Best Places to Invest in Real Estate (2023)

Posted by Matt Lee on Dec 8, 2022 10:59:46 AM

Apartment Complex In Jacksonville Florida

A new year brings new trends and ideas to every industry, and real estate is no different. Finding and investing in properties is constantly evolving and changing, and the best investors continue to learn and keep track of these shifts. 2023 is expected to follow closely in the footsteps of previous years through the pandemic, but there are some new upward trends that are important to note (and take advantage of early on).

2023 investing trends

Before we look at specific cities, it’s important to get an understanding of the general trends we’ve seen carrying into 2023. Many of these could warrant their own deep-dive but at a high level, there’s plenty to keep a close eye on for potential opportunities:

Increasing interest rates: With the Fed dropping federal funds rates below 0.25% and mortgage rates down to less than 3% during parts of the COVID pandemic, the only direction from here is up. Expect to see those increases in 2023, and for 30-year mortgage rates to return to around 3.5% or higher.

Home value appreciation: Increased demand and diminished supply for home buying in the last couple of years has skyrocketed the value of those available. In October 2021 we saw a jump of 18% according to CoreLogic’s Home Price Index, the largest spike recorded in the history of the index.

Cash-out refinances: The end of 2020 and through 2021 has seen a huge increase in homeowner equity, leading to a surge in cash-out refinancing to capitalize on this. With the volume of equity from cash-out refinances at its highest point in 14 years, now is a good time to contact us about your options for refinancing.

Renting on the rise: Another trend that we have seen and expect to continue is the rise of rentership. This is at least partially due to home prices ballooning and becoming too expensive for many, leaving the only viable option as renting.

Commercial real estate going mainstream: We’ve also recently seen progress towards commercial real estate becoming more accessible to those who aren’t highly-specialized investors or ones with immense amounts of capital. FinTech companies are breaking down barriers to entry and making it easier than ever to invest in commercial spaces.

Influx to secondary, suburban markets: Another side effect of COVID has been people of all ages moving away from primary urban areas like big city centers and into more secondary markets. With lower price tags and population booms, these areas could be gold mines for savvy real estate investors.

Top cities to invest in real estate

On that note, there are many areas around the country that have great potential for different forms of real estate investing. Using those general trends as a foundation, we can now look for the best locations to apply them. Let’s go through some of those at the top of our lists:

Youngstown, Ohio

A city going through a period of revitalization right now, Youngstown has a population of just over 60,000 people but is part of a metro area with a population of over 540,000. It’s also just an hour from both Pittsburgh and Cleveland, with low home prices (average: $42,867) and low vacancy rates (3.2%), so this city is a great opportunity for growth.

Phoenix, Arizona

The “Valley of the Sun” not only has beautiful weather and scenery year-round, but also one of the fastest-growing economies and job markets in the country. Its home value appreciation rate of 81% and a 28% increase in average rent (for a one-bedroom apartment) since last year makes it an attractive opportunity for property investors.

Indianapolis, Indiana

Our Home Town Indianapolis, Indiana. With comparatively low housing prices to the west and east coasts, Indianapolis is more affordable for Millennials and those looking to buy their first home. A high home value appreciation rate of 62% also gives it lots of potential for buy and hold investing strategies.

Birmingham, Alabama

Believe it or not, Birmingham is one of the largest banking hubs in the country and its metropolitan area is home to almost 1.2 million people. One of the biggest draws of this city is its 11.1% rent-to-income ratio, and it’s expected to see continued growth to a variety of economic metrics over the next decade or two.

Boise, Idaho

Another city with an expanding population, job market, and need for housing, is Boise. A blend of a college town and state capital, this city has a variety of scenery that ranges from urban areas with museums, restaurants, and festivals to quiet, outdoor spaces away from downtown. The relatively low home sale prices also make it positioned for growth in years to come.

Durham/Raleigh, North Carolina

From 2020 to 2021, median home prices were up more than 25% in Durham, with many graduates from Duke, NC State, and more deciding to stay in the area. This has led to a young and diverse population powering a thriving job market, where home value has increased by 70% over the last five years.

Salt Lake City, Utah

This city’s natural beauty isn’t the only thing drawing real estate investors to it — low unemployment and low state and local taxes are huge benefits for investing here. If that’s not enough, the average rent for single-bedroom apartments also increased by 14% just since last year.

Atlanta, Georgia

Atlanta’s combination of urban, fast-paced lifestyles with more relaxed, family-friendly environments make it a great place to consider investing in. Its business-friendly climate also has strengthened the job market, particularly those of tech and finance, and the city has experienced consistent growth over the past few years.

Jacksonville, Florida

It can be easy to forget about Jacksonville when discussing Florida real estate as Tampa, Miami, and Orlando tend to get the spotlight. However, Jacksonville actually has the second-largest population of any southern city outside of Texas (behind Phoenix). Coupled with major employers and more affordable options than other markets in Florida, Jacksonville has plenty of real estate opportunities.

Grow your portfolio with REO Lending

No matter where you’re investing, do it with Visio Lending. As the nation’s leader in rental loans, we can help you expand your portfolio of properties in this exciting and flourishing time for the real estate market. Take advantage of this year’s positive trends and contact us today to start your next loan.