Top LocationsInvest in These 10 Cities for Real Estate Appreciation in 2021 by Alex Karani April 5, 2021April 5, 2021 by Alex Karani April 5, 2021April 5, 2021While many investors tend to focus on potential cash flow when investing in real estate, this is not the only advantage of buying rental properties. Apart from cash flow, real estate investments offer a range of other benefits including leverage, capital appreciation, and tax breaks. Of course, you should invest in cash flow as the property will pay for itself and generate some extra monthly income, thus helping you make money in the short run. Even still, you should not neglect real estate appreciation which assures that you make money in the long term. While your main focus will depend on your investment goals, a combination of both cash flow and appreciation is what makes a real estate investment worthwhile.In this article, we are going to look into the best cities for real estate appreciation in the US housing market in 2021. But before we get into that, let’s first talk about what real estate appreciation means and why it is important for real estate investors.Related: Cash Flow vs. Appreciation: What Should Drive Your Real Estate Investment Decision?What Is Appreciation in Real Estate?Real estate appreciation is the increase in the value of a piece of real estate over a period of time. It is calculated based on the fair market value of the home. Appreciation in real estate is driven by a number of factors such as location, overall economic growth, demand and supply, government policies, and cost of borrowing (interest rates). Investors can also increase home values through strategic renovations. The more your property appreciates in price, the more profit you’ll earn when you sell it. Property appreciation may also lead to an increase in the monthly rental income and thus your return on investment. If you have a mortgage, an increase in the value of your property would also increase your home equity. Average real estate appreciation varies drastically by location. Therefore, finding markets with high appreciation rates requires a thorough real estate market analysis.Real Estate Appreciation in the US Housing Market 2021Despite the economic challenges brought by the Covid-19 pandemic, average real estate appreciation grew in 2020. This was partly because mortgage rates dropped to record laws, thus increasing buyer demand. So, will housing prices go down in 2021?Well, while home prices in some areas may drop, the consensus among real estate experts is that the US real estate market as a whole will experience a surge in home prices. With the high buyer demand due to low interest rates and low supply, real estate prices are expected to continue rising in 2021 but at a slower pace than last year.Related: 8 Steps to Becoming a LandlordBest Cities for Real Estate Appreciation in 2021To make your real estate investment decisions easier and more confident, we have provided you with a list of the best cities for real estate appreciation in 2021 in the US housing market.However, we understand that for you to find the best cities for real estate investment, you need to consider more than just the appreciation potential. For this reason, we’ll also provide you with key market data from Mashvisor such as median house price, average rental income, and the average return on investment (cash on cash return). This data comes from reliable publicly available sources and has been computed through our machine-learning algorithms. With all this information, you’ll be able to locate high real estate appreciation markets that fit your budget and have a high average rate of return, whether you’re interested in a traditional or Airbnb investment property. Here are the 10 cities that are expected to experience the most year-to-year price growth in 2021, according to Realtor.com, together with city data from Mashvisor:1. San Jose, CaliforniaSan Jose is expected to experience strong real estate appreciation in 2021Real Estate Appreciation Rate: 10.8%Median Property Price: $981,729Price per Square Foot: $670Monthly Traditional Rental Income: $2,864Price to Rent Ratio: 29Traditional Cash on Cash Return: 1.3%Monthly Airbnb Rental Income: $3,040Airbnb Daily Rate: $171Airbnb Occupancy Rate: 56.7%Airbnb Cash on Cash Return: 0.6%2. Seattle, Washington Real Estate Appreciation Rate: 9.7%Median Property Price: $714,850Price per Square Foot: $531Monthly Traditional Rental Income: $2,315Price to Rent Ratio: 26Traditional Cash on Cash Return: 2.1%Monthly Airbnb Rental Income: $2,249Airbnb Daily Rate: $144Airbnb Occupancy Rate: 51.1%Airbnb Cash on Cash Return: 0.9%3. Boise, IdahoReal Estate Appreciation Rate: 9.1%Median Property Price: $686,854Price per Square Foot: $314Monthly Traditional Rental Income: $1,267Price to Rent Ratio: 45Traditional Cash on Cash Return: 0.7%Monthly Airbnb Rental Income: $1,936Airbnb Daily Rate: $105Airbnb Occupancy Rate: 57.8%Airbnb Cash on Cash Return: 1.0%4. Fresno, California Real Estate Appreciation Rate: 8.5%Median Property Price: $348,134Price per Square Foot: $191Monthly Traditional Rental Income: $1,122Price to Rent Ratio: 44Traditional Cash on Cash Return: 1.74%Monthly Airbnb Rental Income: $2,388Airbnb Daily Rate: $115Airbnb Occupancy Rate: 70.3%Airbnb Cash on Cash Return: 4.0%5. Bridgeport, ConnecticutReal Estate Appreciation Rate: 7.8%Median Property Price: $273,663Price per Square Foot: $202Monthly Traditional Rental Income: $1,546Price to Rent Ratio: 15Traditional Cash on Cash Return: 1.7%Monthly Airbnb Rental Income: $3,078Airbnb Daily Rate: $151Airbnb Occupancy Rate: 63.8%Airbnb Cash on Cash Return: 4.6%6. Columbus, Ohio Real Estate Appreciation Rate: 7.6%Median Property Price: $272,796Price per Square Foot: $166Monthly Traditional Rental Income: $1,204Price to Rent Ratio: 19Traditional Cash on Cash Return: 2.9%Monthly Airbnb Rental Income: $1,940Airbnb Daily Rate: $127Airbnb Occupancy Rate: 60.6%Airbnb Cash on Cash Return: 3.9%7. Tampa, FloridaReal Estate Appreciation Rate: 7.5%Median Property Price: $488,753Price per Square Foot: $251Monthly Traditional Rental Income: $1,766Price to Rent Ratio: 23Traditional Cash on Cash Return: 2.7%Monthly Airbnb Rental Income: $2,037Airbnb Daily Rate: $128Airbnb Occupancy Rate: 50.7%Airbnb Cash on Cash Return: 2.1%8. Sacramento, CaliforniaReal Estate Appreciation Rate: 7.4%Median Property Price: $411,419Price per Square Foot: $278Monthly Traditional Rental Income: $1542Price to Rent Ratio: 22Traditional Cash on Cash Return: 2.2%Monthly Airbnb Rental Income: $3,311Airbnb Daily Rate: $126Airbnb Occupancy Rate: 73.1%Airbnb Cash on Cash Return: 4.6%9. Phoenix, Arizona Real Estate Appreciation Rate: 7.0%Median Property Price: $465,610Price per Square Foot: $243Monthly Traditional Rental Income: $1,528Price to Rent Ratio: 25Traditional Cash on Cash Return: 2.3%Monthly Airbnb Rental Income: $2,569Airbnb Daily Rate: $171Airbnb Occupancy Rate: 64.1%Airbnb Cash on Cash Return: 3.2%10. Arlington, Washington Real Estate Appreciation Rate: 6.7%Median Property Price: $523,513Price per Square Foot: $293Monthly Traditional Rental Income: $2,458Price to Rent Ratio: 18Traditional Cash on Cash Return: 3.7%Monthly Airbnb Rental Income: $2,352Airbnb Daily Rate: $180Airbnb Occupancy Rate: 55.2%Airbnb Cash on Cash Return: 1.1%Related: How to Calculate Cash on Cash Return in 2021Although this data gives you some insight into what to expect, there’s no surefire way to predict real estate appreciation. While you can control some aspects of real appreciation like the location of your investment property and the condition of the property, the real estate market trends are hard to predict. For instance, an unexpected spike in interest rates would course an increase in the cost of lending and, consequently, lower the demand for real estate. This would hinder home appreciation. Related: How to Choose a Real Estate Market to Invest In Search for Profitable Investment PropertiesThe Bottom Line Despite the effects of the Covid-19 pandemic on the economy, real estate appreciation was experienced in much of the country in 2020, and the trend is expected to continue in 2021. However, it’s likely that some markets will experience a drop in the average house price. To increase the odds of success, locating the best cities for real estate appreciation in 2021 is important. Remember, finding a target city for your real estate investment is not the end. You still need to locate the best neighborhood and the most profitable investment property within your budget. Be sure to use Mashvisor’s real estate investment tools to conduct a quick and comprehensive neighborhood analysis and investment property analysis. To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today and enjoy 15% off for life. Start Your Investment Property Search! START FREE TRIAL AppreciationBridgeport CTFresno CAProperty PricesSan Jose CASeattle WA 0FacebookTwitterGoogle +PinterestLinkedin Alex KaraniAlex is an entrepreneur and an experienced content writer focused on personal finance, business, and investing. For over six years, he has contributed to a number of publications, both online and print. When he's not writing or working, Alex enjoys reading, traveling, and the outdoors. Previous Post What Is Cross Collateralization in Real Estate? Next Post Airbnb vs Traditional Renting: What’s the Best Real Estate Strategy in 2021? Related Posts The New York City Real Estate Market Forecast for 2019 20 Best US Cities for Investing in Long Term Rentals in 2021: Where Renters Are Moving 4 Affordable Neighborhoods in the Los Angeles Real Estate Market 5 Tips for Investing in the California Housing Market Invest in Buffalo Real Estate and You Won’t Regret It! 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