Norada Real Estate Investments

Real Estate Loans: Types, Features, and Benefits

by

Real Estate Investment Loans

Real estate loans are a crucial part of the real estate industry, providing investors with the necessary funds to purchase, renovate, or refinance properties. From conventional loans to government-backed FHA and VA loans, there are various types of real estate loans available in the market. In this article, we'll discuss the different types of real estate loans, their features, and the benefits they offer to real estate investors.

Types of Real Estate Loans

Real estate loans are an essential tool for anyone looking to purchase, renovate, or refinance a property. With so many types of real estate loans available, it can be challenging to choose the right one for your needs. In this section, we'll discuss some of the common types of real estate loans available in the market, their features, benefits, and requirements. Whether you're a first-time homebuyer or a seasoned investor, understanding the different types of real estate loans is crucial to making informed financial decisions.

Conventional Loans

These are the most common type of real estate loans, and they are issued by banks and other financial institutions. Conventional loans typically require a good credit score, a down payment of 20% or more, and proof of income. Conventional loans are a popular choice for real estate investors due to their availability and relatively low-interest rates. However, they do come with some requirements that can be difficult for some borrowers to meet.

One of the main requirements is a good credit score, typically around 620 or higher. Additionally, borrowers must have a down payment of at least 20% of the property's purchase price, although some lenders may allow a lower down payment with private mortgage insurance (PMI). Finally, borrowers must provide proof of income and employment, which can be challenging for self-employed individuals or those with irregular income streams.

While conventional loans may be more difficult to obtain than some other types of real estate loans, they do offer several advantages. For one, they typically have lower interest rates than other types of loans, which can save borrowers money in the long run.

Additionally, conventional loans are often easier to refinance than other types of loans, which can help investors adjust their financing as their needs change. These loans are backed by the government-sponsored enterprises Fannie Mae and Freddie Mac, which provides a level of stability and predictability that can be reassuring for investors.

FHA Loans

FHA loans are a popular option for first-time homebuyers who may not have a large down payment or a perfect credit score. These loans are insured by the Federal Housing Administration, which means that if the borrower defaults on the loan, the lender is protected by the government.

One of the main advantages of FHA loans is that they have lower down payment requirements than conventional loans. Borrowers can put as little as 3.5% down on the purchase of a home, which can make homeownership more accessible for those who don't have a lot of savings.

In addition, to lower down payment requirements, FHA loans also have more lenient credit score requirements than conventional loans. Borrowers with a credit score of 580 or higher may be eligible for an FHA loan with a down payment of 3.5%. Those with a credit score between 500 and 579 may still be eligible for an FHA loan, but they will need to make a larger down payment of 10%.

While FHA loans can be a great option for some borrowers, there are some disadvantages to consider. One of the drawbacks of FHA loans is that they require borrowers to pay mortgage insurance premiums (MIP) for the life of the loan. This can add significantly to the cost of the loan, and it's important for borrowers to factor in these costs when deciding whether an FHA loan is right for them.

Another disadvantage of FHA loans is that there are limits to how much borrowers can borrow. These limits vary by location and are set by the government, so borrowers should check to see if there are any limits in their area.

VA Loans

VA loans are a great option for eligible veterans, active-duty service members, and surviving spouses who are looking to purchase or refinance a home. The biggest advantage of a VA loan is that it allows borrowers to purchase a home with no down payment. This can be a huge benefit for those who may not have the funds for a large down payment or who would prefer to use those funds for other expenses.

Another advantage of VA loans is that they often have more lenient credit score requirements than conventional loans. While a good credit score is still important, borrowers with less-than-perfect credit may still be able to qualify for a VA loan.

In addition to these benefits, VA loans also offer the following advantages:

  • No Private Mortgage Insurance (PMI) – Unlike conventional loans, VA loans do not require borrowers to pay for private mortgage insurance, which can save borrowers a significant amount of money each year.
  • Competitive Interest Rates – VA loans often have competitive interest rates, making them an attractive option for borrowers looking to save money over the life of the loan.
  • No Prepayment Penalty – Borrowers can pay off a VA loan early without incurring any prepayment penalties, which can save them even more money over time.

Hard Money Loans

A hard money loan is a type of real estate loan that is often used by investors who need quick access to funds or have difficulty obtaining traditional financing. These loans are typically issued by private lenders, rather than banks or other financial institutions, and are secured by the property being purchased.

Because hard money loans are considered high-risk, they often come with higher interest rates and shorter repayment terms than other types of real estate investment loans. However, they can be a useful tool for investors who need to close a deal quickly or have less-than-perfect credit. Hard money loans can be used for a variety of purposes, including purchasing, renovating, or refinancing investment properties.

Private Money Loans

Private money loans are becoming increasingly popular among real estate investors, as they offer more flexibility and faster processing times compared to traditional loans. Private money lenders are often willing to finance projects that conventional lenders may consider too risky, making them a great option for investors who have difficulty obtaining funding through traditional channels.

However, private money loans typically come with higher interest rates and fees, so it's important to weigh the benefits and drawbacks before applying for this type of loan. Investors should also make sure they understand the terms of the loan, including the repayment schedule and any potential penalties for early repayment.

Commercial Loans

Commercial real estate loans are a popular option for investors looking to finance the purchase or renovation of commercial properties such as office buildings, retail spaces, and warehouses. These loans typically require a larger down payment, often around 30% or more, and have shorter repayment terms than other types of real estate investment loans. Commercial loans can be fixed or variable rates, and the interest rate will depend on the borrower's creditworthiness, the size of the loan, and the current market conditions.

The approval process for commercial loans can be more complex and time-consuming, as lenders will carefully evaluate the property's income potential and the borrower's financial standing before approving the loan. Despite the higher requirements, commercial loans can provide investors with significant returns, especially if the property is well-located and has a high-income potential.

Factors to Consider when Choosing a Real Estate Loan

When choosing a real estate loan, there are several factors to consider. These include:

Interest rates: The interest rate you pay on your loan will determine your monthly payments and the overall cost of the loan. It's important to shop around and compare interest rates from multiple lenders to get the best deal.

Repayment terms: The repayment terms of the loan will determine the length of time you have to repay the loan and the amount of your monthly payments. Make sure to choose a repayment term that fits your budget and financial goals.

Credit score requirements: Your credit score will play a big role in your ability to obtain a real estate investment loan. Make sure to check your credit score before applying for a loan and take steps to improve it if necessary.

Down payment requirements: The down payment required for the loan will vary depending on the type of loan and the lender. Make sure to save enough money for the down payment before applying for a loan.

Loan-to-value ratio: The loan-to-value ratio (LTV) is the amount of the loan compared to the value of the property. Lenders often have maximum LTV ratios that they will lend to, so make sure to check with the lender before applying for a loan.

Pros and Cons of Real Estate Investment Loans

Like any type of financing, real estate loans have their advantages and disadvantages. Some of the advantages of real estate investment loans include:

Pros:

  • Access to capital: Real estate loans provide investors with the capital needed to purchase or renovate properties that they might not be able to afford otherwise.
  • Diversification of portfolio: Real estate investment loans allow investors to diversify their portfolios by investing in different properties and markets.
  • Tax benefits: Real estate investors can take advantage of tax benefits such as deductions for mortgage interest, property taxes, and depreciation.

Cons:

  • Higher interest rates: Real estate loans often come with higher interest rates than traditional home loans, which can increase the overall cost of the loan.
  • Stringent requirements: Some types of real estate loans, such as commercial loans, have more stringent requirements than traditional home loans, making them more difficult to qualify for.
  • Risks: Real estate investing comes with inherent risks, such as changes in the market or unforeseen repairs, and taking out a loan to invest can increase these risks.

Summary

Real estate loans offer an important means of financing for real estate investments. By understanding the various types of real estate loans and considering key factors when choosing one, investors can make informed decisions and increase their chances of success. However, investing in real estate always comes with risks, so it's crucial to do thorough research and seek professional advice before making any investment decisions.

Birmingham AL Housing Market: Prices, Trends, Forecast 2023

by

Birmingham Alabama Housing Market REPORT

Birmingham, Alabama has come a long way from its Southern roots, though it retains its historic charm. Birmingham recently earned the title of being the South’s “Comeback Town.” The Birmingham AL real estate market continues to slow down due to high-interest rates. However, price increases in the Birmingham housing market are largely driven by tight inventory which can't meet the buyer demand.

According to a report published by the Alabama Center for Real Estate (ACRE), Birmingham residential sales for the third quarter of 2022 totaled 4325 units, representing a decrease of 740 transactions when compared to 5065 units that were sold in the third quarter of 2021. Compared to historical data, third-quarter sales are 8.96% above the 3-year quarterly average and 16.99% above the 5-year quarterly average.

The median selling price in Birmingham for the third quarter of 2022 was $294,817, a 9.60% increase from the third quarter of 2021's median selling price of $269,000. The average selling price in Birmingham for the third quarter of 2022 was $346,142, a 7.72% increase from the third quarter of 2021’s average selling price of $321,333.

Birmingham residential units available for sale in the third quarter of 2022 increased by 473 units when compared to the same period last year. Compared to historical data to the right, the third quarter months of supply is 4.86% below the 3-year quarterly average and 25.21% below the 5-year quarterly average. The # of months of supply stands at 2.5 months.

Birmingham Real Estate Investment

Birmingham Metro Housing Market Trends & Forecast 2023

Data by Redfin shows that the Birmingham housing market is somewhat competitive. Homes in Birmingham receive 2 offers on average and sell in around 45.5 days. The average homes sell for about 3% below the list price and go pending in around 46 days. Hot listings can sell for about 1% above the list price and go pending in around 26 days.

In December 2022, Birmingham home prices were up 19.1% compared to last year, selling for a median price of $214K. On average, homes in Birmingham sell after 50 days on the market compared to 42 days last year. There were 176 homes sold in December this year, down from 337 last year.

The typical home value in Birmingham is $113,709 (Zillow Home Value Index). Birmingham home values have gone up 11.8% over the past year. According to statistics from NeighborhoodScout, in the last twelve months( (2021 Q3 – 2022 Q3), Birmingham's rate of appreciation has been 16.22 percent. The most recent quarter's (2022 Q2 – 2022 Q3) house appreciation rates in Birmingham were 4.56 percent, which amounts to an annual appreciation rate of 19.52 percent.

However, the real estate market has screeched to a halt, and some economists believe home prices are about to drop significantly in 2023. The home prices may remain flat or rise very modestly in Birmingham in 2023.  Zillow latest forecast shows that home prices in Birmingham Metro may drop by 0.6% between November 2022 to November 2023.

Birmingham Housing Market Forecast
Source: Zillow

Latest Birmingham Housing Market Statistics (Residential)

The latest monthly report published by ACRE Media shows that home sales in the Birmingham metropolitan area decreased by 31.4 percent YoY in November 2022.  According to the Greater Alabama MLS, home sales in the Birmingham area decreased from 1,454 to 998 closed transactions. Following seasonal trends, sales decreased by 10.3% from October. Sales are down 12.5% year-to-date. Homes sold in November averaged 24 days on the market (DOM), 15 days slower than in November 2021.

Birmingham Housing Inventory:  November listings (3,455) decreased 5.3% from October and increased 36.4% from one year ago. At the current sales pace, all the active inventory on the market would sell in 3.5 months, up from 3.3 months in October and up from 1.7 months in November 2021. The equilibrium point where buyers and sellers have roughly equal bargaining power is 4-5 months of supply.

Birmingham Home Prices: Home sales price growth moderated in November with the statewide median sales price rising 6.8% Y/Y, down from an average of 14.3% from January-October 2022 and reaching single digits for the first time since September 2021. The statewide median sales price decreased by 4.9% from the record high reached in October 2022.

Forecast: Going forward, slowing sales and rising inventory are likely to result in home price growth moderating to the 8-10% range by year-end. November sales were 390 units, or 28.1%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 1,388 sales for the month, while actual sales were 998 units. ACRE forecast a total of 16,686 sales year-to-date, while there were 15,363 actual sales through November, a difference of 7.9%.

New Construction: The 105 new homes sold represent 10.5% of all residential sales in the Birmingham area in November. Total sales decreased 40.3% year-over-year. The median sales price in November was $388,490, a decrease of 12.7% from October and an increase of 15.7% from one year ago.

Birmingham Real Estate Investment Overview

Investing in real estate is touted as a great way to become wealthy. Is Birmingham rental property good for investment? Planning to invest in the Birmingham, AL real estate market? Many real estate investors have asked themselves if buying a property in Birmingham is a good investment. You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Birmingham housing market forecast for answers on why to put resources into this sizzling market.

Home prices in Birmingham have been trending up year over year. One of the benefits of the Birmingham AL real estate market is that it is incredibly stable and steady, and investors can purchase Birmingham investment properties for $80,000 to $100,000. This makes it a prominent place for new investors to get their feet wet and for anyone searching for a good investment that can create a stable monthly rental income. It is seeing faster-than-average appreciation, but it has never been subject to the wild swings that have hit the coasts or other “hot” markets.

For example, a quarter of its population is made up of Millennials, and they’re buying an increasing number of homes. They bought almost a quarter of all homes in the area in 2013, and that ratio is only going to rise. Conversely, this means that you know there are buyers for homes when sold by downsizing Baby Boomers. If you buy Birmingham AL real estate, you know you’ll be able to sell it for what you paid for it if not get a little bit more. Here are the top 10 reasons to invest in Birmingham real estate.

Birmingham Real Estate Is Affordable

Birmingham AL real estate is affordable for investors. The typical home in Alabama is worth $218,421 according to Zillow. The typical value of homes in Birmingham is $113,709 as of Dec 2022, up 11.8% over the past year. For many considering relocating in search of work, Alabama’s very low cost of living – including housing – is reason enough to move there instead of Texas or Florida. Birmingham AL's real estate market remains among the most affordable markets in the nation, which bodes well for homeowners, investors, and renters alike.

The typical home value in Birmingham is less than $115,000. Compare this to a typical home price in Dallas, Texas for around $326,938. This means real estate investors could buy two to three properties in Birmingham for the price of a home in Dallas, sometimes considered one of the hottest real estate markets in the country. You could buy several rental homes in Birmingham for the price of a single property in an expensive market in California.

Suppose you don’t want to buy rental real estate in Birmingham. It is a million-person plus metro area, so there are opportunities to invest in the suburbs, as well. Graysville is one such suburb, and its typical home value is $125,447 (ZHVI). The typical home value in Adamsville is $145,009 while a typical Pleasant Grove home costs around $242,136. This makes Birmingham AL real estate an excellent opportunity since you can buy upscale suburban homes for less than a fixer-upper in the inner ring suburbs of many other cities.

The Area Is Growing, Both in Population and Rental Demand

There has been a distinct trend of people moving to the largest metropolitan area in the region in order to find the greatest opportunities. The Birmingham area is home to more than 1.1 million people. LendingTree ranked the Birmingham area as one of the least competitive real estate markets in the country. There were more potential buyers than sellers, forcing many would-be homeowners to rent instead.

The U.S. Census Bureau released data last year that showed major growth in several Birmingham metro counties from 2010 to 2020. According to the data, Huntsville is now the largest city, with Birmingham the second largest. But the Birmingham Area Metro is twice the size of the Huntsville Metro. Birmingham’s population is 200,733, that’s down 1.5 percent since 2010. Huntsville has 215,006 people, that’s up 11.2 percent since 2010. The Birmingham Metro population is 1.1 million people and the Huntsville Metro has 491,000.

It Is Landlord Friendly

No one wants to buy rental real estate in a market where it is almost impossible to evict a tenant for nonpayment. Birmingham AL real estate is attractive in part because of how landlord-friendly the area is. Alabama passed laws in 2014 that made things more favorable to landlords. Proposed 2018 legislation would make it easier for landlords to make tenants have to leave if they breached their lease contract.

Birmingham Is a Low Tax Haven For Real Estate Investors

State and local taxes are one of the biggest deciding factors real estate investors need to consider. Alabama has some of the lowest property tax rates in the nation. In 2017, Alabama’s effective tax rate was 0.48% and the average property tax bill was only $776 it ranked #2 for the lowest property taxes. According to LendingTree, the annual median property taxes in Birmingham, Ala. — where homeowners pay the least in real estate taxes — are about $7,700 cheaper than in the New York metro area, where they’re the highest.

Birmingham, Ala., is the only metro where median property taxes are less than $1,000 a year. The median amount of property taxes paid by homeowners in Birmingham is only $909. For comparison, residents in the next two metros with the lowest median real estate taxes — New Orleans and Louisville, Ky. — owe $1,345 and $1,563 a year, respectively.

The Rental Pool’s Incomes Are Rising

Alabama is seeing an increase in incomes and the skills of its privately employed sector. Birmingham is attracting jobs in law, medicine, nursing & engineering. For example, Autocar and Mercedes Benz are investing more than a billion dollars in Birmingham, bringing high-paying jobs to the area. Unemployment has been below 5% for years. As people move to the area in search of work, they often find themselves renting because of how hard it is to find a home.

The latest data shows that the State's seasonally adjusted unemployment rate, at 2.7 percent in November, less than the national unemployment rate of 3.7%. The rate was unchanged from the October revised rate and below the 3.1 percent recorded a year ago. November’s rate represented 63,043 unemployed persons, compared to 61,721 in October and 69,688 in November of 2021. The comparable national rate for November, at 3.7 percent, was unchanged from the October revised rate, and below the year-ago rate of 4.2 percent.

Conclusion

If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate. Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If the housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

Buying an investment property is different from buying an owner-occupied home. Our Birmingham investment properties are designed to make money as rentals, which means you must look at it solely as an income-producing entity just like any other business. These are “Turnkey Cash Flow Investment Properties” located in some of the best neighborhoods of Birmingham.

Birmingham Investment Properties For Sale ⇐ Click Here

We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in various growth markets. We can help you succeed by minimizing risk and maximizing profitability. You can contact us for a Free Strategy Session by clicking here.

Let us know which real estate markets you consider best for real estate investing! 

Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

REFERENCES

Market Data, Trends, and Statistics
https://www.greateralabamamls.com/
https://birminghamrealtors.com/
https://acre.culverhouse.ua.edu/research/residential-research/birmingham/
https://www.zillow.com/Birmingham-al/home-values
https://www.neighborhoodscout.com/al/birmingham/real-estate
https://www.redfin.com/city/1823/AL/Birmingham/housing-market
https://www.realtor.com/realestateandhomes-search/Birmingham_AL/overview

Population & Jobs
http://www2.labor.alabama.gov/
https://www.wbrc.com/2021/08/12/birmingham-metro-area-counties-grow-over-last-decade-birmingham-now-2nd-largest-city/

Alabama property tax rate
https://www.lendingtree.com/home/mortgage/real-estate-taxes-in-metropolitan-areas/
https://www.usatoday.com/story/money/personalfinance/2017/04/16/comparing-average-property-taxes-all-50-states-and-dc/100314754

Landlord friendly laws
https://www.al.com/news/mobile/index.ssf/2018/03/post_141.html?__vfz=rtw_top_pages%3D2480300011984

Lending Tree least competitive real estate market, lots of prime credit ubyers
https://patch.com/alabama/birmingham-al/birmingham-one-countys-least-competitive-housing-markets

Millennials buying homes
http://www.builderonline.com/money/top-10-markets-attracting-millennial-buyers_o

Montgomery Housing Market: Prices, Trends, Forecast 2022-2023

by

How is The Housing Market in Montgomery, Alabama?

Montgomery Alabama Real Estate Market is hot in 2022. It is a good cash-flow market due to the strong demand for rental housing. And this is not entirely due to the 8 or more colleges and universities in the city. The cost of living in Montgomery is lower than the U.S. average while there are a number of good-paying jobs in the area.

Montgomery has seen the job market increase by 1.1% over the last year. Future job growth over the next ten years is predicted to be 30.3%. With affordable home prices, lower taxes, and a low cost of living, Montgomery is a great city to live in and invest in real estate. The median sales price in the Montgomery area was $196,00 in November 2022, an increase of 1.1% from one year ago and a decrease of -12.9% from October, according to the Montgomery Area Association of REALTORS.

The median home sale price — is the midway point of all the houses or units sold over a period of time. It offers a more accurate view of what's happening in a market. There is an acute shortage of inventory in the Montgomery area housing market. At the current sales pace, all the active inventory on the market would sell in 2.7 months (the # of months of supply).

According to the quarterly report published by Alabama Center for Real Estate (ACRE), Montgomery residential sales in the third quarter of 2022 totaled 1,518 units, representing a decrease of 16.8% when compared to 1,825 units that were sold in the third quarter of 2021. Compared to historical data, third-quarter sales are 7.0% below the 3-year quarterly average and 4.0% above the 5-year quarterly
average.

The median sales price in Montgomery for the third quarter of 2022 was $223,000, a 5.9% increase from the third quarter of 2021's median sales price of $210,500. Compared to historical data, the third-quarter median sales price is 18.5% above the 3-year quarterly average and 27.8% above the 5-year quarterly average.

The average sales price in Montgomery for the third quarter of 2022 was $248,837, a 6.8% increase from the third quarter of 2021’s average sales price of $233,015. The average number of days on the market in the third quarter of 2022 was 47, representing a decrease of 16.0% from 56 days on market in the third quarter of 2021.

The average number of days on the market in the first quarter of 2022 was 54, representing a decrease of 34.8% from 83 days on market in the first quarter of 2021. The residential units available for sale in the first quarter of 2022 decreased by 29.2% when compared to the same period last year. The quarterly average of inventory for sale divided by the current quarterly sales average equals the # of months of supply, which was 1.7 months, up 36.8% as compared to the third quarter of 2021. The market is considered to be in balance at approximately 6 months of housing supply.

Montgomery Alabama Housing Market Trends – November

Home Sales: According to the Montgomery Area Association of REALTORS, in November, home sales in the area decreased 25.2% year-over-year (Y/Y) from 488 to 365 closed transactions. Following seasonal trends, sales also decreased 25.% from October. Sales are now down -13.1% year-to-date. These residential sales include existing single-family, condos, & new homes.

Home Prices: Montgomery Alabama real estate market trends show a 1.1% year-over-year rise in median sales price based on 365 home sales registered last month. The median sales price in November was $196,000. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.

Housing Inventory: Homes listed for sale increased 37.8% year-over-year from 670 to 923 listings. Months of supply increased from 1.3 in October 2021 to 2.3 in October 2022, reflecting a market where sellers generally have elevated bargaining power. Homes sold in October averaged 56 days on the market (DOM), 2 days slower than October 2021.

Housing Forecast:  October sales were 135 units, or 25.1%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 538 sales for the month, while actual sales were 403 units. ACRE forecast a total of 5,501 residential sales year-to-date, while there were 4,932 actual sales through October, a difference of 10.4%.

New Construction: The 73 new homes sold represent 18.1% of all residential sales in the area in October. Total sales increased 9.0% year-over-year. The median sales price in October was $352,325, an increase of 7.2% from one year ago and an increase of 1.5% from September. New homes sold in an average of 73 days, 22 days slower than in October 2021.

For all Montgomery-area housing data, click here.

Montgomery Alabama Housing Market Forecast

The current housing demand: According to Realtor.com, Montgomery County was a buyer's market in November 2022, which means that the supply of homes is greater than the demand for homes. The median listing home price in Montgomery County, AL was $179.9K, trending up 6.5% year-over-year. The median home sold price was $120K. Montgomery County has affordable townhomes and affordable condos. There are 18 cities in Montgomery County where Realtor.com has active listings. Grady has a median listing home price of $1.3M, making it the most expensive city. Ramer is the most affordable city, with a median listing home price of $165K.

Some of the lowest real estate appreciation rates in the country over the last ten years have been in Montgomery, where house values have increased by just 29.38%, which is an annualized rate of 2.61%. This rate is lower than the appreciation rate found in 90% of the cities and towns in America. Over the last year, Montgomery's appreciation rates have trailed the rest of the nation.

In the last twelve months (2021 Q2 – 2022 Q2), Montgomery's appreciation rate has been 14.33%, which is slightly above the national average. In the latest quarter tracked by NeighborhoodScout (2022 Q1 – 2022 Q2), the house appreciation rates in Montgomery were at 5.40%, which equates to an annual appreciation rate of 23.42%. However, the rising mortgage rates that have squashed demand and caused sales to plummet and home price appreciation to slow down.

According to Zillow.com, the typical home value in Montgomery County is $147,446. Montgomery County home values have gone up 15.4% over the past year. The Montgomery, Alabama Metropolitan Statistical Area (commonly known as the Tri-Counties or the River Region) is a metropolitan area in central Alabama. According to Zillow's latest forecast, home values in the Montgomery Metro Area are projected to decline by 1.4% from November 2022 to November 2023.

Montgomery Alabama Housing Market Forecast
Source: Zillow

Montgomery Real Estate Investment Overview

The Montgomery Alabama real estate stands out for its affordable properties, relatively high rents, and numerous opportunities for deals. The relative breadth of its student housing market is remarkable given its small size. Here are some of the reasons to consider investing in Montgomery real estate.

A Big Student Market

Student housing offers stable income and better-than-average returns. Students care as much or more about safety, walking distance to school, and amenities than they do price. This is why cap rates for properties within half a mile of campus are so low; they rarely come on the market, and when they do, there is a bidding war. Investment opportunities do exist in older student housing that can be renovated and now rented out at a premium.

You’ll see steady turnover as people graduate, replaced by incoming freshmen. These tenants will never buy a home until after graduation, and if they have trouble paying the rent, getting a roommate is an acceptable solution. This makes the Montgomery Alabama real estate market perfect for those who want to invest in student housing since there are simply more universities in the area.

Montgomery Real Estate is Affordable

Montgomery real estate is cheap. The median home value in Montgomery is $143,142 as of Q2 2022. NeighborhoodScout’s Median Home Values combine data from the United States Bureau of the Census with quarterly house resale data provided to the FHFA by Fannie Mae and Freddie Mac. Around 33% of homes fall in the price segment of $128,001 – $255,000. Another 33% fall in the price segment of $64,001 – $128,000. Single-Family homes account for 68.7% of the housing units and around 47.7% are renters, which is quite a sizable population for rental property owners.

As of November 2022, the typical home value in the Montgomery MSA is $188335 whereas, in the city, it is $137,960 (Zillow Home Value Index). ZHVI is a smoothed, seasonally adjusted measure of the typical home value and market changes across a given region and housing type. It reflects the typical value for homes in the 35th to 65th percentile range.

While that is far lower than the national average, it is considerably cheaper. That said, affordability should continue to be the driving force of both supply and demand in the area. First-time buyers and Millennials should find the Montgomery home market more enticing than most others. Hence, Montgomery real estate investing should experience a boost in activity as well.

A Large Rental Market for Multi-Family Housing

While the cost of living and housing are both relatively low in Montgomery, many residents can’t earn enough to afford to buy a home. This created a relatively strong market for multi-family housing. As of December 25, 2022, the average rent for a 1-bedroom apartment in Montgomery, AL is currently $750. This is a 3% increase compared to the previous year.

  • The average rent for a 2-bedroom apartment in Montgomery, AL is currently $850, a 0% increase compared to the previous year.
  • The average rent for a 3-bedroom apartment in Montgomery, AL is currently $1,050, a 6% increase compared to the previous year.
  • The average rent for a 4-bedroom apartment in Montgomery, AL is currently $1,298, a 3% decrease compared to the previous year.

Montgomery Alabama real estate is more than apartments for locals and students. The 2017 Realtors Confidence Index Report described the outlook for single-family homes in Alabama as “very strong”. Buyer traffic for Alabama was seen as strong. For seller traffic, Alabama was rated in that report as having moderate seller conditions, but all of the surrounding states were projected to be “weak” in that category.

Suburbs with Potential

Prattville is located near Montgomery, Alabama. Capitol Hill Golf Course is located here; that’s the site of the Nationwide Tour. The town’s population has grown by half in the past ten years. This is an excellent place to consider buying a rental home whether you’re catering to snowbirds or people relocating to the area before finding a permanent residence. The typical home here is worth around $245,990, a deal compared to other up-and-coming golf communities. Suburbs around Montgomery offer safety, space, and more modern amenities. Small towns around the city provide wide open spaces and privacy. Homes in Wetumpka have a typical price of around $241,435 (Nov 2022).

Highest Appreciating Montgomery Neighborhoods Since 2000

  1. Gunter Annex
  2. Cottage Hill
  3. Centennial Hill
  4. South Hull
  5. Maxwell Boulevard North / Maxwell Boulevard South
  6. Hayneville Rd Park
  7. Chisholm / Kilby
  8. Mount Meigs / Brassell
  9. Washington Park
  10. Deer Creek Blvd / Marston Way
  11. Tax-Friendly State

Alabama has incredibly low taxes. The state and local tax burden typically rank among the top ten (best) in the U.S. State and local taxes are one of the biggest deciding factors real estate investors need to consider. Alabama has some of the lowest property tax rates in the nation. The median property tax in Montgomery County, Alabama is $435 per year for a home worth the median value of $121,000. Montgomery County collects, on average, 0.36% of a property's assessed fair market value as property tax.

Montgomery County has one of the lowest median property tax rates in the country, with only two thousand five hundred thirty-eight of the 3143 counties collecting a lower property tax than Montgomery County. The average yearly property tax paid by Montgomery County residents amounts to about 0.74% of their yearly income. Montgomery County is ranked 2719th of the 3143 counties for property taxes as a percentage of median income.

The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified.

References

Market data and trends
https://www.zillow.com/montgomery-al/home-values/
https://acre.culverhouse.ua.edu/category/statewide/montgomery-area/
https://acre.culverhouse.ua.edu/research/residential-research/montgomery/
https://www.neighborhoodscout.com/al/montgomery/real-estate
https://www.realtor.com/realestateandhomes-search/Montgomery-County_AL/overview

Job Growth
https://www.bestplaces.net/economy/city/alabama/montgomery

Alabama taxes
https://taxfoundation.org/state/alabama/
http://www.tax-rates.org/alabama/montgomery_county_property_tax

Prattville data
https://www.nerdwallet.com/blog/mortgages/home-search/best-towns-alabama-young-families/

Montgomery growth
https://www.bestplaces.net/city/alabama/montgomery

Student housing market
http://www.nreionline.com/student-housing/buyers-return-student-housing-sector

Seattle Real Estate Investment: Is it a Good Place to Invest?

by

Is Seattle a Good Place to Invest in Real Estate?

Should you consider investing in Seattle real estate? Well, to answer that question we should take a look at its economy and jobs. Many real estate investors have asked themselves if buying a property in Seattle is a good investment. You need to drill deeper into local trends if you want to know what the market holds for the year ahead.

Seattle is a fairly walkable city in King County of Washington. It has a mixture of owner-occupied and renter-occupied housing. According to Neighborhoodscout.com, a real estate data provider, three and four-bedroom large apartment complexes are the most common housing units in Seattle's real estate market.

<<<Also Read: Seattle Housing Market Trends & Forecast>>>

Other types of housing that are prevalent in the market include single-family detached homes, duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 40% of housing units in Seattle. At the national level, single-family rental homes have grown up to 30% within the last three years. The Seattle real estate market always looks nearly as expensive as an overheated market. We all know that Seattle is an expensive real estate market that gives many investors pause. However, there are many compelling reasons to invest in Seattle.

After a significant decline in Seattle home prices in the past year, the prices have taken a good jump in the latest quarter of 2020. The shortage of homes for sale in the Seattle housing market is causing prices to rise. And so for all those reasons and more, rising property values are a positive development for homeowners and sellers in the Seattle area. The ongoing nationwide crisis has affected the real estate market of Seattle as well but not as much as we expected. As housing inventory in Seattle remains tight, it would make things very challenging for buyers.

Last Year's Housing Trends for Seattle  

In the last year, we had record-breaking sales in the Seattle housing market despite record-low inventory levels. No month had a supply greater than a month. By and large, industry analysts define a balanced market as having an inventory of four to six months. The Seattle area home prices continue to rise beyond the reach of many buyers. The median home sold for $828,111 in King County, up 14.2 percent from 2020.

Prices increased even faster in Snohomish County, where the median price of $680,000 increased by 23.6 percent, and in Pierce County, where the median price of $502,500 increased by 19.6 percent. San Juan County had the highest median sale price: $860,000, an increase of 26.8 percent over a year ago. Seattle's median home price reached $859,000, an increase of 7.4 percent from 2020. Other areas of the county experienced greater increases.

Members of the Northwest Multiple Listing Service reported 107,354 closed sales in 2021. This was the first time the annual volume of sales exceeded 100,000 transactions. Completed sales exceeded $75 billion last year, surpassing the figure for 2020 by nearly $18.9 billion, representing a year-over-year (YOY) increase of nearly 33.6 percent.

Residential (single-family) home and condominium sales in 2021 exceeded those in 2020 by 11,594 transactions or 12.1 percent. Around 86 percent (92,713) of completed sales were single-family homes, while the remaining 14 percent (14,641) were condominiums. Buyers found themselves in competitive bidding situations for last year's sales, frequently paying above the asking price. Across the board, buyers paid an average of 104.7% of the listing price. King County homebuyers paid 106.6 percent, followed by Snohomish County homebuyers who paid 106 percent.

Condo prices area-wide (NWMLS members) rose 11.8%, from $380,000 in 2020 to $425,000 for last year's sales. In King County, which accounted for about six of every 10 condo sales (59%), the median price was $459,000, up a modest 6.7% from 2020. Less than 6% of last year's sales of single-family homes system-wide sold for less than $300,000. About half (48.8%) had sales prices between $500,000 and $1 million dollars. Almost two-thirds of condos (63.1%) sold for a half-million dollars or less.

The highlights in MWLS's annual compilation of statistics for the tri-county areas were showed that the average prices for single-family homes (excluding condos) in the tri-county areas of King, Pierce, and Snohomish have skyrocketed since 1991.

  • From 1991 to 2001 prices rose 88.8% in King County, 57% in Snohomish County, and 32.3% in Pierce County.
  • From 2001 to 2011 prices increased 31.2% in King County, 16.2% in Snohomish County, and 23.5% in Pierce County.
  • From 2011 to 2021 prices surged 249% in King County, 274% in Snohomish County, and 258% in Pierce County.

A closer look at 8,580 condo sales within six “sub-areas” of King County (where nearly 60% of all condo sales were located) shows Seattle accounted for 3,373 of them (about 39%), followed by the Eastside with 36%. The priciest condos, with a median sales price of $550,000, are on the Eastside, followed by Seattle ($495,000). Head south for more affordably priced condos. In the Southwest part of King County, the median sales price was $280,000, followed by the Southeast segment at $340,000.

Seattle Housing Demand is Strong

What does the state of Silicon Valley real estate have to do with the Seattle real estate market? Quite a bit. Seattle has long been a second-tier technology hub, bolstered by companies like Boeing, Amazon, F5, and Real Networks. Seattle’s strong tech ecosystem has led to several startups choosing to start here, but more importantly, many tech giants are setting up “outposts” here.

They’re moving jobs to Seattle so they can afford to expand or simply afford to remain in business. The influx of new high-paying jobs plus relocating employees to Seattle is driving demand for homes in Seattle. Over the past 10 years, Amazon has grown more than tenfold in the city of Seattle, from about 4,000 employees in its hometown to over 45,000.

Much of the growth in the local housing market can likely be attributed to the growth at Amazon. The Seattle real estate market shares many of the constraints that drove up real estate prices in San Francisco. You can’t realistically build on water. It is hard to build in the mountains. You can build up, but that takes time and is expensive. And all the while, everyone wants to live close to the city center and jobs. This helps keep property values in the Seattle housing market high.

Seattle Housing Market Predictions

Seattle Real Estate Investment

Seattle housing prices are going to rise in 2022 and 2023 albeit at a slower rate. Let us look at the price trends recorded by Zillow over the past few years. For the past 6 to 7 years an extreme drop in inventory led to an astronomical rise in Seattle home prices, as buyers competed over a dwindling number of properties on the market. Seattle has a track record of being one of the best long-term real estate investments in the U.S.

Since 2012, the home values in the city of Seattle have appreciated by nearly 154% — Zillow Home Value Index. As you can see in the graph given below, the home values increased consistently, starting in late 2012 and continuing through 2018. After that, it marked the beginning of a sustained downturn in prices which lasted for over a year. In 2018, prices took a steep drop. From July 2018 onward the home values started declining and they continued so until November 2019. The trajectory has shifted from last Oct 2019 to an upward trend.

The current typical home value of homes in Seattle is $927,525 (Data through October 31, 2022). ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. It indicates that 50 percent of all housing stock in the area is worth more than $927,525 and 50 percent is worth less (adjusting for seasonal fluctuations). Seattle home values have gone up 7.1% since last October.

Similar growth has been recorded by NeighborhoodScout.com. Their data also shows that Seattle's real estate appreciated 137.11% over the last ten years, which is an average annual home appreciation rate of 9.02%, putting Seattle in the top 10% nationally for real estate appreciation.

As of now, Seattle prices are up across the board. Condos are still below their peak price, but this is the highest the condo price has been since the peak of 2018. Houses have surpassed peak-breaking records month over month. During the latest twelve months (2021 Q2 – 2022 Q2) tracked by NeighborhoodScout, the Seattle appreciation rate has been 12.16%. From 2022 Q1 – 2022 Q2, the quarterly appreciation rate has been at 4.35%, which annualizes to a rate of 18.58%.

However, it's becoming harder for buyers to afford housing with steep mortgage rates and ultra-high prices. Therefore, high prices and mortgage rates are pushing a lot of buyers out of the market which is decreasing the demand. So, the home prices in this region are expected to increase by single digits in the next twelve months. It means that there is a situation in which demand exceeds supply, giving sellers a slight advantage over buyers in price negotiations.

Here is the housing forecast for Seattle, King County, and Seattle MSA. The home appreciation has been incredibly strong over the past year.

  • Seattle-Tacoma-Bellevue Metro home values have gone up 10% over the past year to $756,606.
  • The Seattle metro housing market forecast ending with October 2033 is positive.
  • Zillow predicts that Seattle metro home values may grow by 0.5% by October 2023.
  • If this forecast is correct, Seattle metro home prices will be higher in the 3rd Quarter of 2023 than they were in the 3rd Quarter of 2022.
Seattle Housing Market Forecast
Source: Zillow

Seattle Real Estate Investment Generates Excellent ROI In The Long Term

Seattle's housing market has been one of the hottest in the country for years. In the past ten years, the annual real estate appreciation rate has amounted to nearly 9%. This puts Seattle in the top 10% nationally for real estate appreciation. Seattle has repeatedly hit lists as being among the top cities for real estate sellers to get the highest return on their investments.

Property values have gone up consistently for years. Rental rates are high and continue to rise, guaranteeing ROI for those who buy and hold properties for the long term. We’ve already addressed the fact that you can raise rents as necessary to match the market. This means you will certainly be able to profit from the large rental market in Seattle whether you buy and hold or buy and flip.

Seattle Has Friendly Business Climate

Businesses aren’t just relocated to Seattle to tap into a growing, skilled labor market. Others are simply relocating because they cannot stay in business in California. California has the highest income taxes in the United States. Incredibly intrusive and endlessly proliferating regulation only makes it harder for businesses to operate. While many businesses are moving to Texas, Seattle is closer both in culture and geography. That they can find cheaper talent and real estate while gaining more freedom to operate their businesses only adds to the bottom line.

Seattle's Tech Landscape Is Rapidly Evolving

Seattle was the fastest-growing major city in the country in 2015. It has ranked among the top 5 fastest growing cities since 2010, hitting a 3.1% annual growth in 2016. Many young people move here because it is seen as an excellent place to live and get started, and that’s aside from the strong job market. The exodus from California to Seattle is only part of the equation, since Seattle attracts people from all over the country, and in truth, around the world. Seattle's tech landscape and real estate market are rapidly evolving.

Google has upped the size of its new Seattle campus. Facebook has been on a hiring spree in the Seattle area, particularly for its virtual reality arm Oculus, which is growing fast in Microsoft’s backyard of Redmond. GeekWire reported on new HQ leases for top Seattle startups Rover and Outreach. Other companies continue to grow and that will pick up any slack. Tech has blown up Seattle. For the past 5 years, we have seen 50% price growth in this market which has priced out many middle-class buyers.

Seattle Rental Market Is Very Strong

Around a third of people in the U.S. rent. However, in Seattle, the rate is over half. This is partially due to the cost of homes in the Seattle housing market. Another contributing factor is that Millennials are less willing to be tied down to a home and thus prefer to rent, while Seattle is one of the top cities for attracting these young adults.

They’re probably going to continue to rent instead of buying homes. Environmentalist protections for large swaths of land around Seattle limit how far the city could spread out. This prevents the value of homes in the Seattle housing market from coming down as people relocate to distant suburbs, trading home values for commute time. Building up is increasingly an option, but you can’t do that here the way they’ve done it in Miami.

The financial district allows buildings to be as tall as FAA regulations allow, but that’s pretty much it. Nor does that designation matter much, since the area is mostly built-up. The rest of Seattle is zoned low, preventing demand from being met by building condo towers. That keeps Seattle rental property rates high.

Seattle Rent Prices Are Rising in 2022

Rental prices are rising in Seattle due to an increase in demand. As of December 0, 2022, the average rent for a 1-bedroom apartment in Seattle, WA is currently $1,999. This is an 11% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Seattle increased by 3% to $1,442. The average rent for a 1-bedroom apartment increased by 5% to $1,999, and the average rent for a 2-bedroom apartment increased by 10% to $2,849.

  • Two-bedroom apartments in Seattle rent for $2,849 a month on average which is a 14% increase from last year.
  • Three-bedroom apartment rents average $3,495 which is an 11% increase from last year.
  • Four-bedroom apartment rents average $3,800 which is a 2% increase from last year.

Only 15% of the apartments can be rented for less than $1500, and more than 50% of the apartments are priced at more than $2,000 per month. This shows that overall rent prices are very high in Seattle and a huge drop in rent prices can help new renters to lock in a long-term lease.

These are some of the most affordable neighborhoods where the rent prices are below the Seattle average rent:

  • Innis Arden
  • Richmond Beach
  • The Highlands
  • Broadway

The Zumper Seattle Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Washington one-bedroom median rent was $1,536 last month. Bellevue was the most expensive city with one-bedrooms priced at $2,220 while Oak Harbor was the most affordable city with one-bedrooms priced at $1,250.

Here are the best areas to invest in a rental property in the Seattle Metro Area in 2023. Investors should consider the suburbs of major metropolitan areas for residential rental opportunities, as they're an ideal investment and have seen an increase in buyer demand in this pandemic.

The cities should be within driving distance of major cities or metro areas. Locations with growing employment opportunities attract more tenants. Most importantly, vet the local neighborhoods thoroughly — their livability, vacancy rate, average rents,  quality of the local schools, and amenities such as parks, restaurants, gyms, and movie theaters.

The Cities With Fastest Growing Rents in Seattle Metro (Y/Y%)

  • Everett had the fastest growing rent, up 23.1% since this time last year.
  • Bremerton saw rent climb 17.1%, making it second.
  • Federal Way was third with rent jumping 16.9%.

The Cities With Fastest Growing Rents in Seattle Metro (M/M%)

  • Bellingham had the largest monthly rental growth rate, up 6.2%.
  • Everett was second with rent climbing 3.9%.
  • Renton ranked as third with rent increasing 3.5%.
Seattle Rental Market
Source: Zumper

Seattle's Large Student Market Is Great For Rental Property Investment

While we cannot say this just about the Seattle housing market, the fact remains that large cities with a strong network of educational institutions always create an opportunity for those who want to own rental properties. Students don’t buy houses – they rent. A college town with a single university sees property values rise and fall relative to the popularity of the university. Seattle’s nearly two dozen four-year colleges provide a diverse market for landlords catering to students, while the strong local job market means you can rent the property out to locals if the students move out.

Seattle Is Friendly To Foreign Real Estate Buyers

The United States is pretty friendly to foreign real estate buyers. Canada has limited the ability of foreign buyers to buy up properties in Canada, a major reason why Vancouver became one of the most overvalued real estate markets in the world. This has led many Chinese investors to buy up Seattle real estate instead, making the city the third destination for foreign real estate investors.

Some hope to send kids to study in the U.S., while a few have children here. Others buy the properties as a way to park money overseas in a relatively low tax jurisdiction with likely returns if they choose to sell later. Since foreign buyers don’t always rent the properties out, this drives up prices in the Seattle real estate market while indirectly constricting supply.

The Seattle Housing Market Is Landlord Friendly

Many investors are reluctant to buy properties in liberal markets because they’re afraid they won’t be able to protect their investment. However, there are several points in favor of Seattle, especially in comparison to Oregon and California. Washington State outlawed rent control, so you can raise rents to keep up with inflation and demand.

If a tenant breaks the lease without the landlord’s consent, the tenant is liable for rent through the end of the lease. Landlords have significant freedom in their screening questions. If a tenant has a month-to-month lease, the landlord can only end it for one of 18 approved reasons, but they can end it with a written notice three weeks before the end of the month.

Is Buying a House in Seattle a Good Investment?

Seattle has long been second to Silicon Valley, but its strong economy, diverse population, and better regulatory climate are bringing refugees from California and migrants from around the country and world to live here. Regardless of the area’s weather, the Seattle housing market’s outlook can only be described as sunny.

Good cash flow from Seattle investment property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Seattle in a growing neighborhood would be key to your success.

The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. You should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Seattle rental property and you should be able to get a good return on your investment over the long term.

The neighborhoods in Seattle must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Seattle might not be the best place to live in. A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods. The inventory is low, but opportunities are there.

There are 75 neighborhoods in Seattle. Some of the other popular neighborhoods in Seattle where you can invest in Seattle investment properties are Maple Leaf, Central District, Phinney Ridge, Ballard, Columbia City, Belltown, Beacon Hill, Green Lake, West Seattle, Wallingford, Madison Park, Queen Anne, Magnolia, and Northgate.

Here are some of the best neighborhoods in the Seattle metro area where you can buy a house or an investment property.

North Redmond is in King County and is one of the best places to live in Washington. According to Niche.com, living in North Redmond offers residents a sparse urban feel and most residents own their homes. In North Redmond, there are a lot of restaurants, coffee shops, and parks. Many families live in North Redmond and residents tend to lean liberal. The public schools in North Redmond are highly rated. The typical value of homes in North Redmond is $1,809,188, up 32.6% over the past year.

North Delridge is quite an affordable neighborhood in Seattle. It lies in King County and is one of the best places to live in Washington. According to Niche.com, living in North Delridge offers residents an urban-suburban mixed feel. The area is known for its lush natural beauty and abundant opportunities for outdoor recreation. The public schools in North Delridge are highly rated. The typical home value in North Delridge is $670,846. North Delridge home values have gone up 8.6% over the past year. About 48% of the residents like to rent a home.

Capitol Hill is a densely populated residential district in Seattle (Not be confused by Capitol Hill, Washington D.C.). It is located east of the city's Downtown on the other side of Interstate 5. Capitol Hill is the 9th most walkable neighborhood in Seattle with a Walk Score of 91 and is bikeable. It is one of the city's most popular nightlife and entertainment districts. Made up of a few smaller neighborhoods, rents in Capitol Hill average around $1,900 a month. The community is made up of young professionals, singles, and families with kids. This neighborhood exists alongside 536 submarkets in the greater Seattle market.

According to Redfin.com, the Capitol Hill housing market is somewhat competitive. In October 2021, Capitol Hill home prices were up 18.2% compared to last year, selling for a median price of $780K. On average, homes in Capitol Hill sell after 7 days on the market compared to 20 days last year. There were 37 homes sold in October this year, up from 32 last year.

On Apartmenthomeliving.com, the pricing for Studio Apartments in Capitol Hill currently ranges from $675 to $8,049 with an average price of $3,228. On average rent for a studio apartment in this residential neighborhood is $1,768, and has a range from $675 to $3,945. One-bedroom apartments average $2,350 and range from $770 to $3,980. A 2 bedroom apartments averages $3,350 and ranges from $1,192 to $4,995. Three-bedroom apartments average $5,392 and range from $2,650 to $8,049.

Highland Park is a neighborhood in King County. Living in Highland Park offers residents an urban-suburban mix feel and most residents rent their homes. The public schools in Highland Park are above average. The median home value in Highland Park is $651,903. Highland Park home values have gone up 13.8% over the past year. According to RentCafe, the average rent in Highland Park, Seattle, WA is $1,711. Highland Park rent is 21% lower than Seattle's average rent. The price range for a studio apartment in Highland Park, Seattle, WA is between $1,850 and $2,299. The price range for a 1-bedroom apartment in Highland Park, Seattle, WA is between $1,850 and $2,299.

South Hollywood Hill is in King County and is one of the best places to live in Washington. According to Niche.com, living in South Hollywood Hill offers residents a sparse urban feel and most residents own their homes. In South Hollywood Hill there are a lot of restaurants, coffee shops, and parks. The public schools in South Hollywood Hill are highly rated.

Sammamish Plateau also lies in King County. It is an upscale, picturesque suburb situated between Lake Sammamish and the Snoqualmie Valley. The market in the Seattle suburb of Sammamish is currently very hot. Living here offers residents a sparse suburban feel. The typical home value in Sammamish is $1,372,491, up 28.3% over the past year.

Sammamish Plateau is consistently ranked among the best places to live in the state and the country. The public schools in Sammamish Plateau are highly rated. According to Apartments.com, the average rent in Sammamish is $1,976. When you rent an apartment in Sammamish, you can expect to pay as little as $1,678 or as much as $2,517, depending on the location and the size of the apartment. The average rent for a studio apartment in Sammamish, WA is $1,678 while the average rent for a two-bedroom apartment in Sammamish, WA is $2,467.

The ten neighborhoods in Seattle have the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

  1. Yesler Terrace West
  2. Belltown Northeast
  3. Belltown East
  4. Central Waterfront
  5. Belltown Southeast
  6. First Hill East
  7. International District
  8. Belltown
  9. First Hill
  10. University of Washington Seattle Campus

Apart from the Seattle real estate market, you can also invest in another hot market in Spokane, WA. Spokane is a relatively cheap real estate market on the West Coast. It is already seeing increased demand and property valuations, while it remains a safe place to invest in real estate. Skip Seattle and Silicon Valley and invest in the future growth of Spokane. One reason why Spokane long lagged behind Seattle was its higher unemployment rate.

Seattle has a roughly 3% unemployment rate, significantly lower than the 5% unemployment rate seen in Spokane. Spokane’s economy, though, is seeing a surge in higher-wage jobs. Out of the tens of thousands of new jobs created since 2010, the majority of them pay more than the average county wage – which is in line with the national average. The promise of better pay will lure many people to Spokane to live, fueling demand for the Spokane housing market.

The next one is the Tacoma real estate market. It is the second-largest city in a state that is often a better choice for investors than the largest city since demand is strong but not so great that investors worry about being priced out of the market or being caught up in a bubble. Tacoma is the third-largest city in Washington state.

Rents and property values in the Tacoma area are rising due to increased demand and constrained supply. This is an ideal time to buy. Roughly speaking, the median house in the Tacoma area is now the same price as the typical house in King County in 2012. Furthermore, there are many reasons to consider investing in Tacoma real estate over homes and condominiums in nearby housing markets.

Then comes the Walla housing market which includes two suburbs, encompassing more than fifty thousand people. The area has become the hub of Washington State’s wine country, though wheat remains a major contributor to the local agricultural economy. Walla Walla is one of the real estate markets in the state that doesn’t depend on Seattle’s growth for appreciation. Walla Walla sits on the Washington-Oregon state line. The Walla Walla housing market is poised for steady price growth. The median home value in Walla Walla is $278,247 and home values have gone up 4.4% over the past year.

For a majority of investors, buying or selling real estate is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

Is Seattle a Good Place to Invest in Real Estate?
  • Seattle is home to over 700,000 people.
  • This makes the Seattle housing market the largest in both the state of Washington and the Pacific Northwest.
  • However, the region's housing market is bigger than that.
  • It extends to nearly four million people in the Seattle metropolitan area.
  • Since, 2010, Seattle's population growth has increased by 18.7%.
  • This is the fastest among the 50 largest cities in the U.S. (Census.gov).
  • Seattle's real estate market has always been strong.
  • Tech companies bring so many people into the city, and construction hasn't been able to keep up with that.
  • The Seattle-area job market continues to add new qualified buyers.
  • It is coupled with declining inventories & falling interest rates which leads to multiple offers and bidding wars among buyers.
  • This is the single driving factor of Seattle home prices.
  • A positive forecast for home values in the next twelve months: 1-5% appreciation is expected despite high mortgage rates.

Not just limited to Seattle or Washington but you can also invest in some of the hottest real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Caveat emptor applies anywhere you buy property. Some of this article's information came from referenced websites. Norada Real Estate Investments provides no explicit or implied claims, warranties, or guarantees that the material is accurate, trustworthy, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market.

REFERENCES

Why Invest In Seattle
https://www.collegesimply.com/colleges/washington/seattle/four-year-colleges
https://www.naahq.org/read/industry-insider/6-28-16/america-becoming-renters-nation
http://www.homebuyinginstitute.com/news/will-seattle-start-rising-again
https://www.geekwire.com/2018/amazon-responsible-seattles-housing-cooldown-real-estate-experts-weigh
https://www.cnbc.com/2018/08/02/seattle-housing-market-is-under-pressure-as-chinese-buying-dries-up.html
https://seattlebubble.com/blog/2019/03/27/case-shiller-seattle-home-price-gains-below-average-in-january
https://www.bizjournals.com/losangeles/news/2016/08/12/california-regulatory-policies-businesses-flee.html
https://www.linkedin.com/pulse/seattle-san-francisco-why-west-coast-tech-companies-both-shanahan
https://www.theurbanist.org/2014/09/02/85-foot-and-125-foot-height-limits-are-a-missed-opportunity
https://www.seattletimes.com/seattle-news/politics/seattle-approves-taller-buildings-in-uptown-doubling-heights-in-some-areas
https://www.seattlemag.com/news-and-features/seattle-housing-experiences-high-demands-tech-companies-continue-grow
https://www.thestranger.com/slog/2018/01/09/25692670/seattle-is-now-number-three-us-city-for-foreign-real-estate-investors
https://www.thestranger.com/news/feature/2016/01/27/23480634/what-you-need-to-know-about-your-rights-as-a-renter-in-seattle

Neighborhoods info & rent prices
https://www.apartments.com/
https://www.apartmenthomeliving.com/seattle/
https://www.niche.com/places-to-live/search/best-neighborhoods-to-buy-a-house/m/seattle-metro-area/

Market Prices, Trends & Forecasts
https://www.nwmls.com/
https://www.zillow.com/seattle-wa/home-values
https://www.redfin.com/news/seattle-homes-sold-above-list-price/
https://www.realtor.com/realestateandhomes-search/Seattle_WA/overview
https://www.rentcafe.com/average-rent-market-trends/us/wa/seattle
https://www.neighborhoodscout.com/wa/seattle/real-estate
https://www.littlebighomes.com/real-estate-seattle.html
https://seattlerealestatenews.com/category/info/seattle-monthly-housing-news
https://www.seattlepi.com/coronavirus/article/best-time-to-buy-or-sell-a-house-during-pandemic-15287608.php

Is San Diego Real Estate a Good Investment?

by

San Diego Real Estate Investment Outlook

Should you consider San Diego real estate investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2022 and 2023. Although this article alone is not a comprehensive source to make a final investment decision for San Diego, let’s look at the state of the San Diego real estate market and the factors driving the property market short and long-term.

Affordability has become an issue for many homebuyers in the San Diego area. This is another housing market trend that is affecting many major cities across the country but particularly in the western coastal markets. How big is the San Diego housing market? San Diego is a moderately walkable city in San Diego County with a population of approximately 1,305,700 people.

It is the second biggest California city and one of the ten biggest cities in the country. San Diego is one of the fastest-growing cities in the U.S, and its economy is strong. San Diego is often overlooked in favor of hotter real estate markets like San Francisco and Los Angeles. However, that’s one of the reasons why you should consider investing in the San Diego real estate market. The city of San Diego continues to outpace California's job recovery, which is good news for San Diego’s housing industry.

The San Diego metropolitan area is known as the birthplace of naval aviation, serving as a major employment center in the nation for defense and in the Southern California region for scientific research, health care, education, trade, and tourism. The significant military presence supports hundreds of thousands of jobs, pays billions of dollars in wages, and has an overall annual economic impact on the San Diego metropolitan area of billions of dollars.

San Diego's housing market remains one of the hottest in the nation (ranked 10th by Zillow). Since home building takes time, especially in a heavily regulated environment, there’s little chance of diminished demand. San Diego has been one of the hottest real estate markets in the country for many years. During the 20 years from 1998 to 2018, the median home value in San Diego rose by a whopping 217%. But the median household income only rose by around 77% during that same 20-year time frame.

San Diego has a mixture of owner-occupied and renter-occupied housing. As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached are the most common housing units in San Diego. Other housing types prevalent in San Diego include large apartment complexes, duplexes, rowhouses, and homes converted to apartments.

There were 4,100 single-family homes and 6,400 multi-family homes built in 2017, compared to 2,200 single-family homes and 7,800 multi-family units in 2016. Today, the general trend for SFR construction in San Diego County is still far below the 2002-2004 numbers. The next peak in single-family residential construction will likely begin around 2021, but it is doubtful to return to the frenzied mortgage-driven numbers seen during the Millennium Boom.

San Diego Real Estate Appreciation Rates

San Diego is in the top 20% nationally for real estate appreciation. NeighborhoodScout.com's data also shows that in the past ten years, San Diego real estate appreciated by 115.52%. This amounts to an annual real estate appreciation of 7.98%. During the latest twelve months, San Diego's appreciation rate has been around 16.35%.

In the latest quarter, the appreciation rate has been 2.79%, which annualizes to a rate of 11.64%. Overall, there exists a limited supply of homes in San Diego, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.

The San Diego Housing Market Is a Relative Bargain

California is known for its insane real estate prices. San Diego stands out as a relatively affordable real estate market. The median home price is around $550,000. This sounds bad if you compare it to the national average of $300,000, but it is a bargain in California. You could snap up several San Diego rental properties for the price of one home in San Francisco.

The San Diego housing market is cooling. Home price appreciation fell below 5%, and home prices in some areas are declining due to decreasing demand. This is an improvement over the 6 to 8% appreciation San Diego had been seeing. The expanding inventory of houses on the market makes this a great time to invest in the San Diego housing market.

San Diego's Housing Supply Is Constrained As New Construction of Homes is Quite Slow

San Diego is a growing housing market. By 2050, the population of San Diego County is expected to grow to 4.5 million, approximately a 50% increase from the population in early 2007 of 3,098,269 people. Population trends have connections with housing trends as it increases the demand for housing supply. However, construction in San Diego has stalled. Single-family residential construction is well below the demand for such homes in the San Diego housing market.

There has been faster growth in the construction of multi-family housing in the San Diego real estate market, but that is also below historic rates. Currently, both single-family and multi-family housing construction is increasing in San Diego. Even though there are more multi-family starts over single-family homes in terms of raw numbers, the percentage of single-family homes being constructed outpaces that of multi-family units.

San Diego also shares several geographic constraints that other California coastal cities do. You can’t build on water. The Cowles Mountains limit how much the city can expand inland, constraining the housing supply. Regulations limit high-density construction, preventing the area from meeting demand with too many tall condo towers. So, do the wilderness areas off-limits to construction like Cuyamaca Rancho State Park and Cleveland National Forest.

The Diverse Student Market Feeds the San Diego Rental Market

San Diego is a major metropolitan area, and it is home to several colleges and universities. The University of California at San Diego is one of the largest. It is sometimes confused with San Diego State University, a different campus, and the University of San Diego. Point Loma Nazarene University is a Christian school in San Diego. National University is located in nearby La Jolla.

Smaller schools like the Art Institute, Alliant International University, Azusa Pacific University, Brandman University, Miramar College, Mesa College, and California College of San Diego fill out the San Diego real estate market.

A side benefit of the diversified student market is that you can buy multiple properties across the San Diego housing market and enjoy a “diverse” investment portfolio. You won’t see demand for the property rise and fall based on the popularity of a flagship school, and the strong San Diego housing market allows you to rent it to newcomers to the area or military officers if you can’t fill the unit with students.

San Diego’s economy isn’t as reliant on tourism as other coastal towns. Instead, defense and the military are a larger part of the local economy. This dumps tens of thousands of renters into the San Diego real estate market who will never buy because they could be deployed elsewhere in a year or two. The military also gives generous allowances for those who rent San Diego rental properties, keeping rents near the military base strong regardless of the state of the economy.

The San Diego real estate market has been ranked among the ten most expensive real estate markets in the country, though it ranks below several other West Coast cities. This creates massive demand for San Diego rental properties by those who simply cannot afford to buy homes. The rental market will continue to grow as the city grows an estimated 500,000 population by 2050, adding tens of thousands each year. The median rent in San Diego is $2700. The rent you’d receive on single-family San Diego rental properties would, of course, be much higher.

If you find a good bargain and make it family-friendly, you could charge well over $3000 a month. If you can convert San Diego rental properties into smaller units, you’d receive around $2200 a month for a one or two-bedroom apartment. The cash on cash returns for properties in the San Diego housing market is around 2.5% for traditional rental properties and nearly 2% if you rent on Airbnb. The fact that the city isn’t too dependent on tourism means you could rent properties on the beach to newcomers, locals, and students if tourism is slow.

Before the pandemic, the average rent for an apartment in San Diego had been growing at 4% year-over-year (source: RentCafe). About 40% of the apartments can be rented for less than $2000, and 60% of the apartments can be rented for more than $2,000 per month. This shows that rent prices are very high in San Diego.

Homeowners vs Renters Statistics: According to the most recent 2020 American Community Survey census data, San Diego County has a renter percentage of 46.7% which is the second most renter percentage of all the counties in the greater San Diego County region. The homeowner percentage is 53.3%. The monthly cost of ownership for property owners in San Deigo is around $2,073.

The median gross rent is $1,658, which is the third most expensive among all other counties in the greater San Diego County region. Comparing rental rates to the United States average of $1,062, San Diego County is 56.1% larger. Also, compared to the state of California ($1,503), San Diego County is 10.3% larger.

San Diego Rent Prices 2022

As of October 3, 2022, the average rent for a 1-bedroom apartment in San Diego, CA is $2,545. This is a 21% increase compared to the previous year. Over the past month, the average rent for a studio apartment in San Diego remained flat. The average rent for a 1-bedroom apartment decreased by -5% to $2,545, and the average rent for a 2-bedroom apartment decreased by -5% to $3,295.

  • Two-bedroom apartment rents average $3,295 which is an 18% increase from last year.
  • Three-bedroom apartment rents average $4,070 which is a 13% increase from last year.
  • Four-bedroom apartment rents average $4,900 which is a 9% increase from last year.

San Diego Housing Market Is More Landlord Friendly For Short Term Rentals

We can’t say that California is landlord-friendly. However, specific cities are better for landlords and real estate investors than others. One reason to invest in the San Diego housing market over San Francisco or Los Angeles is the fact that San Diego is one of the few big cities that doesn’t have rent control. The city has groups fighting proposals to apply rent control to San Diego rental properties in addition to apartments.

San Diego has many tourist attractions. Balboa Park is home to the San Diego Zoo, the Air and Space Museum, the Natural History Museum, the Desert Garden, the local youth Symphony, a Japanese garden, and a golf complex. There’s a SeaWorld in San Diego, an MLB stadium, the USS Midway Museum, and the San Diego zoo safari park. On top of this is the mild weather and proximity to the beach. Any San Diego rental properties in easy reach of these attractions command a premium on rental sites like Airbnb.

Demand for rentals in the San Diego real estate market soars during Comic-Con, one of the biggest comic conventions in the country. The only limit on San Diego rental properties has been the fluctuating rules by the city council, such as a measure passed limiting rentals to primary residences that were rescinded a few months later in 2018. Yet permission for rentals is limited in many master-planned communities and condo developments, keeping rents for Airbnb and other short-term rentals strong.

San Diego Is A Great Place Place To Live In

San Diego is a great place to live which makes real estate investment a lucrative opportunity. It has nice sunny weather and impressive beaches. It has more than 300 parks, including Mission Trails Regional Park, and 40,000 acres of undeveloped open space. Balboa Park has the world-famous San Diego Zoo, Old Globe Theatre, and museums. San Diego Zoo is also one of the prettiest zoos in the world to walk around. U.S. News analyzed 125 metro areas in the United States to find the best places to live based on the quality of life and the job market in each metro area, as well as the value of living there and people's desire to live there.

San Diego, California was ranked:

  • #36 in Best Places to Live
  • #51 in Best Places to Retire
  • #3 in Best Places to Live in California
  • #5 in Most Expensive Places to Live
  • #9 in Best Places to Live for Quality of Life
  • #12 in Safest Places to Live

San Diego is home attracts millennials with its higher education opportunities and big-city amenities such as excellent restaurants, dive bars or clubs, and great nightlife. The craft beer scene in San Diego is one of the best in the world. North County is desirable for young families whereas millennials are moving downtown and to communities to the northeast as a result of gentrification and the diverse entertainment options centralized in those areas.

Best Places to Invest in Real Estate in San Diego

Are you looking for an investment property in the San Diego real estate market? In any property investment, cash flow is gold. San Diego offers an ideal mix of limited supply, high demand, and excellent income potential. San Diego's mild climate, miles of beaches, fun attractions, and great schools make the city one of America's best places to live.

If you’re going to invest in California, it needs to be in San Diego. Good cash flow from San Diego investment properties means the investment is, needless to say, profitable. On the other hand, a bad cash flow means you won’t have money on hand to repay your debt.

Therefore, finding the best investment property in San Diego in a growing neighborhood would be key to your success. The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. You should focus on neighborhoods with relatively high population density and employment growth.

Both of them translate into high demand for housing. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your San Diego rental property and you should be able to get a good return on your investment over the long term.

The neighborhoods in San Diego must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in San Diego might not be the best place to live in.

A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods. The inventory is low, but opportunities are there.

Some of the popular neighborhoods in or around San Diego are Carmel Valley, Rancho Bernardo, Point Loma, Pacific Beach, Mission Valley, Mira Mesa, Rancho Penasquitos, Bonita, Del Cerro, North Park, La Jolla, 4s Ranch, Mission Hills, Otay Ranch and Rancho Santa Fe.

As we write this, the asking price of single-family homes for sale in San Diego (on Realtor.com) starts from $132,000 for a 3-bedroom house and can go up to $37M for a luxury 10-bedroom house located in the Northern San Diego neighborhood.

You can get a beautiful 3-bedroom new construction single-family house for around $379,000 in the Southern San Diego neighborhood — which is quite an affordable entry price as San Deigo home prices are some of the most expensive in all of the United States.

Here are some of the best neighborhoods in San Diego where you can buy an investment property.

Encanto is one of San Diego’s most affordable neighborhoods if you want to buy an investment property. According to Neighborhood Scout Encanto’s median real estate price is $469,345, which is cheaper than 71.3% of California neighborhoods and 21.5% of all U.S. neighborhoods. Encanto is a hilly neighborhood located in the southeastern part of San Diego, California. The neighborhood of Encanto is split into two sections, North Encanto (which lies north of Broadway), and South Encanto (which lies south of Broadway).

The name Encanto usually refers to the neighborhood of Encanto, but it can also refer collectively to the neighborhoods of the Chollas Valley planning area, which consists of Chollas View, O'Farrell, Lincoln Park, Emerald Hills, Valencia Park, Broadway Heights, Alta Vista, Rosemont, as well as Encanto. The citizens' community planning group that represents these eight neighborhoods in accordance with the City of San Diego Council Policy 600-24 is named the Chollas Valley Community Planning Group.

The Encanto Neighborhoods Community Plan is designed to expand the existing retail, commercial and light industrial areas along the main transportation corridors and the villages surrounding the trolley stops at 47th and Market streets, and Euclid Avenue and Market Street. Its cultural heart is the Market Street Village, situated along Chollas Creek, and the trolley stop at the intersection of Euclid Avenue and Market Street.

With its proximity to San Diego Bay just 2 1/2 to 5 miles away, temperatures tend to be mild. The area offers excellent opportunities for infill development, including commercial, transit-oriented mixed-use along the main corridors, and view lots for single-family residential in the surrounding hills.

Nestor is another relatively affordable neighborhood in San Deigo having a median real estate price of $579,106, which is more expensive than 42.9% of the neighborhoods in California and 84.6% of the neighborhoods in the U.S. The average rental price in Nestor is currently $1,881, based on NeighborhoodScout's exclusive analysis. Rents here are currently lower in price than 77.6% of California neighborhoods. Nestor is a residential neighborhood in the southern section of San Diego, and part of the Otay Mesa-Nestor community planning area. According to Zillow, Nestor's home values have gone up 29.4% over the past year.

It neighbors Palm City and Otay Mesa West to the east, Egger Highlands to the north, San Ysidro to the southeast, and the Tijuana River Valley to the south. Major thoroughfares include Coronado Avenue, Saturn Boulevard, Hollister Street, and Tocayo Avenue. According to Areavibes.com, the cost of living in Nestor is 19% lower than the San Diego average and 13% higher than the national average. On their livability index, it ranks better than 42% of areas in San Diego.

The Otay Mesa-Nestor community planning area is located in the southern region of the City and is bounded on the north by Chula Vista, on the east by the community of Otay Mesa, on the south by the Tijuana River Valley and the San Ysidro community, and on the west by Imperial Beach. Twenty percent of the planning area consists of schools, parks, transit, and other public facilities, while vacant, undeveloped, agricultural, and mineral extraction and processing uses comprise the remaining 15 percent.

Emerald Hills is a fairly good neighborhood in San Diego to invest in real estate. It is a calm neighborhood with many green spaces nearby for residents to visit. Most areas in this neighborhood are quiet, as noise from the streets and other parts of the city is rarely an issue. It is bordered by Oak Park and California State Route 94 on the north, Chollas View and Euclid Avenue on the west, Encanto on the east, and Valencia Park and Market Street on the south. Major thoroughfares include Kelton Road and Roswell Street.

Most houses for sale in this neighborhood are located in places that are not very suitable for walking since carrying out daily needs is sometimes difficult. The typical home value in Emerald Hills is $659,983, up 33.0% over the past year.

Another urban area that is great for investment is the Downtown/City Center. It is one of the best places to live in California. It offers residents a dense urban feel and more than 70% of the residents rent their homes. So it is a great neighborhood to buy rental properties due to high demand. Downtown's public schools are above average. It offers good nightlife with restaurants, bars, and entertainment venues. Niche.com ranks it #25 among the best neighborhoods to live in San Diego.

Highest Growing San Diego Neighborhoods Since 2000 (List by Neighborhoodscout.com)

  1. Mountain View Southeast
  2. Logan Heights West
  3. Logan Heights
  4. Barrio Logan
  5. Golden Hill South
  6. Grant Hill West
  7. East Village
  8. Sherman Heights
  9. Mountain View East
  10. Barrio Logan East

The cheapest or most affordable neighborhoods to rent in San Diego are Alta Vista, where the average rent goes for $1100/month, Broadway Heights, where renters pay $1100/mo on average, and Emerald Hills, where the average rent goes for $1100/mo, Encanto, where renters pay $1100/mo on average $1,383, Jamacha Lomita with an average rent of $1100, and Skyline, where the average rent price is 1100. In all of these areas, the asking prices are below the average San Diego rent.

San Diego Rental Market
Graph Credits: RentCafe.com

Apart from San Deigo, you can also invest in several other real estate markets in California. California has the 6th largest economy in the entire world. This is largely driven by its innovative production, the heavy tech sectors in the state, and more. Apart from the San Diego real estate market, you can also invest in another hot market in San Jose. San Jose is part of Silicon Valley, a place where $100,000 a year or higher salaries from competing tech firms have driven up the cost of real estate.

But what about the San Jose housing market itself? San Jose is the third-largest city in California, home to roughly a million people. It has the highest cost of living in any area in the U.S., and it is one of the most expensive housing markets in the country. If you want to invest in San Jose real estate, you may not need to buy and renovate. Instead, if you know of industrial or commercial properties near major employers they may need to convert to employee housing, which you could buy now and hold until it sells.

If that doesn’t happen, you could still turn it into a co-working space. In January 2018, Redfin ranked the ten hottest neighborhoods in the United States. Nine of the ten were in San Jose. When single home prices fall from 1.2 million to 1 million, homes now sit on the market for several days instead of being snapped up immediately.

The other good place for real estate investment in California is Sacramento. Sacramento is an island of sanity in an overpriced, over-regulated, and overheated West Coast housing market. It reflects the California ideal that most of the state has lost, and that’s we recommend it to investors over the “hotter” California metro areas. These are the same factors causing many Californians themselves to vote with their feet and move here instead of moving out of the state altogether.

If you’re considering Sacramento real estate investment, the diverse rental market is a definite plus. Being a state capital, it is home to several universities. This allows you to rent to the relatively large student market in addition to the local population. There is, of course, the University of California campus in Sacramento, but you could own investment properties by American River College and other, smaller schools in the area, too.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment properties.

Not just limited to San Diego or California but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience with our team to see if San Diego makes sense as a place to invest today.

We can help build you a custom portfolio of turnkey properties located in some of the best markets in the United States. By researching and structuring complete turnkey real estate investments, we can help you succeed by minimizing risk and maximizing profitability.

Sources:

  • https://car.sharefile.com/share/view/s2a8899fc081428a8
  • https://journal.firsttuesday.us/san-diego-housing-indicators-2/29246
  • https://www.rentcafe.com/average-rent-market-trends/us/ca/san-diego
  • http://worldpopulationreview.com/us-cities/san-diego-population
  • https://www.sandiegouniontribune.com/business/real-estate/sd-fi-rent-control-20180703-story.html
  • https://www.mashvisor.com/blog/airbnb-san-diego
  • https://www.sandiegoreader.com/news/2018/mar/07/city-lights-airbnb-forcing-you-out
    https://www.niche.com/colleges/search/best-colleges/m/san-diego-metro-area
  • http://worldpopulationreview.com/us-cities/san-diego-population
  • https://www.sandiego.org/articles/east-county/san-diego-east-mountains.aspx
  • https://www.cnbc.com/2019/02/27/spring-housing-market-could-be-coolest-in-recent-years-realtorcom.html
  • https://www.sandiegouniontribune.com/business/real-estate/sd-fi-corelogic-home-20180724-story.html
  • https://www.sandiegouniontribune.com/business/tourism/sd-fi-airbnb-regulations-council-20181022-story.html
  • https://www.10news.com/news/making-it-in-san-diego/making-it-in-san-diego-slowing-housing-market-could-create-buying-opportunity

Blog Posts

Contact

Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

(949) 218-6668
(800) 611-3060
BBB