If you’re considering buying a rental property, familiarizing yourself with the best rental markets in the country could go a long way in preparing you to invest in your first buy-and-hold asset. Aside from being some of the best cities to invest in real estate, today’s best places to buy rental property can teach us a lot about how to invest in specific locations. The location you choose to invest in will ultimately determine the viability and success of any assets you acquire. After all, those who know how to read and interpret market indicators will know where the best rental markets reside. Keep reading to learn where the best places to invest in real estate long term are, and why investors should be excited.
Best Rental Markets In 2022
The best places to invest in real estate are the direct result of new indicators created by the pandemic. At the very least, the impact of COVID-19 on the real estate market has altered the housing sector landscape. Most notably, work-from-home trends have enabled more people to trade their existing living situations for something more desirable, many of which are listed below. As prices increase in today’s most popular cities, in fact, more people sought out more affordable options in areas less prone to COVID-19 breakouts. The ability to seek out new living arrangements helped shape the best places to invest in real estate in 2021, and the same trends appear to be continuing into 2022. As a result, it’s starting to look like these are the best places to invest in real estate in 2022:
- Boise, Idaho
- Tampa Bay, Florida
- Seattle, Washington
- Salt Lake City, Utah
- Providence, Rhode Island
- Dallas, Texas
The Boise real estate market played host to one of the best rental real estate markets in 2021, and there’s nothing to suggest the trend won’t continue. For starters, Boise continues to attract more people looking to leave the expensive confines of small metropolitan apartments in primary cities. As more and more people are permitted to “work from home,” Boise will see an influx in its population. If for nothing else, Boise offers more affordable living arrangements and more outdoor activities at a time when the pandemic continues to drive more people outside. The added attention has increased home values and rental rates significantly, but the demand isn’t expected to end soon. Boise will continue to attract more people because of its affordability and “outdoor lifestyle,” and landlords will benefit immensely. Sales and prices are expected to increase while inventory remains tight. As a result, more people will be forced to rent in Boise—even if they can afford to buy. The added demand will allow rental property investors to increase their prices accordingly, firmly cementing Boise as one of the best cities to invest in real estate.
Tampa Bay, Florida
Not unlike Boise, Tampa Bay was one of the best rental markets last year, so it shouldn’t surprise anyone that it made the list again. The momentum Tampa Bay was able to build last year appears ready and willing to carry over into 2022. However, the real reason Tampa Bay looks to remain one of the best rental real estate markets in 2022 is because of available inventory. Some of the latest numbers released by Florida Realtors suggest active listings are down 19.9%, leaving Tampa with a mere 1.6 months of inventory. The distinct lack of listings means that even buyers with enough money can’t find a home to buy. Therefore, those who aren’t able to buy will be forced to rent. With so few homes for sale, landlords in Tampa will most likely see a surge in interest and be able to increase their rental rates more than in years past.
The Seattle housing market has been one of the best rental markets over the last two years. Increasing job opportunities in the technology sector have resulted in massive population increases and subsequent housing activity. Growing demand has quickly turned into competition, as more and more people are looking to take advantage of historically low borrowing costs. However, much like everywhere else, Seattle doesn’t have enough homes on the market. Heading into 2022, the Seattle real estate market will have somewhere in the neighborhood of 2.8 weeks of supply. A healthy, balanced market will usually boast about six months of inventory, which leaves real estate in Seattle well below where it wants to be. Demand, in association with a distinct lack of inventory, has driven prices up about 11.2% over the last 12 months, and appreciation will continue into 2022. Growing home values will price a lot of buyers out of the market, but many more will be forced to rent because there aren’ enough homes to buy. As a result, local indicators are leaning heavily in favor of landlords. Not only will vacancies become less of a threat because of increased demand, but landlords will easily be able to increase rental prices and monthly cash flow from properties placed in operation.
Salt Lake City, Utah
Few markets across the country had the type of year the Salt Lake City housing market had in 2021. Increasing demand, lower borrowing costs, and just under two months of inventory have led to some of the country’s fastest appreciation rates. In as little as one year’s time, the median home value in Salt Lake City has increased as much as 24.1%. In that time, rental rates have also increased approximately 20.7%. Increases in rental rates and home prices result from new indicators created by the pandemic, but the slight disparity suggests rates have room to increase. Home values have increased because of supply and demand constraints, but the longer Salt Lake City goes without adding more inventory, the more we can expect rental rates to increase. With so few home available to buy and demand increasing each month, more and more people will be relegated to the renter pool. It is reasonable to assume rental rate increases will make up ground on their home value counterparts over the course of 2022, and local landlords will surely find Salt Lake City to be one of the best rental markets in the country.
Providence, Rhode Island
At $1,341, the median rent in Providence is now 20.9% higher than it was just one year ago. However, it is worth noting that rental rate increases have outpaced home values. In the last year, the median home value in Providence has increased a slightly more modest 18.5%. The difference is most likely due to the city’s 19.83 price-to-rent ratio. At 19.83, it’s more affordable to rent a home in the Providence real estate market than to buy one. Local affordability has driven more people to the rental market at a time when there’s not enough units to rent. In other words, supply hasn’t been able to keep up with demand, and landlords have been able to increase their rental rates faster than home owners have been able to increase their listing prices. The unique circumstance may create the perfect storm for local investors. With home values increasing at a slower rate than rents, 2022 may be the perfect time to buy a home in one of the country’s best rental markets.
The Dallas market has two key features that make it a great opportunity for buy-and-hold investors: housing availability and high rental rates. According to Apartment List, the average monthly rent for a one-bedroom apartment is roughly $1,678. Generally speaking, renting in the city is more affordable than buying — making rental demand high across the city for all income levels. In the last year alone, rental demand has increased by 14 percent. The market is expected to keep growing in the coming years as new jobs open in a variety of sectors. Investors interested in this Texas market will want to act soon, as some estimates predict the population will double over the next 15 years.
By: THAN MERRILL