In a recent, combined study by PricewaterhouseCoopers and the Urban Land Institute, Texas cities outranked the usual winner, San Francisco, in the best US cities for investors list. While most reports of this type usually don’t supply too much data to back up their claims, PricewaterhouseCoopers and the Urban Land Institute’s report breaks down the entire US housing market in 112 detailed pages and names their top US real estate markets to watch and best US cities for investors. We’ll share some of the most interesting findings and how they pertain to investing in Austin.
Texas Economy Dominates the Rankings in 2015
The strength of the Texas economy seems to be the top story in the study, with three of Texas’ major metros making the top 5 and the fourth sneaking in the top 25 US markets to watch. While coastal cities like San Francisco and New York have dominated the list in previous years, Texas is now the new stronghold. The report cited the thriving job market and economic growth as the main reasons for Texas’ desirability.
Best US Cities for Investors
According to the report, here are the top 25 best US cities for investors. You’ll see a trend of less urban, more affordable cities compared to the urban “24 hour” city that dominated the list for years. For the full list, check out page 32 of the Best US Cities for Investors Report.
- Houston, TX
- Austin, TX
- San Francisco, CA
- Denver, CO
- Dallas/Fort Worth, TX
- Los Angeles, CA
- Charlotte, NC
- Seattle, WA
- Boston, MA
- Raleigh/Durham, NC
- Atlanta, GA
- Orange County, CA
- Nashville, TN
- New York – Manhattan, NY
- San Jose, CA
- Portland, OR
- Oakland/East Bay, CA
- Chicago, IL
- Miami, FL
- San Diego, CA
- Charleston, SC
- New York – Brooklyn, NY
- San Antonio, TX
- Indianapolis, IN
- Washington, DC – Northern VA
Investors Should Consider Where Millennials Are Going
The largest generation since the Baby Boomers, Millennials will impact much of the real estate market in the coming decade. Though Millennials have been hesitant to purchase homes because of record setting student loan debt, stagnant salary increases and a desire to live in urban areas, they are expected to enter the market in full force over the next 5-10 years. Given 10 years is the average holding period for investors, now is the perfect time to purchase rental homes to have control of the supply when Millennials are ready to become homeowners. The question investors will need to answer for each city will be will Millennials be drawn more to urban areas or will they retreat to the suburbs. I don’t think there is a blanket answer for every market.
Real Estate Investors Willing to Spend More
Austin is not the cheapest market to buy investment property, but it definitely is one of the most affordable, least risky cities to invest – and – investors agree. Most investors surveyed said they were willing to invest more per property for less risk and more potential profit in the future, which is a sensible strategy. One mistake many investors make is buying as many properties as they can in the absolute cheapest market. They don’t take into account vacancy rates, which can account for a substantial loss in revenue.
Why Austin is a Great Place to Buy Investment Property
Austin not only is a great place to live for Millennials and Baby Boomers alike, but its rental market is strong with a 97% occupancy rate (a great market is said to be a 92% occupancy rate). Because of our booming job market, which is expected to continue, landlords are able to push rents every year. Austin is also a place that is attracting Millennials and recent college graduates who aren’t quite ready to buy this year. But, in a few years once they’ve paid off their student loans and have more stable jobs, they’ll be ready to purchase. Investors who own some of the supply will benefit from the increased demand.
Austin’s Frequently Tops Many Best of US Cities Lists
If the above wasn’t enough reasons to invest in Austin, here are Austin’s most recent accolades.
- #1 Best US City for Millennial Home Buyers
- #1 Best US City for Job Seekers
- 7th Highest Appreciation in the US
- #3 Best Cities for Recent College Grads List
- One of 15 Hottest American Cities for 2015
- #1 US City Driving the Future
- 3rd Coolest US City
- 3rd Best US City for Jobs
- Best City for Future Job Growth
- 2014 Fastest Growing City in America for the 4th Straight Year
- #1 US Economy in 2013
Most Affordable Austin Neighborhoods to Invest
Schools are a big driver for our rental market. If you’re looking for the best neighborhoods to invest in Austin, try these lists first.
- Top 10 Affordable Austin Neighborhoods with the Best Schools
- Top 10 Affordable Cedar Park Neighborhoods with the Best Schools
- Top 10 Affordable Round Rock Neighborhoods with the Best Schools
- Top 10 Affordable Buda Neighborhoods with the Best Schools
Considering Buying an Investment Property in Austin?
Good choice! Not only have we helped many investors purchase investment properties, we own investment property as well. We can show you the best places to invest in Austin and help you negotiate a great deal on the property. Check out our Austin Home Buyer section for more info about our team and how we work. Then, call us at (512) 827-8323 or email us at info@11OaksRealty.com to get started.