While big real estate markets like Phoenix, Austin, and Atlanta have been grabbing headlines for their rapid appreciation and bidding wars, there’s an entire tier of smaller cities seeing their housing markets heat up. Realtor.com has released its list of the hottest real estate markets in the US, and it’s clear that the popularity of remote working combined with the unmet demand for housing in bigger markets has pushed a lot of home buyers to smaller cities. Their list is a ranking of markets where houses are selling the quickest and the most potential buyers are clicking on property listings. Some of these markets offer greater affordability, with single-family home costs below the national average, which now sits at a record $400,000. We culled the list and chose three cities which also have a built-in demand for rental housing. So, let’s hit the road and visit the hot markets that you’ve never considered.
Our first stop is the number one hottest housing market in the US. Would-be home buyers who were priced out of Boston and other expensive markets in the northeast have found that their money goes a lot further in greater Manchester, about an hour north of the Boston. The average home cost in greater Boston is a steep $675,000, compared to greater Manchester’s much more affordable $416,000. For investors who are seeking a place to buy an investment property, there is a high demand for rental housing, which has driven up rents an average of 25 percent in the past five years. The area also offers consistent demand for rental housing in nearby Durham, where the University of New Hampshire is located. Despite Manchester’s small town feel, over 600,000 people live within 20 miles of Manchester and over 4.5 million people live within one hour’s drive. If you like being outside, the area region also offers year-round outdoor recreation, with its proximity to excellent skiing and popular beaches.
If you’re looking for a bargain, you’ll find it in Rochester. Its average home cost is $216,000, well below the national average, which is probably why it’s been ranked as one of the top US cities millennials are moving to. While home values haven’t escalated as quickly as other markets, homes in Rochester are clearly on the rise. Over the past five years, prices in Rochester have risen by 37 percent.
Even with the relative affordability of homeownership in Rochester, there is still a demand for rental housing. Approximately 51 percent of homes in Rochester are renter-occupied, with rents in Rochester having increased by 8.4 percent over the past three years. Rochester is also home to 19 colleges and universities, so demand for student housing is likely to remain high.
Raleigh is the capital of North Carolina and the second largest city in the state, with a population of about 470,000. Its median home cost is a little above the national average at $427,000, due in part to a quickly growing population and the job opportunities in the area. In addition to government jobs in the area, Raleigh actually beats out traditional high-tech powerhouse cities such as San Francisco and Boston for job creation in the tech and research sectors. This is due to Raleigh’s location in North Carolina’s Research Triangle, which is comprised of three major research universities.
The population of Raleigh is projected to grow by nearly 125,000 over the next 15 years, which is great news for rental property owners. Renter-occupied households in Raleigh make up 43 percent of the total occupied housing units in the metropolitan area, with average rent in the area rising 3 percent year over year. As of May 2021, the average rent in Raleigh is $1287.
If you’ve been focused on bigger cities, don’t be afraid to look at some markets that are on the rise. Whether you’re looking for your forever home or a place to invest, some smaller markets can offer a strong renter base along with increased affordability.