2023 Roundup: Which Markets Are Experiencing Growth?
Renters Warehouse Blog
Choosing the right rental property is an important decision. But investors know that it’s also important to pay attention to local housing market conditions as well.
As 2023 draws to a close, we saw several markets become top-picks for rental property investors. With robust economies, flourishing job markets, and growing populations, these markets may be worth paying attention to. Keep in mind as well that in some cases, tertiary markets and locations that are just outside of hot property markets are worth a look as well. These markets are less heated, which makes them more affordable. In some cases, they could still benefit from some of the growth that the major metropolitan area is experiencing as well.
Of course, each market is different and there are many factors that affect housing prices and viability of an investment. In this roundup, we’ll focus on growth and share some of 2023’s thriving markets along with insights and speculation into some of the driving forces behind their growth. But you’ll still want to do your own research to determine whether a location makes sense for you.
Factors to Look For When Investing in a New Real Estate Market
The housing market may have cooled ever so slightly, but one thing is still for sure: renters aren’t going anywhere.
The rental vacancy rate has been steadily declining in the past decade with investments in rental home construction increasing. Keeping your eye on growing markets is critical if you want to enter at the right time.
Looking for an area that’s experiencing growth, or about to experience growth, is a good strategy. Of course, it can be challenging to spot a market that’s emerging, but here are some things to watch for, signs of an emerging market:
The heart of a growing rental market is economic expansion. When a city or region starts bringing in businesses, industries, and investments, job opportunities multiply and the potential influx of workers means they need places to stay. Whether they’re moving from across the country or commuting from a neighboring town, some of these workers will seek rental properties close to their workplaces.
Infrastructure and Amenities
A neighborhood with well-laid roads, efficient public transport, good schools, hospitals, parks, outdoor recreation, a cultural scene, and other amenities is like a magnet for potential renters. It’s a win if tenants can find everything they need within arm’s reach.
Areas with reasonable rental rates often see faster growth, especially if they promise value for money. Other cost of living expenses, such as gas prices and groceries, come into play too. A city or state’s tax laws are another thing that can entice (or turn away) people. Migration trends show that many Americans are leaving high-tax states for states with lower taxes.
A low crime rate, well-lit streets, active neighborhood watch programs, and responsive local authorities can all be signs of a good area as well.
Renters and investors often have an eagle eye on future infrastructure projects or upcoming business hubs. The announcement of a new university, metro station, or tech park can set a rental market ablaze.
Cultural and Lifestyle Fit
Regions with a unique cultural or lifestyle appeal, be it beach towns, tech centers, student cities, or art districts, can further fuel the rental demand.
Government Policies and Incentives
Sometimes, government policies can steer the direction of a rental market. Tax breaks for developers, incentives for new renters, or urban regeneration projects can make an area more appealing.
Here’s a more in-depth look at Scouting Out New Markets - What to Look for, What to Avoid.
Fast-Growing Real Estate Rental Markets in 2023
Raleigh, North Carolina
The capital of North Carolina is one of the hottest markets in 2023. A city on the rise, Raleigh has a growing population and a job market that has increased by 17.5% over the last 10 years. Its low unemployment rate of 3.4%, coupled with a high annual average income, makes for a winning combination.
Raleigh is also considered the cultural hub of North Carolina with its flourishing cultural scene, with many museums, galleries, and festivals. Another draw is its access to outdoor recreation. Raleigh has lakes, parks, and mountain trails ideal for activities like hiking and boating.
Another thing that makes Raleigh an excellent choice for rental investments is its high student population. Raleigh is home to large universities like Duke, North Carolina State, and the University of North Carolina at Chapel Hill.
The good news for investors is that real estate prices in Raleigh have become more favorable to buyers, allowing investors to maximize returns and capitalize on future growth.
Atlanta has seen its real estate market soar, propelled by a surge in rental demand. Between 2015 and 2050, the metro Atlanta region is expected to see a 51% increase in population and a 34% increase in employment.
The diverse economic opportunities in Atlanta keep on attracting people to the Peach State. Atlanta is home to several Fortune 500 companies like The Home Depot, Delta Air Lines, and Coca-Cola. It has also gained a reputation as a fast-growing and prolific tech hub.
Compared to other major U.S. cities, Atlanta is still an affordable place to live. Residents can grocery shop, dine out, and enjoy leisure activities without breaking the bank. Its mild climate and abundant green spaces are also a major draw.
Thinking of investing in an out-of-state rental? Read our tips for long-distance property management here: Managing Your Rental Property Remotely: Tools and Techniques for Long-Distance Landlords.
Phoenix’s real estate market is on fire, thanks to its affordable living costs, sunny climate, and an influx of remote workers. The demand for rentals comes from the increase in young professionals and families who are drawn to the city’s job market but may not yet be ready, or able, to commit to homeownership.
The fifth-largest city in the US is one of the fastest-growing economies in the country, with a variety of industries like manufacturing, information technology, tourism, and healthcare. The Arizona Commerce Authority says that the year-over-year Arizona employment increased by 111,500.
Job market aside, Phoenix’s proximity to natural parks like Saguaro National Park and the Grand Canyon, plus the availability of big-city amenities, make it a favorite for people looking to move. The city has become a top destination for people living in expensive areas like Los Angeles or San Francisco.
Phoenix also presents other great opportunities for rental investors. The affordability and weather draw in retirees, while the high-quality colleges and universities bring in students. Of course, let’s not forget the millions of tourists that visit each year.
Charlotte, North Carolina
With a booming financial sector, Charlotte’s real estate market continues to be a solid choice for investors. The city offers a plethora of job opportunities, not just in finance, but also in sectors like technology, retail, and energy. This ensures a steady stream of young professionals relocating to Charlotte. You’ll also find Fortune 500 companies like Bank of America, Lowe’s, and Duke Energy here.
Charlotte is home to 23 top-ranked schools and universities, making it a great option to consider for those who want to invest in student rentals. The Queen City also appeals to young families thanks to its southern charm, urban amenities, and proximity to natural attractions. On top of that, the cost of living is 2% lower than average.
Charlotte’s diverse rental demographic, ranging from students, and young professionals, to families, provides flexibility for investors in terms of property type and rental strategy. Another bonus for investors is that North Carolina has a number of landlord-friendly regulations as well.
Check out our tips on Spotting a Good Investment Property.
Austin’s tech boom continues to fuel its real estate market, making it a target for investors. Tech giants like Tesla, Samsung, Google, and Oracle have headquarters in Austin. Aside from tech, many leisure and hospitality jobs have also been opened up. As of 2023, Austin ranks as the best-performing major job market since 2020.
With an ecosystem that supports entrepreneurs, Austin has solidified its reputation as a hotspot for business and innovation. This can ensure a steady stream of job opportunities, drawing professionals from various fields. The Austin Housing and Planning Department estimates that the metro will continue to grow by 2% until 2050.
The city’s lifestyle and cultural scene amplify its attractiveness. Austin’s wide range of outdoor recreational activities along with its reputation as a diverse and inclusive city have made it a top destination for Millennials and Gen Z.
Additionally, Texas’ absence of state income tax, combined with landlord-friendly regulations, offers financial advantages and relative ease of property management.
Denver has shown impressive economic growth in recent years. The city has various sectors, including technology, aerospace, telecommunications, and renewable energy. This diversity has spurred job creation, drawing in a steady stream of skilled professionals and a younger demographic. With Millennials and new residents inclined toward renting, especially in the early stages of their careers or relocation, there’s a sustained demand for quality rental properties.
Beyond its economic vitality, Denver offers a unique blend of urban sophistication and unparalleled access to outdoor activities, thanks to its proximity to the Rocky Mountains. The ability to work in a modern city and enjoy weekend getaways in nature is a big plus for those seeking a good work-life balance.
For investors, this translates to a diverse pool of potential renters, from young families to seasoned professionals.
Rental properties offer both cash flow and long-term appreciation. Thinking of investing in rentals? Read our Beginner's Guide: How to Start Investing in Rental Properties.
According to the U.S. Census data, Florida is now the nation’s fastest-growing state in terms of population. Orlando, in particular, has been a prime beneficiary of this influx. The steady migration of residents, attracted by the state’s favorable tax climate and Orlando's booming job market with sectors in tourism, technology, healthcare, and education, ensures a consistent demand for long-term rental accommodations.
Aside from the favorable demand dynamics, Orlando presents investors with relatively affordable real estate options compared to other booming markets in the U.S. Coupled with the state’s landlord-friendly regulations and absence of state income tax, Orlando offers a compelling return on investment scenario.
The blend of a booming economy, population growth, and the city’s inherent draw as both a tourist destination and a desirable place to live positions Orlando as a great place to own rental properties.
From an economic standpoint, Tampa’s growth trajectory is impressive. The city witnessed consistent job growth in sectors such as finance, healthcare, and technology, with companies like Citi, Amgen, and numerous startups choosing Tampa as their operational base. Tampa’s population growth rate consistently outpaced the national average in the years leading up to 2023, further solidifying its appeal to investors.
Lifestyle-wise, Tampa offers a unique blend of elements that can win over potential renters. Its scenic beaches, vibrant nightlife, cultural venues, and the added allure of being a sports city (home to teams like the Tampa Bay Buccaneers and the Tampa Bay Lightning) have also contributed to its reputation as a desirable place to live and work.
The fastest-growing real estate markets in 2023 showcase a blend of established markets like Florida and emerging markets like North Carolina. Many of the cities we mentioned provide a high quality of life at a more affordable price, making them top choices for renters, investors, and landlords. Identifying potential markets to invest in isn’t always easy, but a little bit of regular research and keeping up to date with market and economic trends will help you identify profitable rental investment opportunities.
Note: Investment opportunities vary. We’ve highlighted some popular markets that are worth keeping an eye on as we enter the next year, but it’s important to conduct your own due diligence before investing. The viability of an investment will vary, depending on a number of different factors and you’ll want to consider the property itself in addition to the market conditions before you invest.
Ready to start searching for your next rental property? Check out our inventory of available properties for sale. Renters Warehouse also offers 24/7 professional landlord services to help you manage your rental property in a hassle-free way.
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