- Origin Investments gave an overview of five cities that look promising for real estate investment.
- The technology industry plays a role in the economic growth of each city.
- But real estate consultant Nicholas Gerli says high-tech cities can plunge the most.
The top five cities in the United States that offer the greatest opportunities for real estate investment, rent growth, and development in apartment buildings are all in the South. Sun beltaccording to Origin InvestmentsA real estate private equity company that manages $ 1.4 billion in assets.
In a recent report, the company evaluated indicators such as past rents, affordability of homes, supply and demand, recent migration, local employment, income and population growth in various U.S. markets. We looked at potential rent growth. Of the total of 150 US markets considered, Origin discovered Phoenix, Arizona. Tucson, Arizona; Las Vegas, Nevada; Austin, Texas; Nashville, Tennessee were five cities with potential income, employment, and population growth.
“Everything is a medium-sized city with room for growth, a suburb that gives residents many choices in terms of lifestyle and location,” the report said. “The three cities are state capitals, all with a strong university presence, forming the kind of quality workforce that the region wants to attract and maintain.”
Each of the five cities contains a diverse and strong employment market.
Tech manufacturing is one of the largest industries in Phoenix, Arizona in recent years, but Origin expects jobs and wages in Nashville, Tennessee to increase as technology jobs increase. Caterpillar’s relocation of its Mining Technology Regional Headquarters to Tucson, Arizona in 2017 has brought about 600 jobs to Arizona. Las Vegas, Nevada already looks attractive due to the lack of state and corporate taxes, and shows recent plans to attract new industries such as financial services and information technology. Technology companies are also more integral to the market in Austin, Texas, with companies such as Oracle, Tesla, Samsung, Apple, and Meta planning to relocate their headquarters or build new campuses.
Origin also pointed out the rapid backlash of cities to the challenges posed by the pandemic as a sign of strength. The company quotes data from the Bureau of Labor Statistics, showing that average rents have risen by 3% in the five years prior to the pandemic. Using this indicator as a benchmark, Origin believes that the growth potential of these five cities will far exceed the 3% figure until at least 2023.
“We understand that the real estate market is constantly evolving, but we are looking for places where employment and demographic trends indicate future opportunities,” Origin explained. “There is a lot of optimism in these five cities.”
Are these cities overrated?
A recent analysis conducted by NPR based on Moody’s analysis data revealed five notable cities in Origin (Phoenix, Arizona).Tucson, Arizona; Las Vegas, Nevada; Austin, Texas; Nashville, Tennessee — ranked 21, 155, 22, 36, 16 respectively on the list. The most overrated metropolitan area In the United States.
Origin has emphasized its ties to big technology as an asset for urban housing growth, but these same cities may be overly dependent on the tech workforce. In short, some cities are at highest risk in the event of an industry downturn. CEO of Reventure Consulting, a real estate data analysis company.and Recent interviews with insidersGerli warned that many tech companies are still unprofitable, even though investors are flocking to them like moths.
“Tech employs a relatively small number of people in the US economy compared to all other industries, but they dominate a tremendous amount of wealth and housing demand,” Gerli said. “Currently, stock prices have plummeted and layoffs are beginning to be seen. This is a major economic risk factor for these housing markets.”
In addition, he believes that justifying the extraordinary assessment of major cities by past growth is a “retrospective perspective.”
“The area that was the beneficiary of [tech] Growth will slow at best in the last five to ten years, “Gerli said.
Gerli specifically believes that Austin, Texas is currently facing a housing bubble. This is because the city’s annual housing costs have nearly doubled over the past two years, while wage growth has increased by only 7% and rent growth by only 24% over the same period.
Meanwhile, Taylor Marr, Deputy Chief Economist at Redfin, said: Recent interviews with insiders High-income migration patterns are sufficient to justify price increases in cities such as Austin.
“One of the most compelling things I’ve seen is the big cities that really lead the country in terms of rising prices when compared to local incomes like Austin, Phoenix, or Nashville. It’s time to look at the sphere. House prices may seem to far outpace income growth in these regions. “
Mar continued. “But most of the pools of homebuyers in these metropolitan areas actually come from these more expensive coastal cities, and higher income or even higher cash from selling homes in those coastal cities. These immigrants usually have a much larger budget and can really save on housing money compared to what they were leaving. “
With that in mind, here are the five cities where Origin is highlighted, along with a description of each city.