- Dan Hnatkovskyy says real-estate investors should analyze data to determine where to buy.
- Cities that have jobs, increasing income, and rising rents are great locations.
- These areas should also have low home prices to be considered for investment opportunities.
When mortgage rates are high and home prices are high, the real estate market may appear less appealing. However, this does not mean that buyers should avoid the market entirely.
According to Dan Hnatkovskyy, CEO and co-founder of NewHomesMate, an online marketplace for newly constructed homes that connects buyers and investors to builders, when deciding where to buy, you should consider gathering as much information as possible.
Following experienced investors is one way to accomplish this. Hnatkovskyy’s team communicates with large real-estate investment trusts interested in single-family homes on a regular basis to learn what they are looking for and where they are buying and selling.
Another method they use to gather information is to monitor NewHomesMate website activity to see where buyers and smaller investors are looking. Regardless of the state of the market, all of this additional information can give a buyer an advantage.
For example, prior to March 2022, Hnatkovskyy noticed an increase in searches in Austin, Texas. As demand grew, the median sales price in that area reached $670,000 by May 2022. Investor interest in that area, on the other hand, has decreased since interest rates began to rise.
Today, one of the more noticeable trends observed by Hnatkovskyy is that markets that were popular during lockdowns, such as Austin and Miami, are returning to pre-COVID valuations, slashing up to 20% off sale prices. Furthermore, rising property prices and interest rates make smaller and simpler homes more appealing, particularly in rural or suburban areas. He believes that the desire for simplicity is not going away.
The trend of working from home is also not going away. People will spend more time at home than in offices, increasing demand for environmentally friendly and energy-efficient properties. Craig Barrett, NewHomesMate’s head of marketing, believes this will be especially important for those living in areas prone to heat waves and natural disasters. Solar panels, green materials, and energy-efficient appliances will command a higher price. Property with home office spaces and flexible living arrangements, such as apartments and condos with amenities, will be more popular among buyers and renters as remote work trends continue.
According to the data, cities that make for appealing investments frequently share a few characteristics that attract both developers and investors.
NewHomesMate uses zip code data to analyze various trends and how they compare to one another. This assists them in identifying areas ripe for real-estate investment. Data showing which cities are experiencing job creation, rising incomes, and rising rents, for example, can be compared to which cities also have low property taxes and median and average home prices that are relatively low compared to the economic opportunities in that area.
The following data and their sources were used:
Rentdata.org data shows high rental rates.
According to Internal Revenue Service data, property taxes are low.
Using data from the US Census Bureau and the IRS, there is a strong job market and a high median income.
Solid property appreciation based on MLS listings.
Population growth data from the United States Census Bureau.
Local laws and regulations supporting the rental market based on NewHomesMate’s proprietary data.
Despite heavy investment in recent years, the following cities are expected to retain investor interest:
- Florida: Jacksonville, Orlando, Tampa, and LakelandTennessee’s Nashville, Knoxville, and ChattanoogaNorth Carolina’s Raleigh-Durham and CharlotteAtlanta is a city in Georgia.Dallas, Fort Worth, and Houston, Texas; Birmingham, Alabama
Cities that will become emerging markets in the coming years as investors seek out less competitive areas:
- Arkansas, Little RockTennessee’s MemphisOlive Branch is a town in Mississippi.
Cities that have attracted a lot of attention but may see a drop in interest as investors seek higher returns elsewhere:
- Phoenix, Arizona, Boise, Idaho, and Denver, ColoradoNevada’s Las Vegas and RenoWashington’s Seattle and Spokane