: $1,451
  • Average Cap Rate: 1.5 percent
  • As the rest of the state grows, expect Tampa to grow as well.

    Salt Lake City, Utah
    Salt Lake City, Utah

    Salt Lake City

    Salt Lake City is one of the largest cities in Utah. It is known for its easy access to the ski slopes, gorgeous hiking trails, and countless whitewater rafting and kayaking opportunities. Salt Lake City also has clean air, great schools, and plenty of job opportunities. There are also strong colleges and universities nearby.

    One of the top neighborhoods in Salt Lake City is called The Avenues, which is perfect for those who want to live in the suburbs but maintain easy access to downtown. This neighborhood also has great public schools.

    A few statistics on the Salt Lake City housing market include:

  • Average Home Price: $496,713
  • Average Rent: $1,289
  • Average Cap Rate: 1,2 percent
  • The local market should remain strong in the future thanks to the great schools and great job opportunities.

    Washington, D.C.
    Washington, D.C.

    Washington, D.C.

    As the Nation’s Capital, Washington, D.C. is always a bustling, vibrant city with lots to do. With close proximity to Baltimore, there are plenty of job opportunities available as well. While the dominant industries in D.C. are government institutions, transportation and banking are significant in the area as well.

    Dupont Circle is one of the top neighborhoods in the local area. With easy access to mass transit, safe housing options, and exceptional job opportunities, this is a great place for young professionals looking to get started just after graduation.

    A few statistics on the local housing market include:

  • Average Home Price: $685,723
  • Average Rent: $2,078
  • Average Cap Rate: 1.9 percent
  • The nation’s capital will continue to be a popular location to live and work moving forward.

    Boston, Massachusetts
    Boston, Massachusetts

    Boston

    Boston is located on the coast of Massachusetts and is filled with a tremendous amount of history from the birth of the country. Boston is also a major metropolitan area that is driven by finance, education, transportation, and professional sports. Boston is home to the Boston Celtics, the Boston Red Sox, and the Boston Bruins.

    One of the top neighborhoods in Boston is Back Bay, which is delicious dining options, great job opportunities, easy access to mass transit, and easy access to the water.

    A few statistics on the Boston housing market include:

  • Average Home Price: $685,000
  • Average Rent: $2,744
  • Average Cap Rate: 1.14 percent
  • Boston has numerous neighborhoods that will remain popular even as some people move out of urban areas.

    Long Island, New York
    Long Island, New York

    Long Island

    Last on the list of best cities for real estate investment is Long Island. Known for its close proximity to the water and New York City. Long Island has been a popular place for those who want to work in New York City without paying such high housing prices. Long Island is driven by fishing, transportation, and finance, providing residents with access to great jobs. Long Island also provides easy access to numerous professional sports teams, including the New York Mets.

    One of the top neighborhoods in Long Island is the North Fork, which is known for its quiet lifestyle and easy access to the water.

    A few statistics on the current Long Island housing market include:

  • Average Home Price: $515,000
  • Average Rent: $2,298
  • Average Cap Rate: 1.8 percent
  • With some people looking to move out of New York City and work remotely, Long Island should continue to grow in the future.

    Final thoughts

    Suburbs is where people are looking to live. Smaller towns with proximity to larger cities can be a great place to look for investment opportunities. There are great opportunities to be found in Texas and North Carolina. Neighborhoods will differ so it is important to ensure you get a positive cash flow deal when you are looking. Use our cash on cash return calculator to start your journey.

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