These 8 ‘underrated’ cities with median home prices under $290,000 are great markets for real-estate investors to buy in right now thanks to high cash flows and affordability, according to BiggerPockets
- The “On The Market” podcast recently compiled a list of cities to watch for real-estate investors.
- The cities have low median prices, good cash flow, and solid economic fundamentals.
- They include Oklahoma City, Tallahassee, and others.
It’s not a good time to be a real-estate investor, especially in comparison to the low-interest-rate environment of the 2010s.
Affordability is at an all-time low, with mortgage rates above 7% and national home prices hovering near all-time highs. Housing supply is extremely limited as homeowners are hesitant to give up their low mortgage rates. And rents are beginning to fall in cities across the United States.
According to Dave Meyer, host of BiggerPockets’ “On The Market” podcast, there are still opportunities for investors across the country. Meyer and three of his real-estate-investor guests — Kathy Fettke, Henry Washington, and James Dainard — highlighted eight markets where they believe conditions are right for investors to buy right now in a November 3 episode of the show.
The podcast’s analysts developed four criteria for what would make a market appealing in the current high-rate environment: median home prices below the national median (that’s $412,020, according to Redfin data); population growth; a rent-to-price ratio above the national average; and a local unemployment rate below the national average (the current unemployment rate is 3.9%, according to government data). The closer a rent-to-price ratio is to 1.0 or higher, the more likely it is to generate cash flow.
We’ve compiled data for each city listed below. Redfin provides median home price and appreciation data, while the Census Bureau provides population data. The Federal Reserve Bank of St. Louis provided the unemployment data, and BiggerPockets provided the price-to-rent ratios. Commentary from the podcast guest who discussed each market is also included. The cities are listed in the order they were mentioned in the podcast.
1. Myrtle Beach, South Carolina
Median home price: $287,500
Home price appreciation last 12 months: -3.4%
Population as of July 2022: 38,417
Population growth July 2021-July 2022: 4%
Local unemployment rate: 3.1%
Average rent-to-price ratio: 0.67%
Podcast guest who presented market: James Dainard
Commentary: “After the pandemic, we’ve seen a lot of these coastal community towns, vacation towns, where people are like, ‘Forget it, I’m just moving to where I want to hang out and have fun.'” And this is one of those communities.”
Sources: BiggerPockets, Redfin, the Federal Reserve Bank of St. Louis, and the US Census Bureau
2. Tallahassee, Florida
Median home price: $261,750
Home price appreciation last 12 months: 4.7%
Population as of July 2022: 201,731
Population growth July 2021-July 2022: 0.7%
Local unemployment rate: 3%
Average rent-to-price ratio: 0.54%
Podcast guest who presented market: James Dainard
Commentary: “It’s a good market to look at because the pricing is so low compared to the median home price and the quality of living is so high.” So, in my opinion, it has some runway.”
Sources: BiggerPockets, Redfin, the Federal Reserve Bank of St. Louis, and the US Census Bureau
3. Joneboro, Arkansas
Median home price: $250,000
Home price appreciation last 12 months: 22%
Population as of July 2022: 79,876
Population growth July 2021-July 2022: 1.3%
Local unemployment rate: 2.8%
Average rent-to-price ratio: 0.74%
Podcast guest who presented market: Henry Washington
Commentary: “The vacancy rate is 6.7%, which means most everything is getting rented.”
Sources: BiggerPockets, Redfin, the Federal Reserve Bank of St. Louis, and the US Census Bureau
4. Joplin, Missouri
Median home price: $180,000
Home price appreciation last 12 months: 18.2%
Population as of July 2022: 52,518
Population growth July 2021-July 2022: 1.1%
Local unemployment rate: 2.6%
Average rent-to-price ratio: .65
Podcast guest who presented market: Henry Washington
Commentary: “I’m buying cash-flow deals left and right in this market.” Two days ago, I closed on a house in Joplin. I paid $67,000 for the house, will invest $30,000 in it, and it will rent for more than $1,500 per month.”
Sources: BiggerPockets, Redfin, the Federal Reserve Bank of St. Louis, and the US Census Bureau
5. Tuscaloosa, Alabama
Median home price: $257,500
Home price appreciation last 12 months: 14.4%
Population as of July 2022: 110,602
Population growth July 2021-July 2022: 1.4%
Local unemployment rate: 2.3%
Average rent-to-price ratio: 0.8%
Podcast guest who presented market: Dave Meyer
Commentary: “The University of Alabama, Stillman College, and Shelton State Community College are all present, contributing approximately $3 billion in economic activity to the area.”
“When you have an economy that is based on something really solid like a college or public sector jobs that are really stable, I think that is a relatively good foundation for an economy.”
Sources: BiggerPockets, Redfin, the Federal Reserve Bank of St. Louis, and the US Census Bureau
6. Oshkosh, Wisconsin
Median home price: $205,000
Home price appreciation last 12 months: 13.3%
Population as of July 2022: 65,948
Population growth July 2021-July 2022: 0.9%
Local unemployment rate: 3%
Average rent-to-price ratio: 0.6%
Podcast guest who presented market: Dave Meyer
Commentary: “It really ranks high in terms of education, in terms of healthcare and health, one of the highest places for quality of life and safe places to live. And so that it seems a lot of people are moving to Wisconsin, and I think Oshkosh is sort of getting swept up into that.”
Sources: BiggerPockets, Redfin, the Federal Reserve Bank of St. Louis, and the US Census Bureau
7. Odessa, Texas
Median home price: $273,955
Home price appreciation last 12 months: 1.7%
Population as of July 2022: 112,906
Population growth July 2021-July 2022: 0.6%
Local unemployment rate: 2.8%
Average rent-to-price ratio: N/A
Podcast guest who presented market: Kathy Fettke
Commentary: “It’s in the Permian Basin, which has a lot of oil, so that’s a plus.” There are a couple of employers you may have heard of: Halliburton and Schlumberger, both of which are massive oil companies.”
“It’s just too small a market for me, too dependent on one economy.”
“Having said that, I’m sure people are making a lot of money by investing in this town.” So, as you mentioned earlier, if you know your town and where the jobs are likely to remain, you’ll be fine. And the price is reasonable.”
Sources: BiggerPockets, Redfin, the Federal Reserve Bank of St. Louis, and the US Census Bureau
8. Oklahoma City, Oklahoma
Median home price: $250,000
Home price appreciation last 12 months: -2.2%
Population as of July 2022: 694,800
Population growth July 2021-July 2022: 0.9%
Local unemployment rate: 3.4%
Average rent-to-price ratio: 0.6%
Podcast guest who presented market: Kathy Fettke
Commentary: “330,000 new jobs created over the past decade, so supply is low and demand is high.
“The governor is pushing to get the state income tax to zero, like Texas. If that happens, I really think we’re going to see quite a boom.”
Sources: BiggerPockets, Redfin, the Federal Reserve Bank of St. Louis, and the US Census Bureau
