2021 was a crazy year for real estate investing. We saw the boom of the 'Silicon Valley' in San Francisco, prices sky rocketing to an average of $1,006 per square foot. Then we witnessed the real estate bubble burst in New York when the average price per square foot fell below $950. In many regions of the United States, we've seen investors fight it out to acquire the best properties. 2022 looks promising as well. We've analyzed the latest economic trends to determine where investors should be focusing their attention this coming year. The following are our top 5 hottest real estate markets, based on data obtained from the Urban Land Institute.
Tampa/St. Petersburg led all metros in the available development and redevelopment opportunities, and the market also had the highest level of buy recommendations from surveyed investors for retail property specifically. It also ranked number four among all markets in buy recommendations for hotels. The forecasted population growth over the next five years is projected to be 1.0 percent per year which might not seem like much but this is still far over the projected national average of just 0.6 annual growth. And this number is even higher than neighboring Miami's anticipated expansion coming in at just 0.9 percent. The Tampa/St. Petersburg market is unique in its relative affordability compared to other areas of the country, with home prices as of august of this year hovering right around the national average of 303 000.
The Tampa/St. Petersburg market is a prime example of the emerging urbanizing shift that's occurring in the U.S. real estate market where more and more people are becoming willing to give up living in suburban areas for this new experience of city-living. This might sound like an odd trend but it is appearing all over the country!
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Believe it or not, Austin dropped a few slots from coming in at number two on last year's list. However, this market still has a ton of room to run with a five-year annual population change forecasted to be 2.0 percent per year, which is the highest number of all markets. Austin ranked number one in local economic prospects and the availability of debt and equity capital showing not just population and job growth but also significant investor interest that continues to add fuel to the fire. Zillow data shows Austin home values exploding since the beginning of 2020, jumping by 30 percent since January of last year! There is no denying that Austin's property values have grown at a breakneck pace. The city has been on fire for years now, and its real estate prices continue to climb. Apart from Boise, Idaho, which has a 32.4 percent growth rate, this is the fastest-growing city in the United States. Tesla is one of the most recent additions to Austin, officially announcing the move of its headquarters from Palo Alto to Austin earlier this month. As well, companies like Google, Amazon, Apple, Oracle, and Facebook have all brought a significant number of jobs to the metro over the last few years. Companies are not the only ones making Austin their new home, as workers who can't afford to live in downtown neighborhoods are taking up residence in surrounding suburbs.
this is the first time phoenix has cracked the top 10 list in over a decade and this metro has been on an absolute tear in the past few years, with home values jumping by 24.3 percent since January of 2020. Phoenix is also expected to see significant job growth over the next five years and again similar to Austin and Tampa this market allows its residents to skip the winters which make this market a really attractive city for many people looking to leave expensive west coast markets like San Diego, Los Angeles, San Francisco, or Seattle, and even though home prices in the market have skyrocketed over the last few years Phoenix is still relatively affordable for would-be homeowners. The average home price sits at $402,000 versus the national average of $300,000. For renters, Phoenix is actually even more affordable than most other cities across the US. If you mix these factors with a population growth of over 5%, it's not hard to see why investors are clamoring to get in on the action.
Coming in at #2 is Raleigh, North Carolina. This metro has a lot of the same characteristics that made Phoenix so popular over the past few years with a low cost of living low taxes and extremely strong job growth. Raleigh has incredibly strong prospects heading into the new year, with 1.3 annual population growth expected over the next five years and 1.2 percent annual job growth projected during this time. Raleigh also ranked number one in homebuilding prospects, number two in both multi-family and retail buy recommendations and number three in development and redevelopment opportunities. What's also interesting about Raleigh. is that this is one of the largest markets in the country for one of the hottest real estate product types across the entire us right now life sciences and Raleigh is also the home of research triangle park, which is the largest high-tech and medical research park in all of North America. This metro is also one of the most affordable on this top five list with residential rents coming in at almost 16 percent lower than the national average and home prices in Raleigh coming in at $364,000 or just $61,000 over the average figure.
We round out this list, with 2022's hottest real estate market. Nashville ranked number one in overall investor demand number, two in development and redevelopment opportunities and local economic strength, & number three among all markets in the report in the availability of debt and equity capital. Nashville is the only city on this list that isn't experiencing massive population growth (1.8% annual population growth through 2022) but what Nashville lacks in population it makes up for in economic strength with 1.8 percent annual job growth expected over the next five years. This metro also has one of the best cost of living ratios as well. Home prices in Nashville are just $53,000 higher than the national average and residential rents in the market are 8 lower than the average figure in the U.S., making this another affordable place to live for young professionals and growing families. This market also has one of the highest concentrations of college-educated millennials in the country. Nashville also ranked number two in retail and numbers four and five respectively in multi-family & residential development/redevelopment making this overall one of the best places for real estate investors to get into.
So if you're looking for a place to start your real estate investing business or you're looking for a new market to explore, make sure you check out this list. These markets might not be as dynamic as those on the west coast or as economically stimulated as those in New York City, but they have some incredible opportunities for small to mid-sized investors.
And if you're looking for an opportunity to grow your portfolio, adding some high-demand real estate in these markets could be a great starting point. Good luck!
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