Finance and Investments
15 Markets To Watch If You Want To Buy a Rental Home in 2024
Last Updated Jan 14, 2024
When considering real estate as an investment, usually the first question that comes to mind is “where?”. Which cities are the best places to buy a rental property – and is it my home town or further afield?
“Location, location, location” remains the top three criteria for a good buy, so it’s no wonder real estate professionals focus so much attention on the best places to buy rental property. In the past few years, the biggest trend in real estate has been migration. People keep heading to good weather, more space, and more affordable locations within the US. Cost of living and quality of life are becoming more influential, alongside usual factors such as strong labor markets.
People = demand. So which cities are the best places to buy rental property and search for good deals? And for homeowners considering holding onto property to rent out, are there big opportunities in your city? For clues on where the next emerging markets could be, we took a look through PwC’s latest report, “Emerging Trends in Real Estate 2024”. Here’s what we found.
15 markets to watch for the best places to buy rental property in 2024
According to a survey of real estate consultants and industry professionals, here are the top 15 markets to watch:
- Nashville
- Phoenix
- Dallas/Fort Worth
- Atlanta
- Austin
- San Diego
- Boston
- San Antonio
- Raleigh/Durham
- Seattle
- Houston
- Denver
- Charlotte
- Miami
- Northern New Jersey
Source: Emerging Trends in Real Estate surveys, compiled by Nelson Economics, Emerging Trends in Real Estate surveys, compiled by Nelson Economics, Emerging Trends in Real Estate surveys, compiled by Nelson Economics, published by PwC in this report.
Magnets for migration in 2024
Where is everyone moving to in 2024? All eyes remain on the Sun-Belt region where the population is soaring — much like the temperatures they enjoy. But being an attractive prospect for real estate also makes metros in this region fiercely competitive. Affordability may be a challenge, so potential buyers need to do their research on the best localities to find a deal. Migration-magnet cities include Atlanta, Phoenix, San Antonio, Tampa/St. Petersburg, Dallas/Fort Worth, Houston and Miami.
Fastest growing real estate markets in 2024
The fastest growing markets on the list are Austin, Nashville, and Raleigh/Durham. Though the pace of growth is slowing as the cost of living and competition for real estate grows, these metro areas have enjoyed incredible and sustained population growth in recent years.
The PwC report also notes that Boise in Idaho is absent from the top 20 list for the first time in two years. After being considered a shooting star in 2022, it’s fallen to 41 in this year’s report. It’s a timely reminder that there’s risk in chasing the same bets as everyone else and some may prefer the stability of more established markets.
Mid-size cities to watch in 2024
Which brings us to opportunities in mid-size cities. Some buyers feel that focusing on mid-sized areas can be risky compared to major metros like Los Angeles, San Francisco or Seattle. But for those who can’t afford the higher entry cost, a smaller counterpart can be a great place to investigate. There is an opportunity for better returns in fast-growing mid-size markets if you can get in at the right time.
Sometimes called “18-hour cities”, these cities don’t operate 24/7, but offer similar quality of public services and job opportunities. The report lists Charlotte, Denver, and San Diego as the top mid-sized cities to watch in 2024.
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Challenges and opportunities in single-family rentals in 2024
Unlike short-term rentals and the stock market, long-term single-family rentals provide a critical service to the community — a place to call home. For many Americans, home ownership is out of reach for them right now. Or they need to relocate temporarily for work. Or aren’t ready to pull the trigger on a forever home. But everyone needs a place to live.
The report predicts that economic uncertainty, coupled with a shift in lifestyle preferences will continue the trend of more adults delaying homeownership. This will keep up the demand for high quality long-term rentals in desirable neighborhoods. For homeowners looking for stability, locking in great residents for 12 months with guaranteed rent can offer predictable and reliable income.
The challenges ahead center on the cost of living. Home expenses are rising in every direction. Most landlords have successfully passed on those costs into higher rents, but the skyrocketing growth of years past has slowed. If your rental home is in an area with more housing supply coming into the market, you will need to factor this in before any major hikes send good residents packing.
The rising cost of insurance is another factor to consider. Many of the listed high-growth markets also happen to be in areas that experience extreme weather conditions. Heatwaves, wildfires, storms, flooding and hurricanes can all send your insurance premiums through the roof. The ongoing cost to protect your asset is worth considering before investing in real estate in a high-risk area.
Before taking the plunge, it’s important to consider if buying a rental property in your own city might make more sense than investing out of state. After all, you will be more familiar with the local market and what makes a good deal in sought-after neighborhoods. Another common mistake is not factoring in all of the costs associated with owning a rental home out of your home state. There is a higher risk of overpaying or not budgeting accurately, especially as you will need to hire help to manage the home.
Learn More: How To Manage a Rental Home From Afar
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You can also visit our homeowner's page to learn more about how our modern, tech-enabled services are helping people ditch property management in the markets mentioned in this article including Austin, San Antonio, Tampa, Raleigh/Durham, Dallas/Fort Worth, Houston, Miami and more.
Disclaimer: This article should not be considered financial advice. A major city doesn’t represent one 'housing market', but rather many housing markets within every locality. A good buy in Miami isn't necessarily the same as a good buy in Tampa. Some cities have consistent demand, others will go through fluctuations based on supply and demand. It’s important to consult with a professional and consider your personal financial situation, local microeconomic factors and other risk factors before choosing to invest in real estate.
About the author
Melanie Kershaw
Mel Kershaw is a Content Lead at Belong. With an extensive background working with technology companies including Eventbrite and Yelp, she’s always looking for ways to create educational and informative articles that simplifies tech and solves problems for her audience.
