First Quarter 2012 Data Points toward California as a Top Market for Rental Real Estate, but Opportunities Abound Nationwide
DALLAS, March 14, 2012
DALLAS, March 14, 2012 /PRNewswire/ -- The shine may have been off the Golden State lately, but not when it comes to purchasing rental properties. A just-released survey of the Best 100 U.S. Markets to Invest in Rental Property shows California with a commanding lead, boasting 12 markets. But opportunities are noted nationwide. Florida is second with nine markets, Texas is third with seven, North Carolina is fourth with five, and New York, Ohio and Tennessee tie for fifth with four markets each. From Hawaii (Honolulu) to the smallest state (Providence, RI), a total of 39 states and the District of Columbia are represented. (See full list here.)
"Timing is everything, and with the long-term trends in their favor, investors don't need to jump immediately into every market," said Ingo Winzer, president and founder of Local Market Monitor.
"There are good opportunities for investors in every one of the top 100 markets," said HomeVestors' co-president, David Hicks. "But investors would be wise to take into account other dynamics for the ideal timing to enter the market." Hicks sites job growth as a key indicator of a market prime for investment. "Higher job growth rates normally indicate a stronger market for rentals," he said. "Strong growth rates and higher risk-return premiums usually point to the best markets to invest in now."
The first quarter rankings of the 100 Best U.S. Markets, combined with job growth rates, reveal an opportune timeline for investors:
SHORT-TERM: For immediate investments, Hicks noted several Florida markets, (Tampa-St. Petersburg, Daytona Beach, Fort Myers), along with Phoenix-Scottsdale (AZ), Bakersfield (CA), Boise City (ID), Warren (MI), Grand Rapids (MI), Rochester (NY) and Dallas/Fort Worth (TX). "Prices are close to a bottom and the local economy is growing well. And opportunities in Dallas, Fort Worth and Rochester, which didn't have a boom and bust, are probably best to consider right now."
LONGER TERM: Winzer advised, "Wait until next year for Las Vegas and Reno, where home prices are still falling sharply." Other markets that could benefit from playing the waiting game include Orlando (FL), Ft. Lauderdale (FL), Sarasota (FL), Jacksonville (FL), West Palm Beach (FL), Atlanta (GA) and Detroit (MI).
The trends favoring investors include a growing economy that is forcing rents higher and housing prices that continue to fall because of oversupply and inflation.
"Inflation, which just a few years ago was close to zero, has been running between three and four percent," Winzer said, adding that he expects inflation "to increase to five percent in the next couple of years because of the vast sums of money pumped into the economy by the government." He expects rents to keep pace with inflation.
"So, we're in a unique position: home prices falling now but certain to increase rapidly in the future, and rents boosted not just by higher demand but also by government-sponsored inflation," said Winzer.
"We think this is the best opportunity for investors to accumulate rentals in the last 30 years," Hicks commented. HomeVestors and Local Market Monitor estimate that approximately 14 percent of single-family homes in the U.S. are maintained as rental properties. The companies believe there is no other regularly produced, reliable national ranking of the expected future performance of homes maintained as rental properties, which makes this ranking particularly useful to prospective investors.
About Local Market Monitor
Local Market Monitor, the premier real estate forecasting solution, offers investors in homes and home mortgages the local market risk intelligence they need to make informed decisions. Using a proprietary formula called the Equilibrium Home Price, Local Market Monitor determines if markets are currently over or under valued, equipping users with a long-term risk and investment perspective. Covering over 300 local markets, Local Market Monitor also presents key investors with a 12, 24 and 36-month home price forecast. The solution includes sorting capabilities allowing subscribers to view and compare real estate markets along various metrics, including an Investment Suitability Ratings to identify opportunities based on individual investing goals. To learn more, visit www.localmarketmonitor.com or call 800-881-8653.
About HomeVestors of America, Inc.
Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties. Most commonly known as the "We Buy Ugly Houses®" company, HomeVestors strives to make a positive impact in each community. In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review's "Top 50 Franchises," a distinction awarded to franchisors with the highest level of franchisee satisfaction. For more information, visit www.HomeVestors.com.