Three Florida Housing Markets That Look Good for Investors

According to a new report, Florida housing markets in Orlando, Fort Lauderdale, and Cape Coral offer ideal conditions to real estate investors in 2016. Those three cities recently appeared in a top-ten list of best markets for investors.

The list was compiled by Forbes with help from Local Market Monitor, a North Carolina company that tracks house values and economic conditions across the country. Texas cities were also prominent in the rankings. Austin, Dallas and San Antonio appeared within the top ten.

Is 2016 a Good Year for Real Estate Investors?

Home prices are still rising in most U.S. cities, as they did through most of last year. That might seem like a good thing. The problem, however, is that house values are rising faster than wages in many cities. By comparison, wages have remained relatively flat over the past months.

Read: 7 positive trends in the housing market

This creates affordability problems for the average home buyer in 2016, especially those in the lower and middle income brackets.

But 2016 could be a good year for real estate investors, particularly in housing markets like Orlando, Cape Coral and Fort Lauderdale (to name but a few). In such markets, economic conditions favor investors who want to put their money into rental properties.

Homes in these markets can be purchased for a good price and turned into an income stream, and possibly resold down the road for a higher price.

Many of the housing markets that made the top 20 are still considered undervalued. Most of the cities on the list had a combination strong population growth, job market stability, and expected home-price appreciation in 2016. These are considered to be ideal conditions for real estate investors, according to the report.

Cape Coral, Fort Lauderdale and Orlando Housing Markets Look Good for Buyers

To find out which housing markets offered investors and home buyers the best bang for the buck, Forbes and Local Market Monitor examined the 100 biggest metro areas in the U.S. (all with populations of 600,000 or higher). They zeroed in on markets with favorable characteristics for real estate investors and “regular” home buyers. The result was a top-20 list of “2016 Best Buy Cities.”

The full top-20 list is available on the Forbes website. An abbreviated top-10 version is shown below.

Top 10 “best buy” cities for investors, shown with average home price:

  1. Grand Rapids, MI — $154,348
  2. Orlando, FL — $202,809
  3. San Antonio, TX — $200,522
  4. Charlotte, NC — $220,758
  5. Salt Lake City, UT — $258,371
  6. Dallas, TX — $211,245
  7. Austin, TX — $281,355
  8. Fort Lauderdale, FL — $258,577
  9. Seattle, WA — $370,306
  10. Cape Coral, FL — $211,531

As you can see, three of the 10 “best buy” housing markets for investors are located in Florida — Cape Coral, Fort Lauderdale and Orlando. All told, there was a total of seven Florida cities within the top 20.

Will Fort Lauderdale Home Prices Drop in 2016?

As mentioned earlier, home prices are expected to continue rising in most of the housing markets on the Forbes / Local Market Monitor list. But there were exceptions as well.

According to the economists and housing analysts at Zillow, home prices are expected to rise in only two of the three Florida cities in the top-10 list above. The company’s 12-month forecast calls for rising house values in Cape Coral and Orlando, during 2016. In contrast, prices in Fort Lauderdale are expected to drop slightly over the next 12 months.

Here is Zillow’s 1-year forecast for all three housing markets, as of February 2016:

City 1-year change 1-year forecast
Cape Coral +11% +3.7%
Fort Lauderdale +6.2% -1.8%
Orlando +11.6% +4.2%

Granted, these forecasts are the equivalent of an educated guess. But it’s a well-educated guess made by some of the most data-savvy analysts within the real estate industry. So it’s certainly worth considering, if you’re a real estate investor or home buyer.

Disclaimer: This story contains research, opinions and forecasts from third parties that are not associated with the Home Buying Institute. The publishers of this website make no claims or assertions regarding future conditions within the housing market.