New quarterly data from Local Market Monitor identifies some key markets, including three Texas cities leading the list, that could be prime targets for investors in single family rental properties, according to a release.
Topping the list are Fort Worth, Houston and Austin . “The economy has been growing quickly in these markets, there are lots of renters, and there aren’t many foreclosed properties to provide competition,” Ingo Winzer, president and founder of Local Market Monitor, said in the release.
“We think there are a number of markets nationwide that will run up against a housing shortage that will boost home prices even higher than most of us initially expected as the spring thaw gets underway,” David Hicks, co-president of HomeVestors, said in the release. “The upward pressure on home prices—economic growth and a history of slow home construction—eased somewhat due to the horrible winter weather.”
Hicks said the new data identifies the markets where conditions are right for home prices to rise, making them prime targets for investors in single family homes as rental properties.
“In all the major markets in Texas, we are experiencing an actual shortage of properties for sale.’ Hicks said in the release. “Our franchises tell us they are quickly selling every house they can buy.” HomeVestors’ franchises are independently owned and operated, which means they understand from a local viewpoint what is happening in over 110 markets nationwide the release stated.
Other cities making the Top
Ten in order include:
- Orlando, which profits from a resurgence in tourism, a business staffed by a lot of workers who rent;
- Nashville, which has a well-diversified economy based on healthcare and business services;
- Seattle, which benefits from the technology boom and a lot of single workers with high incomes;
- Charlotte, which is growing because of a strong business services sector;
- Atlanta, which is also growing because of business services;
- Denver, which benefits from the boom in shale oil and gas; and
- Fort Lauderdale, which features a rapidly-growing retail and tourist industry.
The quarterly data categorizes 300 U.S. markets according to different investor risk preferences including dangerous, speculative, medium risk and low risk.
“Investors should weigh the data carefully according to their risk preferences before making a decision about investing in a market,” HomeVestors co-president Ken Channel said in the release. “For those who can handle more risk, markets ranked as ‘speculative,’ and ‘medium risk,’ including 11 in Texas and 10 in California. Of the six cities ranked as “dangerous” (Rockford, IL; Decatur, AL; Johnstown, PA; Anniston-Oxford, AL; Rocky Mount, NC; Decatur, IL) all are characterized by persistently high unemployment and negative job growth.
About the Quarterly Data:
The data identifies markets that will be good rental markets and where home prices are likely to increase at a good rate over the next few years. Criteria include markets where:
- The population has been growing at above-average rates (4% or better) with growth coming from people moving there in search of jobs;
- The current rate of job growth of 2% or better; and
- There is low unemployment, so that new jobs will be filled by people who move there, not by unemployed people who are already there.
Markets are excluded that:
- Have a small population because they don’t have stable economies;