As a real estate investor or someone considering the option of investing in real estate, you already know that two of the most widely used terms in the business are: a buyer’s market and a seller’s market.
It is common sense to assume that a buyer’s market is a market which generally favors buyers, while a seller’s market is one that tends to be more favorable to sellers. While that’s absolutely true, it is not enough to know whether the market you are looking at is rather buyer’s or seller’s. Thus, below are some of the main features of each market which will allow you to distinguish between the two. As a real estate investor, you should always look for the best markets to invest in, and these are generally the top buyer’s markets across the country. After the general description of a buyer’s and a seller’s market, you will find the 10 best markets to invest in within the US right now.
What’s the difference between a buyer’s and a seller’s market?
Let’s first take a look at the differences between a buyer’s and a seller’s market in order to know how to identify buyer’s markets as these are usually the best markets to invest in.
Buyer’s market
- High percentage of properties with price cuts, i.e., selling prices below listing prices
- Decreasing average property prices
- An increasing number of properties on the market
- Listed properties spending more time on the market
- 6 months or more of inventory on the market
- Lower closing percentage
- An overall increase in real estate ad activities
On the other hand, a seller’s market is pretty much the opposite of a buyer’s one.
Seller’s market
- Selling prices above listing prices
- Average property prices going up
- A decline in the number of properties on the market
- Listed properties spending less and less time on the market, i.e., investment properties are getting bought right away
- 3 months or less of inventory on the market
- Higher closing percentage
- Not much real estate advertising activity
Now that you know how to determine whether a certain market that you are considering for your next purchase of an income property is a buyer’s or a seller’s one, it’s time to take a look at the top 10 buyer’s markets in the US at the time, in other words – the best markets to invest in.
Which are the top buyer’s markets in the US at the moment?
Following is a list of the most prominent buyer’s real estate markets according to data compiled by the brokerage firm Zillow, as reported by Business Insider. The ranking is based on two of the most important indicators of a buyer’s market which make for the best markets to invest in: namely, percent of listings with price cut and average number of days for which properties are listed on the market. These data comes from Zillow, while the figures related to the median property price, rental income, and profitability are generated by Mashvisor’s investment property calculator, which saves you lots of time by performing the real estate market analysis and investment property analysis for you.
Related: Here Are the Top 10 Real Estate Markets for 2017
1. Baltimore
Percent of listings with price cuts: 12.7%
Days properties spend listed on the market: 104
- Median Property Price: $277,000
- Traditional Rental Income: $1,640
- Airbnb Rental Income: $1,960
- Traditional CoC Return: 4.5%
- Airbnb CoC Return: 5.9%
- Traditional Cap Rate: 8.1%
- Airbnb Cap Rate: 9.7%
- Airbnb Occupancy Rate: 48.0%
#1 among the best markets to invest in right now is Baltimore, which is the top buyer’s market. Moreover, it is affordable with excellent profitability. Airbnb is the better strategy for real estate investing in Baltimore.
2. Miami
Percent of listings with price cuts: 11.5%
Days properties spend listed on the market: 108
- Median Property Price: $494,000
- Traditional Rental Income: $2,270
- Airbnb Rental Income: $1,960
- Traditional CoC Return: 2.6%
- Airbnb CoC Return: 2.1%
- Traditional Cap Rate: 5.9%
- Airbnb Cap Rate: 5.4%
- Airbnb Occupancy Rate: 33.9%
The second among the best markets to invest in in 2017 is Miami, which offers equally good opportunities for a traditional and Airbnb rental property.
3. Philadelphia
Percent of listings with price cuts: 13.3%
Days properties spend listed on the market: 101
- Median Property Price: $342,000
- Traditional Rental Income: $1,570
- Airbnb Rental Income: $2,350
- Traditional CoC Return: 3.1%
- Airbnb CoC Return: 5.8%
- Traditional Cap Rate: 6.3%
- Airbnb Cap Rate: 9.2%
- Airbnb Occupancy Rate: 30.2%
Philadelphia, the 5th most populous city in the US, is yet another top choice for buying an investment property because of the price cuts and the long periods which income properties for sale spend on the market.
Related: Why You Should Be Investing in Philadelphia Real Estate
4. Chicago
Percent of listings with price cuts: 10.6%
Days properties spend listed on the market: 105
- Median Property Price: $366,000
- Traditional Rental Income: $1,990
- Airbnb Rental Income: $2,330
- Traditional CoC Return: 2.4%
- Airbnb CoC Return: 3.7%
- Traditional Cap Rate: 6.6%
- Airbnb Cap Rate: 8.0%
- Airbnb Occupancy Rate: 46.9%
No surprise that Chicago is among the best markets to invest in now as it has traditionally been a top real estate investment choice. The relatively low median property price and the good rental income make it profitable, especially for Airbnb.
5. Houston
Percent of listings with price cuts: 10.9%
Days properties spend listed on the market: 94
- Median Property Price: $453,000
- Traditional Rental Income: $2,190
- Airbnb Rental Income: $1,660
- Traditional CoC Return: 3.8%
- Airbnb CoC Return: 2.5%
- Traditional Cap Rate: 6.5%
- Airbnb Cap Rate: 5.1%
- Airbnb Occupancy Rate: 49.3%
The most populous city in the State of Texas and the 4th most populous one across the US – Houston – is also among the best markets to invest in for any real estate investor. If you prefer traditional over Airbnb income properties, you will be happy to hear that the latter is more profitable in Houston.
6. Indianapolis
Percent of listings with price cuts: 11.4%
Days properties spend listed on the market: 88
- Median Property Price: $221,000
- Traditional Rental Income: $910
- Airbnb Rental Income: $1,900
- Traditional CoC Return: 1.9%
- Airbnb CoC Return: 8.0%
- Traditional Cap Rate: 5.8%
- Airbnb Cap Rate: 12.3%
- Airbnb Occupancy Rate: 39.5%
#6 in the list of the top buyer’s markets to buy a rental property is Indianapolis, which is highly affordable. Moreover, profitability in terms of both CoC return and cap rate is high, especially for Airbnb.
Related: Why It’s a Good Time for Indianapolis Real Estate Investments
7. Detroit
Percent of listings with price cuts: 11.6%
Days properties spend listed on the market: 87
- Median Property Price: $273,000
- Traditional Rental Income: $1,330
- Airbnb Rental Income: $1,710
- Traditional CoC Return: 1.2%
- Airbnb CoC Return: 3.0%
- Traditional Cap Rate: 6.5%
- Airbnb Cap Rate: 8.4%
- Airbnb Occupancy Rate: 45.4%
The prevalence of price cuts and the number of days which properties spent listed on the market make Detroit another one of the best markets to invest in in the US right now.
8. Tampa
Percent of listings with price cuts: 13.3%
Days properties spend listed on the market: 83
- Median Property Price: $294,000
- Traditional Rental Income: $1,840
- Airbnb Rental Income: $2,430
- Traditional CoC Return: 4.5%
- Airbnb CoC Return: 7.6%
- Traditional Cap Rate: 8.3%
- Airbnb Cap Rate: 11.5%
- Airbnb Occupancy Rate: 40.4%
Tampa is one of the 3 Florida markets in this list, which makes Florida a top choice for buying an income property in 2017. Tampa is an ideal market for real estate investors in favor of Airbnb rentals.
9. Orlando
Percent of listings with price cuts: 10.6%
Days properties spend listed on the market: 89
- Median Property Price: $252,000
- Traditional Rental Income: $1,430
- Airbnb Rental Income: $1,830
- Traditional CoC Return: 3.3%
- Airbnb CoC Return: 5.5%
- Traditional Cap Rate: 7.3%
- Airbnb Cap Rate: 9.6%
- Airbnb Occupancy Rate: 39.4%
If you are looking for an affordable investment property in a market with significant price cuts and high number of days that listings spend on the market, Orlando is the place for you.
10. Washington
Percent of listings with price cuts: 11.3%
Days properties spend listed on the market: 84
- Median Property Price: $634,000
- Traditional Rental Income: $2,530
- Airbnb Rental Income: $2,250
- Traditional CoC Return: 2.6%
- Airbnb CoC Return: 2.2%
- Traditional Cap Rate: 5.0%
- Airbnb Cap Rate: 4.5%
- Airbnb Occupancy Rate: 62.5%
Position #10 among the best markets to invest in is for Washington, DC as a top buyer’s market at the moment.
So many times it’s been said that location is key in real estate investing. That’s the case only because it is so true. One of the most important decisions you will make with regards to your investment property is the market in which you will buy it. Thus, you should always be aware of the best markets to invest in across the US. Once you’ve settled on any of the above-listed markets, check out Mashvisor for available properties and for figures on them as computed by Mashvisor’s rental property calculator.
