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Where Are the Best Cities for Real Estate Investment?

Due to the explosion of real estate prices over the past few years, more are looking to diversify their investments by expanding into real estate. But not all real estate properties are a sound investment; those looking for the best “bang for their buck” must balance real estate prices with taxes, vacancy rates, insurance, and the list goes on. 

As such, Policygenius, an online insurance marketplace, has curated a list of the top places investors should seek due to their attractive climates for investors. 

Using data from Zillow and the U.S. Census Bureau, Policygenius analyzed the top-600 metropolitan areas using six metrics to find the most attractive cities to invest in. The categories include: home value, home value appreciation, effective property tax rate, rent to home value ratio, rental vacancy rate, and rent to income ratio. 

The top-10 cities that Policygenius found are as follows:

1. Youngstown, Ohio

  • Population of more than 60,000 people, and part of a large metropolitan area that includes Warren and Boardman and which contains some 540,000
  • Within easy driving distance of both Cleveland and Pittsburgh
  • "A former steel town, Youngstown has seen a rebirth in recent years, including the launch of the Youngstown Business Incubator"
  • According to the report, low home prices combined with a high rate of appreciation and low rental vacancy rates to make Youngstown a good prospect

2. Detroit, Michigan

  • Michigan's largest city
  • Population of just under 640,000 inhabitants, and part of a metro area that is home to approximately 4.3 million people.
  • Home to the “Big Three” American auto companies, as well as Quicken Loans, Ally Financial, and DTE Energy
  • In 2021, Apple announced it was opening its first Developer Academy in the city
  • Per the report, Detroit boasts low home prices and very high home value appreciation, which together "make it a no-brainer for getting in on the ground floor of this exciting American success story.”

3. Spring Hill, Florida

  • Located 40 miles away from Tampa in "an unincorporated area that is part of the metropolitan area that includes Tampa, St. Petersburg, and Clearwater"
  • Described as "a bustling suburb ... that attracts people for its affordability and central location"
  • Home values in the area sit at under $250,000 and home value appreciation stands at around 85%

4. Pueblo, Colorado

  • Population of nearly 112,000, the ninth-largest city in Colorado
  • Home to the first steel mill to be powered largely by solar energy
  • Includes a "Riverwalk" that runs along the Arkansas River, as well an abundance of "galleries, museums, and public spaces."
  • The home value appreciation rate is 80%.

5. Birmingham, Alabama

  • Population of just over 207,000, within a larger metropolitan area that is home to 1.2 million people
  • Formerly a manufacturing center, today "one of the largest banking centers in the U.S.
  • Revitalized downtown area combined with low home prices and high rent-to-home value ratio

6. Cleveland, Ohio

  • Population of just over 370,000, within a larger metropolitan area of over 2 million people
  • Strong hub for technology: "the state-funded Cleveland Innovation District was formed in 2021 to increase funding for health research jobs"
  • Average home value of under $100,000 and a home value appreciation of nearly 100%

7. Colorado Springs, Colorado

  • The city is currently "undergoing a housing boom as people move from Denver and other states to the city for its clean air, mild weather, and great quality of life."
  • Just under 500,000 residents and a diverse economy, including defense contractors and tech companies
  • Home values are nearly $428,000, but "a high rate of home value appreciation and low rental vacancy rate make Colorado Springs a great option for real estate investors.”

8. Lehigh Acres, Florida

  • Described as "a fast-growing suburb East of Fort Myers"
  • Low rental vacancy rate and "relatively typical low home prices for the area"

9. Palm Bay, Florida

  • Largest city in Brevard County
  • Home to just under 120,000 people
  • Part of the “Space Coast”: the city "has a diversified economy that includes aerospace and defense industries"
  • Low rental vacancy rate

10. Phoenix, Arizona

  • Fifth-largest city in the U.S.
  • One of the fastest-growing economies in the country
  • Strong housing market
  • Home value appreciation rate of 81%

To view a comprehensive list of Policygenius’ findings, click here. 

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at kyle.horst@thefivestar.com.
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