After playing it safe and focusing on defense, it’s now time to shift gears and start scouting for real estate opportunities. In this post, we’re diving into the best states to buy real estate in 2022 and the foreseeable future.
Despite a bump in mortgage rates, real estate remains largely affordable thanks to lower interest rates in the past. Coupled with a recovering job market and increasing incomes, there’s a growing interest in diversifying investments into more stable assets like real estate.
Understanding the nuances of real estate trends requires timely and firsthand information. For instance, if you knew that finding a suitable property in expensive coastal cities took me 45 days of intense searching, you might conclude that these markets are cooling off—a fact supported by data showing peak prices around late 2017.
Let’s break down the impact of the SALT (State and Local Tax) cap, which limits deductions to $10,000, a figure easily surpassed by property taxes alone in high-cost states like California and New York. This policy has significantly dampened home price growth in these states, contrasting with more stable and sometimes higher appreciation rates in less expensive states.
For those preferring lower-risk and steady returns, the more affordable states present an attractive option for real estate investment. This has proven true especially as real estate values in these states now outperform their pricier counterparts.
However, political changes like the potential removal of the SALT cap under President Biden could boost property values in high-cost states. Keeping an eye on these developments is crucial.
When considering where to invest in real estate, one must look at migration trends and housing supply. Migration indicates where potential growth could occur, driven by factors like job opportunities, quality of life, and affordable housing. The United Van Lines 2019 National Movers Study highlights states experiencing high inbound migration, which are key areas to consider for investment.
Here are the top 15 states based on migration data, median home prices, and median incomes:
1. Vermont – $260,000; $57,000
2. Idaho – $288,000; $56,000
3. Oregon – $364,000; $63,000
4. Arizona – $270,000; $59,000
5. South Carolina – $187,000; $51,000
6. Washington – $413,000; $74,000
7. Florida – $246,000; $53,000
8. Washington, DC – $629,000; $85,000
9. South Dakota – $206,000; $57,000
10. North Carolina – $204,000; $53,000
11. Tennessee – $187,000; $52,000
12. New Mexico – $205,000; $47,000
13. Nevada – $302,000; $58,000
14. Texas – $208,000; $61,000
15. Delaware – $255,000; $65,000
Despite the compelling data, always perform the “eyeball test” to identify any anomalies. For instance, Vermont’s high rank despite its harsh winters and less dynamic job market might seem surprising, but its reasonable real estate valuation and significant inbound migration keep it in contention.
In summary, combining migration data with real estate valuations provides a solid foundation for deciding where to invest. States like South Carolina, Vermont, and Tennessee offer promising opportunities based on both migration trends and property valuations. Understanding these dynamics can significantly impact your real estate investment decisions, allowing you to capitalize on trends and potentially increase returns.
