Simply investing in any urban sunbelt market is not a recipe for success. Seize the wave of appreciation cash flowyou need to dig into the indicators to examine where people are moving, how property and rental prices are rising, and what the unemployment rate is.
The good news is we’ve done it all for you! So stop throwing darts at the map, check out our findings, and pick the markets like a smart, discerning investor.
Rental oversupply and interest rates are having an impact
The first thing you’ll notice when looking at the table is that neither home prices nor rents have increased significantly in our top markets. Some are declining. After experiencing the post-epidemic bubble period in 2021, prices and rents took off like a spaceship. The emergence of high interest rates achieved its intended purpose: putting a brake on the booming home purchase market.
The increase in rental units has exacerbated the problem, as many new apartments are coming to market to accommodate population growth caused by relocation in the job market. CoStar, a national data, analytics and listings website, reached the same conclusion in a study recent reports.
“USA Multifamily Jay Lybik, CoStar’s national director of multifamily analysis, said in a statement on his organization’s website that the market will rebound strongly in 2023, with the number of units absorbed rising 122% year over year to 332,000 units. While demand growth is impressive, the influx of new units has masked demand growth, causing a supply-demand imbalance and driving up vacancy rates.
Costar reports that about 565,000 new units came on the market last year, mostly in Sun Belt statesand oversupply cause As our table shows, rents will fall in some southern markets.
Austin hits the brakes
Austin, Texas, the poster child for the Texas tech boom, has seen the most severe housing growth slowdown, with our data showing home prices in the state fell 6.29% for the year and rents down 3.01%. This is the fall from dizzying highs of Just a few years ago, investors bought a record $9.4 billion in apartments in 2021, with rents rising 20%, more than anywhere else in the U.S., according to MSCI Real Assets.
The actual decline was more severe than our year-over-year data suggests,and Freddie Mac Home Price Index reveal According to statistics, since peaking in 2022, home prices have fallen by more than 11%, the largest decline of any metro area in the country. wall street journal.
“Clearly, have Apartment investor Larry Connor, whose company manages a national apartment portfolio of 15,000 units, told The New York Times wall street journal.
However, excluding Austin would be a mistake. There are so many in the area Major technology companies Once the market stabilizes, value will inevitably increase.
Charleston’s tourism industry is a $12 billion industry.
Interestingly, although Charleston, South Carolina ranks at the bottom of our list, this is due to its population growth only. The area is booming, judging by home prices (up 6.31%) and rent increases (up 7.03%), indicating that many jobs are booming in the area. be filled By locals. according to United States CensusLast year, South Carolina surpassed Florida to become the fastest-growing state in the country.
According to South Carolina’s National websiteNorth Charleston, South Carolina, including Berkeley, Charleston and Dorchester Counties, biggest Percent growth in nonfarm employment from October 2022 to October 2023.
this largest private employer Healthcare, aviation (Boeing) and retail (Walmart) in Charleston. However, one of the biggest drivers of employment It’s tourismwhich increases $12 billion to the local economy. Tourism will drive growth in housing prices and local employment. Aviation DNA Statistics Support this by showing twice as active short term rental Available on the market within 12 months.
Fastest growing sunbelt city
The fastest-growing Sunbelt cities are all relatively close to each other: Myrtle Beach, South Carolina; followed by Three cities in Florida: Lakeland, Fort Myers and North Port-Sarasota-Bradenton. Here’s a more in-depth look at each.
Myrtle Beach, South Carolina
Myrtle Beach is not only one of the fastest growing cities in the United States sunbelt, But according to statistics, the country has the fastest growing U.S. News & World ReportAn annual list of the fastest growing regions in the United States, based on net migration. Our data confirms this, showing population growth of 5.17%, house prices growing at a steady 2.08%, and rents growing at 3.65%.
A big part of Myrtle Beach’s success is diversifying away from pure tourism. “We said for Some A key factor in making this a year-round place to live over the years has been diversifying our employment base and that we’re not entirely reliant on summer and summer tourism,” Assistant City Manager Brian Tucker told CNN News 13, a local television station. “We have to have these job creators available year-round.”
However, many people who move around year-round to the area Not attracted to this work area, but Retirees or working remotely. For example, Horry County has experienced explosive growth over the past 20-plus years, with the population increasing from 198,000 people in 2000 to more than 380,000 people in 2022.years old) moved to Myrtle Beach area 2023.
Lakeland, Florida
Our data shows Lakeland’s population will grow by a healthy 4.5% in 2023, an increase of just 0.87% house price growthrent increased by 1.63%.
One of the area’s main draws is its location between Orlando and Tampa. It retains a small-town feel, has lower housing costs, and is less crowded than the surrounding suburbs of the two major cities.
Lakeland Deals Diversified employment Opportunities in education, healthcare, aviation and logistics. This is an excellent choice for people to live and retire, mainly if telecommute is an option.
fort myers florida
Located between Tampa and Miami on Florida’s Gulf Coast, Fort Myers has many of the same attributes as Lakeland in that it’s not as expensive as some of Florida’s more glamorous cities and has a laid-back charm, plus The River District has a vibrant downtown bar scene. It’s also a paradise for outdoor and water sports enthusiasts.
There are employment opportunities here Healthcare, retail, education and tourism. The commute time to Naples is Not far Hospitality jobs available in many hotels.
us news Ranked Fort Myers as one of the fastest-growing cities in the United States in 2023-2024, ranking third. Our data shows a healthy population growth of 4.38% and marginal house price growth of 0.15% (due to lower interest rates and explosive growth when interest rates are lower). Due to rapid growth during a period of high inflation, rental growth fell by 1.58% compared to last year.
Like many cities in Florida, Fort Myers attracts retirees, with residents 65 and older making up nearly a quarter of the city’s population.
North Port-Sarasota-Bradenton (Florida)
The area is close to Lakeland and offers many of the same attributes as nearby Tampa and Miami, with lower housing prices and a quieter pace. The area is busy with new developments such as the Mary Selby Arboretum and the Newtown Opening Museum of 1920s Houses, the city’s historically black district.
Our data shows that the population grew by 3.68%, house price growth fell by 0.42%, and rent growth fell by 0.20%.
Part of the greater Sarasota area’s appeal to New Yorkers isn’t just its proximity to destination cities, There is also an active arts scene (Sarasota Orchestra, Asolo Repertory Theatre, Sarasota Opera, and Van Wezel Hall for the Performing Arts)also Popular white sand beach.
With so many retirees, it’s no surprise that the healthcare industry is one of the region’s largest employers, Sarasota Memorial Health Care System Employs 6,550 people. However, the sophisticated arts scene appears to come at a price, as the median home price is over $450,000 and the median rent is $2,382, putting it beyond the reach of many retirees.
final thoughts
Lower taxes, warm weather, and an affordable cost of living are the main reasons why businesses and people move to the Sun Belt, especially to Florida. according to U.S. Census DataFlorida is a top location for newly formed business entities. Of the 5.8 million new business applications submitted nationwide from January 2021 to January 2022, 683,680 people, or 12%, are in Florida.
These businesses range in size and scope, from behemoths such as real estate investment group Blackstone Group, global investment bank Goldman Sachs and self-driving car technology company Argo AI to hundreds of smaller businesses. Combine that with remote work options and an all-time favorite location for retirees, and you can see why Florida is (pardon the metaphor) in a perfect spot. immigration storm.
Reasons to move to Texas and other Sun Belt states are similar to Florida: jobs, weather, and a pleasant cost of living. As long as these remain intact, it’s hard to imagine the Sun Belt not continuing to tighten its grip on Americans seeking to escape the cold, overcrowding and high cost of living in other parts of the country.
When it comes to Sun Belt housing, investors have two main options: attract retirees who are hesitant about long-term mortgages, or attract an influx of young movers attracted by jobs, weather and affordable rents .
Exclusive segmentation and data analysis of the most popular areas for investors
It’s no secret that the Sun Belt has been a major focus for investors for years due to appreciation and rental growth. But which markets offer the best cash flow opportunities?
Download our Sun Belt Market Worksheet Get a rundown of the most popular metro areas and states for investors and get Complete data for all states and markets In our accompanying Sunbelt Market Intel spreadsheet.
Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
