Real estate investing success has a lot to do with location. In this article, we will show you the best markets for real estate investing in 2023.
Table of Contents:
- What Is in Store for the Real Estate Market in 2023?
- 10 Best Markets for Real Estate Investing: Traditional Rentals
- 10 Best Markets for Real Estate Investing: Airbnb Rentals
While there’s more to real estate investing than just the location, the market you’re investing in plays a major role in determining how successful your investment will be. As an investor, you should take into account what a location has to offer and if it can help you achieve your investment goals.
Even if you have more than enough money to fund your investment, if the real estate market has a very low cash on cash return or cap rate, you’ll probably end up making a return on your investment for a longer period, or worse, end up with a negative cash flow.
This is why performing due diligence is so important in real estate investing. It helps you determine the best markets worth investing in. It shows you real estate markets that have very promising cash on cash returns, which quickens the return on investment.
Having access to sufficient funds is not the main issue at this point. It is the access to crucial information and accurate real estate market data that will point you in the right direction that’s the main thing. You need to have the best real estate investing tools, like Mashvisor, to help you locate the most profitable and hottest markets for real estate investing going into 2023.
In this article, we hope to give you a better insight and understanding of what to expect in 2023 and where you should go from here.
What Is in Store for the Real Estate Market in 2023?
Before we show you the best markets for real estate investing in 2023, we need to discuss what to expect in 2023. Real estate industry insiders and experts are already starting to make predictions and forecasts about the 2023 real estate market as we prepare to enter Q4 2022.
The 2022 real estate market has cooled down in recent weeks as interest rates continue to climb. Goldman Sachs, a multinational investment bank and financial services group, warns us that this downturn in the real estate industry—the housing market, in particular—will get worse in 2023.
Experts expect the growth of home prices to stall to a 0%-average in 2023. Goldman economist and strategist Jan Hatzius, in a memo to clients, wrote, “While outright declines in national home prices are possible and appear quite likely for some regions, large declines seem unlikely.”
This simply means that prospective real estate investors and buyers in 2023 should not expect significantly lower home prices. Despite what experts say, home prices are expected to stay high due to inflation and limited supply.
Higher mortgage rates, housing affordability, and limited supply aren’t the only things dragging real estate down. Existing home sales and building permits have also drastically decreased this year in areas where they were high during the pandemic. This suggests that it is reflective of the pandemic-induced boost in real estate demand since we’ve now somehow gone back to pre-pandemic norms.
Related: High Mortgage Rates Pushing Consumers to Rent Homes Instead of Buy
Going by the Numbers
Q2 2022 showed an average of $525,000 in home prices. In 2021, the second quarter housing price average was $473,000. In 2020, the average for Q2 home prices was only $374,500. Given this type of growth rate, an average of $575,000 to $600,000 is highly likely in Q2 2023.
Mortgage rates at this time are still above 6%. According to an article from the NY Post, Freddie Mac reports that the average mortgage rate for a 30-year fixed mortgage went up to 5.66% for the week ending on September 1, 2022. A year ago, we were still enjoying record-low rates of 2.88%. That is quite a significant jump in just a year.
On the other hand, given the predicted decline in real estate sales, the Federal Reserve is doubling its efforts in combating inflation by hiking interest rates. While higher interest rates may slow down inflation for a bit, it will greatly affect real estate investing and home buying. According to Fed chairman Jerome Powell, this is the price of reducing inflation. Not doing anything about it would only bring greater pain to households and businesses.
Related: When Will Mortgage Rates Go Down in 2022?
We still have one more quarter to see how things will turn out before we fully go into 2023. A lot can still happen in that period. We can only hope for the best for the real estate industry at this time. Regardless of how it turns out, getting into real estate investing should always be taken with a lot of careful consideration and thoughtful planning.
If you intend to get into real estate investing in 2023, you should arm yourself with the best tools and information.
Related: How to Find Good Investment Properties
10 Best Markets for Real Estate Investing: Traditional Rentals
As an investor, you should treat real estate investing as a life-changing experience that could make or break your career. Doing it right will let you see your real estate investing dream become a reality. However, one wrong decision could turn your dream into a nightmare.
This is why you should go into real estate investing armed to the teeth with the best real estate information and tools possible. As a real estate website, Mashvisor has helped countless people in their real estate investing journeys. The company has helped investors locate the best investment properties that meet their needs.
The site has a massive database that covers almost every real estate market in the country. Its database is regularly updated to reflect real-time data, which makes investment property analysis much more realistic and accurate. This is a pretty handy tool to have where real estate investing is concerned.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.
We have listed the best real estate markets for traditional rental property investing based on Mashvisor’s September 2022 location report. We have ranked this list to reflect the best cash on cash returns.
This list has been filtered to give you the best markets that have at least a hundred active listings and:
- A median property price below $1 million
- A monthly traditional rental income of no less than $2,000
- Cash on cash return of 2.00% and above
- Price to rent ratio of 20 and up
Here are the hottest traditional rental markets for real estate investing in 2023:
1. Vero Beach FL
- Median Property Price: $707,039
- Average Price per Square Foot: $291
- Days on Market: 80
- Monthly Traditional Rental Income: $2,647
- Traditional Cash on Cash Return: 4.40%
- Traditional Cap Rate: 4.51%
- Price to Rent Ratio: 22
- Walk Score: 78
2. Fountain Hills AZ
- Median Property Price: $960,907
- Average Price per Square Foot: $377
- Days on Market: 92
- Monthly Traditional Rental Income: $3,508
- Traditional Cash on Cash Return: 3.74%
- Traditional Cap Rate: 3.80%
- Price to Rent Ratio: 23
- Walk Score: 39
3. Bradenton FL
- Median Property Price: $600,566
- Average Price per Square Foot: $318
- Days on Market: 59
- Monthly Traditional Rental Income: $2,498
- Traditional Cash on Cash Return: 3.53%
- Traditional Cap Rate: 3.62%
- Price to Rent Ratio: 20
- Walk Score: 47
4. Stuart FL
- Median Property Price: $694,342
- Average Price per Square Foot: $356
- Days on Market: 61
- Monthly Traditional Rental Income: $2,778
- Traditional Cash on Cash Return: 3.31%
- Traditional Cap Rate: 3.38%
- Price to Rent Ratio: 21
- Walk Score: 39
5. Williamsburg VA
- Median Property Price: $542,435
- Average Price per Square Foot: $220
- Days on Market: 58
- Monthly Traditional Rental Income: $2,094
- Traditional Cash on Cash Return: 3.30%
- Traditional Cap Rate: 3.38%
- Price to Rent Ratio: 22
- Walk Score: 81
6. Riviera Beach FL
- Median Property Price: $695,505
- Average Price per Square Foot: $415
- Days on Market: 84
- Monthly Traditional Rental Income: $2,821
- Traditional Cash on Cash Return: 3.27%
- Traditional Cap Rate: 3.35%
- Price to Rent Ratio: 21
- Walk Score: 43
7. Palm Beach Gardens FL
- Median Property Price: $967,136
- Average Price per Square Foot: $432
- Days on Market: 55
- Monthly Traditional Rental Income: $3,980
- Traditional Cash on Cash Return: 3.24%
- Traditional Cap Rate: 3.29%
- Price to Rent Ratio: 20
- Walk Score: 2
8. Hallandale Beach FL
- Median Property Price: $908,024
- Average Price per Square Foot: $460
- Days on Market: 89
- Monthly Traditional Rental Income: $2,904
- Traditional Cash on Cash Return: 3.24%
- Traditional Cap Rate: 3.35%
- Price to Rent Ratio: 26
- Walk Score: 79
9. Melbourne FL
- Median Property Price: $499,595
- Average Price per Square Foot: $258
- Days on Market: 54
- Monthly Traditional Rental Income: $2,060
- Traditional Cash on Cash Return: 3.21%
- Traditional Cap Rate: 3.29%
- Price to Rent Ratio: 20
- Walk Score: 73
10. Tampa FL
- Median Property Price: $614,497
- Average Price per Square Foot: $344
- Days on Market: 77
- Monthly Traditional Rental Income: $2,606
- Traditional Cash on Cash Return: 3.19%
- Traditional Cap Rate: 3.26%
- Price to Rent Ratio: 20
- Walk Score: 47
To start looking for and analyzing the best traditional rental properties in the hottest real estate markets in the country, click here.
Fountain Hills AZ is one of the best markets for traditional rental investing.15
10 Best Markets for Real Estate Investing: Airbnb Rentals
As profitable an investment as a traditional rental is, owning an Airbnb business could give you greater earning potential. This is why a lot of folks who go into real estate investing prefer to own vacation rentals.
As a vacation rental owner, you can earn up to three times what most landlords earn. However, it will still depend on how you manage your business and, of course, the market you’re in. Even if you have the best property your money can buy, if your location doesn’t have much to offer by way of Airbnb earnings, you’ll probably struggle to break even.
To get the best out of your real estate investment, you must look for markets that offer the best numbers in the following categories:
- Median Property Price. The best rental markets with lower median prices offer faster and greater returns on your investment.
- Airbnb Rental Income. Monthly rental income will vary depending on several factors like seasonality and geographic location. Find out all you can about a particular real estate market first (including its tourism and economy) before you make your decision.
- Airbnb Cash on Cash Return. Cash on cash return takes into account financing since not all real estate investors have the capacity for all-cash transactions.
- Airbnb Occupancy Rate. Occupancy rates, like rental income, vary per real estate market. Be sure to check out the real estate and rental comps in the area to see how well similar rental properties are performing.
These four categories are crucial to the success of your real estate investment. The following real estate markets have been filtered in a similar way as the list for traditional markets.
Here are the best real estate markets for Airbnb investing in 2023, with data pulled from Mashvisor’s September 2022 location report:
1. Nashville IN
- Median Property Price: $468,167
- Average Price per Square Foot: $189
- Days on Market: 59
- Monthly Airbnb Rental Income: $4,968
- Airbnb Cash on Cash Return: 7.72%
- Airbnb Cap Rate: 7.87%
- Airbnb Daily Rate: $260
- Airbnb Occupancy Rate: 52
- Walk Score: 50
2. Sweetwater FL
- Median Property Price: $584,713
- Average Price per Square Foot: $352
- Days on Market: 63
- Monthly Airbnb Rental Income: $5,023
- Airbnb Cash on Cash Return: 7.65%
- Airbnb Cap Rate: 7.80%
- Airbnb Daily Rate: $166
- Airbnb Occupancy Rate: 51%
- Walk Score: 82
3. Port Ewen NY
- Median Property Price: $388,960
- Average Price per Square Foot: $234
- Days on Market: 46
- Monthly Airbnb Rental Income: $4,704
- Airbnb Cash on Cash Return: 7.61%
- Airbnb Cap Rate: 7.80%
- Airbnb Daily Rate: $217
- Airbnb Occupancy Rate: 56%
- Walk Score: 55
4. Rio Grande NJ
- Median Property Price: $361,309
- Average Price per Square Foot: $244
- Days on Market: 46
- Monthly Airbnb Rental Income: $4,068
- Airbnb Cash on Cash Return: 7.54%
- Airbnb Cap Rate: 7.73%
- Airbnb Daily Rate: $284
- Airbnb Occupancy Rate: 52%
- Walk Score: 52
5. Clawson MI
- Median Property Price: $280,493
- Average Price per Square Foot: $233
- Days on Market: 28
- Monthly Airbnb Rental Income: $3,531
- Airbnb Cash on Cash Return: 7.51%
- Airbnb Cap Rate: 7.73%
- Airbnb Daily Rate: $175
- Airbnb Occupancy Rate: 60%
- Walk Score: 69
6. Del Haven NJ
- Median Property Price: $449,939
- Average Price per Square Foot: $301
- Days on Market: 47
- Monthly Airbnb Rental Income: $5,010
- Airbnb Cash on Cash Return: 7.34%
- Airbnb Cap Rate: 7.48%
- Airbnb Daily Rate: $282
- Airbnb Occupancy Rate: 57%
- Walk Score: 14
7. Reading OH
- Median Property Price: $234,520
- Average Price per Square Foot: $141
- Days on Market: 51
- Monthly Airbnb Rental Income: $2,865
- Airbnb Cash on Cash Return: 7.32%
- Airbnb Cap Rate: 7.58%
- Airbnb Daily Rate: $100
- Airbnb Occupancy Rate: 57%
- Walk Score: 80
8. Robbinsdale MN
- Median Property Price: $307,235
- Average Price per Square Foot: $160
- Days on Market: 35
- Monthly Airbnb Rental Income: $3,411
- Airbnb Cash on Cash Return: 7.15%
- Airbnb Cap Rate: 7.35%
- Airbnb Daily Rate: $145
- Airbnb Occupancy Rate: 63%
- Walk Score: 73
9. Juneau AK
- Median Property Price: $440,750
- Average Price per Square Foot: $277
- Days on Market: 47
- Monthly Airbnb Rental Income: $4,782
- Airbnb Cash on Cash Return: 7.15%
- Airbnb Cap Rate: 7.30%
- Airbnb Daily Rate: $217
- Airbnb Occupancy Rate: 65%
- Walk Score: 84
10. Columbia Heights MN
- Median Property Price: $304,388
- Average Price per Square Foot: $145
- Days on Market: 34
- Monthly Airbnb Rental Income: $3,580
- Airbnb Cash on Cash Return: 7.14%
- Airbnb Cap Rate: 7.34%
- Airbnb Daily Rate: $135
- Airbnb Occupancy Rate: 64%
- Walk Score: 82
To start looking for and analyzing the best Airbnb properties in the hottest cities and neighborhoods, click here.
Wrapping It Up
As a real estate investor, knowing the best markets for real estate investing will give you a better chance of success. The bottom line is real estate investing requires plenty of serious studying and researching. This includes knowing what to expect in 2023 as well as discovering what the different real estate markets have to offer as investment locations.
You can make the entire research process a lot simpler and quicker with the help of a real estate platform like Mashvisor. As a real estate investing tool, Mashvisor not only helps you locate the most profitable markets but also pinpoints which properties are worth looking into. The site’s investment property calculator allows you to come up with an accurate rental property analysis and ROI projection.
The site is easy to navigate and very user friendly, which is perfect for both seasoned and beginner investors. Thousands of users can attest to Mashvisor’s efficiency and accuracy as an investment tool. If you want to find the best investment property to help you achieve your goals, look no further than Mashvisor.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.