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New Year, New Investments: What Are the Hottest Investment Locations in 2022?

by Kevin Kiene

Now is the time to get a jump on Hottest Real Estate Investment Locations for 2022.  Real estate markets are expected to cool a bit in 2022, and, while price growth is expected, it should be more normalized than the double-digit growth of 2021. This could mean more opportunities for investors that have been sidelined last year due to limited inventory and fiercely competitive markets across the country.

As a result, now is a good time to research markets to find one that’s a good fit and could be a strong addition to your portfolio. In 2021, sunbelt areas were particularly popular for investors, with Phoenix, Las Vegas, Atlanta, and Orlando seeing substantial growth. While these popular areas continue to be strong, the rise in working remotely has led to some shifts in demand and resulted in some less obvious markets becoming surprisingly attractive.

Given these shifts, it’s worth exploring markets across the country to determine the best places to invest in 2022. Here’s a look at what some of the data shows.

The Hottest Real Estate Markets in 2022

Before looking specifically at the best markets for investors, it’s worth taking a moment to look at areas that are expected to be the top real estate markets in 2022. PricewaterhouseCoppers and Urban Land Institute put together a report analyzing markets based on a number of factors including strong growth, affordability, homebuilding outlook, and job prospects.

Specifically, their data focused on the 5-year projected population growth, 5-year projected employment growth, and 5-year projected household growth. This comprehensive report projects that the top 12 housing markets in 2022 will be:

  • Nashville, Tennessee
  • Raleigh/Durham, North Carolina
  • Phoenix, Arizona
  • Austin, Texas
  • Tampa/St. Petersburg, Florida
  • Charlotte, North Carolina
  • Dallas/Fort Worth, Texas
  • Atlanta, Georgia
  • Seattle, Washington
  • Boston, Massachusetts
  • Salt Lake City, Utah
  • Denver, Colorado

For more details about why these markets are predicted to be so strong, you can review the entire report here. It provides a helpful analysis of factors to consider when evaluating markets as well as information about some areas and regions that are expected to see the most growth in the year ahead.

Best Markets for Investors in 2022

While real estate is currently a great investment and research by the Federal Reserve Bank of San Francisco found that real estate has been the best long-term investment over the course of modern history, the reality is that some locations are better than others.

Before purchasing an investment property, it’s important to consider factors like property costs, rental markets, vacancy rates, tenant default rates, carrying costs, and home value appreciation.

recent report by Policy Genius used data from Zillow and the U.S. Census Bureau to evaluate over 600 markets across the country. The analysis looked at six key factors: the effective property tax rate, the median home value as of 2021, home value appreciation over the last 5 years, the rent-to-home value ratio, the vacancy rate, and the rent-to-income ratio. Each of these six factors was given equal weight and markets were ranked by score.

Based on this process, the report found that the top five markets for investors in 2022 are:

  1. Youngstown, Ohio, is a small town about an hour from Cleveland, Ohio, and Pittsburgh, Pennsylvania. Youngstown stands out because of its low home prices ($42,687), high appreciation rate (77% over the last five years), and low vacancy rate (3.2%). These factors make it a particularly good option for first-time investors.
  2. Detroit, Michigan, is a location that is seeing substantial growth and development as the result of a major revitalization. That energy, combined with low home prices ($58,213) and high appreciation rates (103% over the last five years) makes now a perfect time for investors to buy in Detroit.
  3. Spring Hill, Florida is a suburban area about 40 miles from Tampa. Its location and affordability make it an attractive area, leading to steady population growth. That growth, combined with a low vacancy rate (3.1%) and a high appreciation rate (85% over the last five) make it a promising area for investors.
  4. Pueblo, Colorado is a steel-manufacturing town that boasts the first steel mill powered by solar energy. The median home value is $263,343, and the area is seeing high appreciation (80% over the last five years) and low vacancy rates (3.1%).
  5. Birmingham, Alabama was once a manufacturing town, but it’s now become a banking center, with a downtown area that’s in the process of being revitalized. The high rent-to-home value ratio (11.5%) and low home prices ($90,047) offer investors a good return on their investment.

You can review the entire report to learn more about all 25 top investment markets and to get more context about what makes each area so attractive for investors.

Tips for Landlords Wanting to Expand their Portfolio

While data on hot and attractive markets is helpful, it’s important to keep in mind that real estate is local. This means that even if you’re looking at buying property in a strong rental market, it’s important to do your research first. This means getting to know some things about the neighborhood and understanding area rental prices and expenses.

Before purchasing a property, it’s always vital that you do plenty of homework and conduct an analysis of your potential ROI based on specifics in the area, including carrying costs, potential rental prices, and vacancy costs.

Be Prepared When You Find a Good Opportunity

Once you find the right rental property, it’s important to make sure that you’re prepared to get the most out of it. Good Tenant Screening and a thorough Lease are essential first steps for ensuring that you’re protecting your investment, getting the best return possible, and getting the most out of your rental property.

Visit ezLandlordForms.com to learn more about Tenant Screening and the importance of a great Lease.

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