A study conducted by Forbes and Local Market Research, a company that tracks home pricing and economic data, has yielded a list of the top 20 United States cities to invest in real estate. To compile the rankings, Local Market Research evaluated the 100 largest Metropolitan Statistical Area and Divisions, each with populations in excess of 600,000, and screened them for healthy job growth rates, population growth, and anticipated home price appreciation using local income and housing data.
Cities with healthier employment growth rates were weighed favorably in the rankings. Thus, Grand Rapids, Michigan topped the list while Tampa, Florida placed fourteenth even though the two cities share a robust population growth rate, due to the difference in job growth rates. Grand Rapids enjoyed 3.9% employment expansion in the 12 months leading up to November 2015 whereas Tampa plodded along at a comparably lower 2.6%.
Overall, Florida performed admirably in the survey, with seven Floridian cities making the list, due to the stabilization of the national economy. The economic recovery following the 2008 recession has prompted retirees, vacationers, and other potential home buyers to return to the Sunshine State, creating jobs and local economic growth.
The U.S. housing market has been strong in spite of stagnant wages and a volatile stock market. New home sales have hit their highest level since 2008, CNN Money reported earlier this year, with shares of the home price tracker, Zillow, jumping 20%. The influx of first-time buyers has also bolstered the housing market.
This confluence of factors could result in a “trickle-up effect,” said Thomas Wilson, an investment manager at Brinker Capital, to CNN Money. “More first-time buyers are entering the market, which makes it easier for people to sell.” The rebound in housing prices and sales could, in turn, spark a boom in retail sales due to the wealth effect.
However, the combination of rising housing prices and stagnating wages has also lowered home affordability, even as the economic rebound has driven investment into real estate.
“More low-income Americans will be priced out of homeownership. Home values are rising faster than incomes, so in 2016, the poorest Americans will be unable to afford even the least expensive homes,” according to Zillow.