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Ask the average person for some passive investment ideas and ten out of ten times, they’ll list real estate in their top three. Why? Real estate is part of our lives. Everyone lives somewhere.
It’s quite easy to think that your mortgage provider or landlord must be earning lots of money. Well, most times they are, especially if you’re residing in a real estate hot spot.
Here, you’ll learn about 18 of the best states for real estate investing in 2022. Uncover why each of these states is a great housing market to invest in. See current housing market statistics for every state and what makes each of them stand out.
Table of Contents
Best States for Real Estate Investing in the US
Before we head into our rankings of best real estate markets, there are some things you’ll need to know.
- Unless otherwise stated, recent housing market data used here is from Zillow, Census Reporter, Data USA (2019 census data), redfin, and November 2021 statistics from Apartment Guide for rent trends.
- These rankings are in alphabetical order. These are the 18 best housing markets in America.
Arkansas
Arkansas provides a great real estate investment opportunity, with promises of a high quality of life for homeowners and real estate investors in 2022. The average home here sells for $159,714, with a median increase of 15.3%year-over-year.
Of all housing units 84% are inhabited, with tenants occupying 35% of that number. The average rent here is less than you’d find in most other states, sitting at $914 per month. When compared to the previous year, the average rent reduced by a massive 15.3%.
What’s more? Population growth in “The Natural State” was up by 0.13%, pushing the numbers to 3 million residents. The property tax rate for the largest households is below $800, putting Arkansas alongside the lowest property tax states in the US. Notably, Arkansas is expected to come out strong as a seller’s market in 2022 with buyer’s and rental demand greater than there are available properties.
California
Also known as “The Golden State”, California is the most populous state in the country with 40 million residents. The median price for a home in California is $772,406, with a year-over-year increase of 21%. Nine out of every ten houses in CA are occupied, with renters inhabiting half of the housing units.
The average rate of rent increase year-over-year in CA is 19.0%, with single-family properties increasing by 22.3%. The median rent in this diverse economy goes for $3,123 per month, amid a job growth rate estimated at 1.37% last year. Taxpayers with the largest share of households pay $3,000 in property taxes.
Georgia
Georgia’s median price for a house is $269,441 according to Zillow, with a year-over-year increase of 18.9% in December according to Redfin. Intending sellers had to wait for an average of 26 days, with 36% of the housing units occupied. Again, single-family units account for the biggest percentage of housing units in the Peach State’s housing market.
Property taxes are, on average, less than $800, with the average rent at $1,666 per month. Home to more than 10.7 million people, Georgia ranks sixth in the US for net immigration. The state added 284,541 people in 2019, consequently increasing the diversity of its population. Furthermore, the real estate market is expected to follow suit in increasing potential and dynamism.
Florida
Many millennials (and consequently, young professionals) are moving out of big cities like Chicago and Los Angeles for less noisy suburbs. Helpfully, Florida’s housing market presents an attractive alternative with its welcoming beaches, coastal cities and warm year-round weather.
The average home in the state sells for $328,576, and is increasing year-over-year by 23.9%. Median rent is at $2,271 per month, with an average year-over-year rent increase of 37.56%.
Per employment opportunities, job growth is at 2.57% against a population growth of 0.84%. Of houses, 82% are occupied, while the average taxpayer (with the largest share of households) pays $3,000.
Experts believe that interest rates will rise in 2022. Generally, the figures are favorable for potential investors, with single-family homes holding the highest promise.
Idaho
Next on this list of best real estate markets is Idaho. Home to one of the hottest real estate markets in the nation (Boise), Idaho has a median home value of $446,550. The average home’s worth increased 38.2% year-over-year with a total of 87% of its houses occupied. The average rent in this state comes in at $1,429 per month, with an average year-over-year rent increase of 21.72%.
Employment chances in Idaho grew by 4.32% in the last year, against population growth of 1.87% bringing the total population to 1.7 million. Per the property tax rate, the largest households in Idaho will pay between $800 and $1,499.
Illinois
The average home in Illinois’ housing market sells for $243,355, growing by 13.6% year-over-year. While 90% of housing is occupied, about 34% of total housing units are renter-occupied. Reasonably, with the relatively small amount of vacant total housing units, the prospects of successive investment properties and new real estate portfolios are bright.
Population slightly declined by 0.5%; while jobs grew by 0.84% in the previous year. Median rent in “The Prairie State” goes at $1,619 per month, increasing by 15.05% year-over-year. Per the property tax rate, the largest share of Illinois households pays over $3,000.
According to data from Illinois REALTORS®, Oak Park and Schaumburg have the highest monthly rental growth rates, both up 4.8%. Aurora and Chicago are close behind, with a 3.3% rent increase each.
Indiana
Homes sell in Indiana for $197,767 on the average—a 17.4% year-over-year increase from the previous year. With an occupied housing rate of 89% in Indiana, 31% of its occupants are tenants. Job growth rate in the state is at 1.53% against a population increase of 0.6%.
Renters pay an average of $1,208 per month, with a 7.15% year-over-year increase.
On the tax front, the property tax rate (for the largest household share) is pretty fair at less than $800 per month. More specifically, realtor.com singled out Indy-Carmel-Anderson metropolitan area at #4 in its rankings of housing markets across America in 2022.
According to the report, the area hosts healthy local economies and reasonable job growth rates, both of which are expected to continue into the New Year.
Iowa
Iowa offers her residents ample opportunities to enjoy outdoor living. Its top cities include Des Moines, Cedar Rapids and Davenport, with the largest share of households paying over $3,000 in property taxes.
The average home in “The Hawkeye State” sells for $174,916, with a median value increase of 111.1% year-over-year. 91% of properties in Iowa are occupied, with tenants taking up 29% of the total housing units.
Housing prices across the state were up 7.8% year-over-year in December according to Redfin. During the same period, the number of homes sold fell 10.8%, while the number of homes for sale dipped by 19.8%.
Kentucky
The average home in “The BlueGrass State” today sells for $178,523, with a 13.9% year-over-year increase. About 87% of housing units are currently occupied, with 33% of those houses having tenants.
Tenants, on average, part with $1,082 each month, a 6.8% increase from the previous year. Per the property tax rate, Kentucky residents have a more modest property tax rate of less than $800, for residents with the largest share of households. Evidently, the housing market offers affordable investment opportunities, with regards to both rental markets and property sales.
Kentucky’s housing market is set to remain a seller’s market in 2022, with more people looking to buy than there are sellers. Notably, the trend is largely the same all across the US, as the country seeks to master the reins of the recalcitrant pandemic. The state’s population dropped by 0.02%, now standing at 4.5 million residents.
Maine
The median price for a home in Maine goes for $326,024, with a 0.67% month-over-month increase. Her current 30-year mortgage is at 3.14% of a median sale rate of $304,000.
Investors in Maine’s housing market can expect to sell their investment property on the average in less than two months. What’s more? The average income in the lobster hub of America is $49,469.
Across the nation, home prices are up by about 18%, and getting relief in the property market might take a few years. With its 1.3 million people, Maine’s real estate markets bear a deficit of around 25,000 housing units, making it predominantly a seller’s market. In one word, Maine remains a hot real estate market for potential investors with mortgage rates expected to increase even more.
Michigan
Over the last year, houses sold for $218,051 on the average, with a 17.4% year-over-year increase. About 86% of houses are occupied, with 28% of the housing occupied by tenants.
Median rent in Michigan is at $1,318 per month, up 12.63% from the previous year. The population in Michigan dipped slightly by 0.09% to stay at 10 million residents.
The state’s property tax rate is near the highest in the U.S., with the largest households having to pay $3,000. High housing demand and low supply led to high sale prices of homes in Michigan last year. Notably, The Great Lakes State’s housing market is expected to remain a seller’s market in 2022.
Nebraska
The average home in the Cornhusker State is valued at $217,232 while increasing year-over-year by 14.4%. Average rent is at $1,316 per month, with an average year-over-year rent increase of 9.29%.
Housing market statistics from Redfin show that home prices statewide increased by 7.1% year-over-year in December, 2021. During the same period, the number of houses rose 8.1% while the amount of houses available for sale reduced by 28.7%.
Per employment opportunities, jobs growth in Nebraska is at 1.17% against population growth of 0.27%. About 91% of houses are occupied, with renters living in 34% of all available units. Lastly, the average taxpayer (with the largest share of households) parts with $3,000 at tax time.
New Mexico
The average home in New Mexico sells for $259,771, growing by 18.7% year-over-year. While 84% of the housing market is occupied, about 32% of total housing units are renter-occupied.
The population slightly increased by 0.07%, while jobs grew by 5.59% over the previous year. New Mexico has a population of 1 million people.
That said, median rent in The Land of Enchantment is at $1,619 per month, increasing by 15.05% year-over-year. As for the property tax rate, the largest share of New Mexico households pays less than $800.
New York
New York’s real estate market has continued to thrive without any signs of slowing down in the New Year. The median home price in NY is $850,000, trending flat year-over-year. Data from Redfin says that the average price of a home was $780,000, increasing by 7.6% from the previous year.
New York’s housing affordability index decreased by 3.7%, implying that home prices have gone northward. According to NYSAR.com, NY’s total active listings fell by 12.3% in December, 2021. Despite being one of the most hard hit by the pandemic, NY remains a favorite destination for long-term real estate property investment.
North Dakota
The average home in North Dakota today sells for $257,423, with an 8.3% year-over-year increase. About 85% of housing units are currently occupied, with 39% of those houses having tenants. Renters part with $1,006 each month the average in ND, a 6.8% increase from the previous year.
On ND’s property tax rate, residents pay about $3,000. Job growth over the last year was at 3.01%, against a slight population rise of 0.26%.
One of the least populated in America, the population in North Dakota sits at 774,948 inhabitants. Investors looking to ply their trade here might want to consider markets in Fargo–ND’s most populated city–or Bismark.
Ohio
Ohio’s median home value is $190,984 with a home value increase of 16.4% year-over-year. The current average rent is at $1,213 each month, with a year-over-year median rent increase of 9.06%.
About 9 out of 10 Ohio homes are occupied, with 34% of that occupancy made up by renters. Jobs here rose by 0.67% in the last year, with the largest earning household paying $3,000 in property taxes.
That said, a study by some researchers reveals that Ohio properties are among the most overvalued in America.
Ranked the fifth hottest housing market in 2022 by realtor.com, Ohio’s looking to stabilize and increase its potentials for investors.
Pennsylvania
According to this report, limited inventory and an increasing median sale price are the most notable metrics in PA for December 2021. Homes in the Keystone State have a median home value of $245,153.
The average home’s worth increased 15.9% year-over-year with a total of 89% of its houses occupied. Median rent in this state comes at $2,060 per month, with an average year-over-year rent increase of 24.75%.
Job opportunities grew in Pennsylvania by 4.32% in the last year, against a slight population dip of 0.04% to 12.8 million. Per tax rates, residential properties within the largest household share in PA will pay property tax of about $3,000.
Utah
If you have a real estate investment property in Utah, your tax should be between $800 and $1,499. Average home prices in Utah are at $505,789, which increased year-over-year at 29.6%. Utah boasts an employment growth rate increase of 4.14%, inviting businesses and professionals.
Top-rated in economic rankings, Utah ranked #1 for economic outlook in the country according to the American Legislative Exchange Council. With its scenic beauty and nearby top-rated ski resorts, Salt Lake City (Utah’s capital) readily offers tremendous opportunities and prospects for real estate market investors.
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What Makes a Good Real Estate Market?
The truth is, in the marketplace, sentiment doesn’t decide what a good deal is—facts do.
But here, you want the best returns on investment from your portfolio. So you need to know what metrics determine a favorable real estate market in America.
The following factors often determine which housing market is best—or better—for real estate investing.
Job Growth Rate
Job market growth is one of the main reasons why people and businesses migrate across states. For starters, employment gains are part of why states like Utah and Maine remain hotspots for real estate investing.
Increasing Property Prices
States which have a long history of rising property prices are strong contenders for better market ratings. New York State, for instance, has seen properties rise in value steadily since 2010.
Moreover, the trend looks to continue in the New Year, further strengthening the state’s real estate market profitability. It’s the same story for similar states with rising home prices.
High Occupancy Rates of Rental Properties
If a high number of rental properties in a state are occupied, it’s a good indicator of a virile market. I mean, who wants to invest in a city with most of its apartments currently vacant. In our list, California and Nevada stand tall with renter-occupied housing rates of 45% and 43% respectively.
Increasing Share of Renter-Occupied Households
Yes, we’ve seen that high rental occupancy rates motivate investors. It’s also worth adding that a growing share of renter-occupied households helps improve a market’s viability for investment.
Why? The metrics further accentuate how attractive the real estate market is for renters.
Low Property Taxes
The states with lower property taxes help reduce the cost of living. Invariably, it means that the investor or real estate business owner gets more cash in hand, after all necessary deductions, at the end of the day. On our list, Indiana and Georgia have among the lowest property taxes (below $800).
Consistent Population Growth
An increasing number of residents means that there’s more demand–home sale and rental demand–for real estate in the market. Idaho and Nevada show the highest population growth indices here—1.87% and 1.51% respectively.
Of course, usually, it’s a combination of these factors that tip a state as a favorite destination for America’s real estate pros.
The Hot Passive Investment Option
If you’re considering investing in the housing market or starting up a real estate business , you want to know the best markets out there.
As you probably already know, location is one of the topmost priorities when planning to invest in the market. What are the best states for real estate investing? What makes these states the “best” for real estate investing?
Most real estate stats predict that the market will get more relief from the turbulence of the last two years. These predictions alone make great news for intending or current real estate investors.
Moreover, experts believe that both fixed mortgage rates and home sales will rise later in the year. It’ll remain a seller’s market— and that’s largely good news for current or intending passive investors.
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Don’t let a recession derail your financial future – start building a passive income stream today!
Sign up now to see our Multifamily Properties!
In Summary
While this article covers the best states for real estate investing, it’s still imperative to conduct thorough research and investigation before staking your hard-earned money. Some other parameters to watch out for are how prone an area is to natural disasters or crime.
That said, why lose your sleep over an investment decision when a real estate expert can guide or manage your portfolio? The volatility of the market, an unstable economy, and taxes are among the biggest headaches for intending investors.
Holdfolio offers top-notch property management services, having developed proven proprietary technology that assists non-accredited investors in navigating the commercial real estate market.
That is, you don’t need to own $50,000 as an accredited investor to enjoy the benefits of passive real estate investing. Holdfolio deals have a lower barrier to entry and engage in high quality perfect for the average person seeking a consistent and passive monthly cash flow from real estate.
We’re talking about having a trusted, experienced, and proven investment partner by your side, throughout your investment journey. You’re not just assured of predictable cash flow to grow your savings for your retirement. Holdfolio’s property management services ensure you receive current industry knowledge on finding the best investment, and subsequently on the progress of your portfolio.
Book a call with TJ Lokboj, Managing Partner at Holdfolio, to explore your options!
