According to a recent report, Texas has some of the best residential real estate markets for investors. This is based on an analysis of the 100 largest metro areas in the country. Housing markets in Austin, Dallas and San Antonio were all ranked within the top 10, as far as best places to invest in a home.
The analysis was conducted by Forbes, with help from Local Market Monitor, a North Carolina-based company that monitors home prices and other economic conditions across the country. Florida cities also fared well in the rankings. Cape Coral, Fort Lauderdale and Orlando made the top ten.
Austin, Dallas, San Antonio: “Best Buy” Housing Markets
Home prices rose steadily in 2015, all across the United States, and more gains are expected in 2016. In fact, house values have risen faster than job wages, and that has created affordability problems for buyers in some parts of the country.
But for real estate investors seeking to purchase rental properties, opportunities abound — especially in the 10 housing markets listed below.
To find out which cities were poised to give investors a solid return, Local Market Monitor analyzed the 100 largest metropolitan statistical areas in the U.S. (all with populations of 600,000 or higher). They then identified housing markets with favorable conditions for investors and “regular” home buyers alike. These markets all have healthy job growth, population growth, and anticipated home price appreciation.
The result was a top-20 list of “Best Buy Cities” for 2016. An abbreviated top-10 version is shown below.
Top 10 “best buy” housing markets for investors, with average home price:
- Grand Rapids, MI – $154,348
- Orlando, FL – $202,809
- San Antonio, TX – $200,522
- Charlotte, NC – $220,758
- Salt Lake City, UT – $258,371
- Dallas, TX – $211,245
- Austin, TX – $281,355
- Fort Lauderdale, FL – $258,577
- Seattle, WA – $370,306
- Cape Coral, FL – $211,531
As you can see, three of the top 10 real estate markets for investment are located within Texas — Austin, Dallas and San Antonio. According to the Forbes article that announced the results:
“… these three Texas metros are doing well overall thanks to their diversified economies … Austin is welcoming growth in high tech. Dallas is welcoming the relocation of Toyota, State Farm Insurance, and Liberty Mutual Insurance. San Antonio has financial firms and data centers.”
The three Texas cities listed above all have strong job markets that attract people from other parts of the state, and from elsewhere in the country. This puts more home buyers into the market and increases demand for housing, at a time when there’s a supply shortage. This is why home prices have risen so fast in the Austin, Dallas and San Antonio housing markets.
Home Prices Climbing in Texas Metros
According to Zillow, home prices in Austin and Dallas rose by double digits last year. Additional, but more modest, gains are expected in 2016. This is partly due to the supply-and-demand imbalance mentioned earlier. In short, there aren’t enough homes for sale in these real estate markets to satisfy demand.
Local Market Monitor expects prices in these housing markets to continue climbing over the next few years. Their three-year home price growth projections for Austin, Dallas and San Antonio are all above 25%. The authors explained that “there continues to be a shortage of housing supply, meaning prices are likely to keep on rising.”