Despite rising home prices and mortgage rates, aspiring real estate investors can still find hidden gems in affordable metros across the U.S., Realtor.com says. The real estate listing website unveiled a list of the top U.S. markets for property investment, showcasing opportunities for savvy investors in less obvious but highly promising markets, with the spotlight shining brightly on the Midwest and Northeast regions.
The top 10 in rank order include: Dayton, Ohio; Rochester, N.Y.; Cleveland-Elyria, Ohio; Pittsburgh, Pa; Knoxville, Tenn.; Albany-Schenectady-Troy, N.Y.; New Haven-Milford, Conn.; Buffalo-Cheektowaga, N.Y.; Grand Rapids-Kentwood, Mich.; and Columbus, Ohio.
“For buyers interested in investing in rental properties or other real estate, it’s key to know which areas are both affordable and in high demand to be able to capitalize on any investment opportunities, especially with today’s higher prices and rates,” said Danielle Hale, chief economist at Realtor.com. “With low vacancy rates and strong demand, the markets we’ve highlighted as top markets for investment opportunity offer a great mix of affordability and growth potential. These spots give aspiring investors a chance to tap into long-term growth and set themselves up for solid returns as the market shifts.”
The top markets for real estate investment are noted for their affordability, low rental vacancy rates, rising rents and sustained buyer demand, making them prime candidates for investment. Realtor.com research indicates that these markets saw nearly double (1.95x) the average page views per property compared to the national trends, with home prices an average of 21.7% lower than the national average, offering compelling value for investors.
Rental vacancy rates in these hotspots averaged just 4.8% so far in 2024, well below the national average of 6.6%, signaling a strong rental market with minimal property turnover. Furthermore, 13.8% of buyers in these markets were investors in Q1 2024, 1 percentage point below the national average, but up 4.4 percentage points from 2019 levels, reflecting a growing trend of real estate investment since pre-pandemic levels despite economic challenges.
Dayton, Ohio reigns supreme as the top investment hotspot
Dayton, Ohio topped the list for investment opportunity with its below-average home prices and robust demand, boasting a low 4.7% rental vacancy rate in early 2024. Investor activity has picked up over the past five years, with 13.7% of buyers in the first quarter being investors, just shy of the national average.
Other Midwest metros, such as Cleveland, Ohio; Pittsburgh, Penn.; and Grand Rapids, Mich. also offer strong returns for investors, thanks to their low prices and steady demand. Climbing home prices in these markets reflect sustained buyer interest, while relatively low home prices mean the typical monthly mortgage payment is lower than the U.S. average.
“As the rental market eases in many areas, the Midwest and Northeast stand out for their combination of affordability and stability,” said Hannah Jones, Realtor.com senior economic research analyst. “These regions offer investors a prime chance to secure steady rental income and tap into growing demand, making them attractive for both seasoned and first-time investors alike.”
While Midwest and Northeast lead, South and West also hold opportunities
While the South and West have historically been popular regions for investors, recent affordability challenges and rising inventories have shifted focus to the more stable, growth-ready markets in the Midwest and Northeast, and only a handful of markets from the South and West made the list. Knoxville, Tenn., is the sole Southern city to make the list, while Fresno, Calif., and Albuquerque, N.M., stand out in the West as top investment spots for their notable demand and price growth, despite their higher home prices.
The report analyzed Realtor.com listing data and public data for the 75 largest U.S. metros. It used the 12-month average of listing prices, views per property, and housing stock, along with 2024 Q1 and Q2 vacancy data, to identify the top markets for real estate investment. The best markets were determined by a combination of high listing viewership, low home prices, significant price growth, growing inventory, and low rental vacancy rates.
