What US city will see the most residential appreciation over the next 15 years?
If you were in your early to mid 20s and for the first time able to afford residential real estate, what US city do you think would create you the most wealth through appreciation over the next 15 years if you were to acquire multiple properties as you are financially able?
This is purely subjective so I’ll take a shot at it. Let me preface by saying my criteria for investing in a market would be it has be a location that has insatiable demand but will inherently have limitations on supply due to geographical factors (surrounded by water). Political environment could help but I wouldn’t invest in a market solely based off of connections. Also, some may argue that one doesn’t have to rent an expensive apartment in the urban area. Perhaps but you have to realize that millenials and Gen Z are huge proponents of living a decent distance from work (no more than 30 mins) so this excludes suburbs and exurbs.
1. Miami - tremendous potential due to proximity to Latin America (access to foreign capital - Brazil/Argentina), warm weather albeit hurricane season is scary, affordability relative to NY/SF/LA, no state income tax, and I think the govt down there is realizing they’ll have to build mass transit eventually because Miami is too disconnected and corporate firms are going to pressure the city to build up the infrastructure to allow for their employees to commute to the office. This is probably another 7-10 years away from becoming a reality but that’s why it is good to get in early.
2. Boston - probably the smartest city in America if you’re going by the amount of notable institutions of higher educations in the country. It’s economy is incredibly diversified - life sciences, tertiary hub for finance, education, consulting, tech, shipping, etc. So there’s definitely a high concentration of high-income workers. Politics seems like it is becoming an issue in Boston with rent control and the new mayor but we’ll see how it plays out.
3. San Diego - this is my sleeper pick. It has wonderful weather, is a strategic location for logistics along the border and shipments from Asia. It’s 2 hours from LA for those who rather not be involved in the Hollywood life but want to have the optionality to visit. It’s a growing life sciences market. I haven’t heard too much about tech in the area but would make sense as a place where people migrate to away from SF. Finance bros typically follow tech migration but doubt the big financial firms would set up any meaningful presence in the city.
4. Seattle - Just throwing this in because I like the feel of this city. It has a highly educated workforce, a plethora of corporate giants are HQed in the area, and has a lot of natural scenery. I think the city realizes it had a mass transit issue and is working to create a robust system. Would actually be an amazing economic idea to connect Seattle, Portland, and Vancouver with high speed rail.
Last point, I think folks who are investing in inland markets such as Atlanta, Dallas, Nashville, and Charlotte are in for a rude awakening if the strategy is to hold. I consider these markets to be fool’s gold. The way I see it, these markets are surging now due to the mass COVID migration from large cities in a short amount of time. In another 4-6 years, these markets will probably have ample supply to meet the demand. Those markets do not have any geographical or political limitations. They’re seen as business friendly and the environment allows them to build pretty much anywhere considering there’s no geographical barrier surrounding these cities. Pretty soon, replacement costs will be lower than buying an existing asset.
Disagree on Seattle and San Diego. Both are priced extremely high and due to this they are starting to see migration out of these areas. Doesnt help that the state governments are also a pain to deal with. Amazon saw this coming a mile away and thats why they decided to put their HQ2 in NoVa.
If I were a betting man, I'd say NoVa and most Florida markets will excel. NoVa has been pulling in corporations from around the country. The governor is pro-business Republican (ex-private equity), probably one of the smartest republican governors and does believe in things like Covid, so he's a realist. Boeing, Amazon, and plenty of other companies are being pulled to the area. Also helps that you have a great metro system, international airports, and are adjacent to the nations capital. Housing prices in Fairfax and Loudoun still cheaper than Seattle/Austin/San Diego, etc. Plus add in the fact that Loudoun county has the highest median income in the country and you got so much potential.
Next up is probably Florida in general, maybe Tampa more so. The prices are still reasonable, but yes Covid pushed these higher once WFH became a big thing and people moved south. I don't think Miami has the boom potential like Tampa because in part Miami prices are already nearing prices or beating prices of most metros. Tampa is also seeing good expansion northward in some really nice communities.
NOVA all the way. Look at the current and planned development at Reston Town Center by BXP, and all of the other massive places planned by other large developers along the entire metro line out of DC.
Great schools in the area as well! If you want more tertiary markets near NOVA, check out Frederick County and Howard County MD. Frederick has great commute paths into DC/Bethesda/NOVA on 270, and a growing downtown, not to mention great schools.
Howard County is similar to a Fairfax, but with more supply constraints considering a ton of the land is off limits per “forever farmland” restrictions. Consistently a targeted place to raise a family for high income individuals in the DMV area due to its equidistance to DC and Baltimore, and amazing school system. Howard has seen steady home price growth over the years. It may not be the home run pick, but easily at least a double over the next decade.
Others have mentioned it above, but Northern Virginia is killer in terms of location. Home prices are expensive but still lag behind other major metropolitan areas, especially factoring in how safe and amenitized the region is and how strong schools are. While I haven’t looked for myself I have heard that median rent as a % of median income is actually quite low in Nova compared to other national markets.
Rosslyn-Ballston corridor is plain awesome. Metro is actually a decent form of public transit, especially on VA side. Overall just a very strong blend of quality of life and cost to live (not calling it cheap). Extremely high levels of education and income anchored by federal government across river and business friendly counties. The catch is that the people here absolutely blow. I would want to monitor oversupply/overbuilding in the next 5-10 years too.
A little surprised at all the Miami comments. Miami is a notoriously cyclical market and the long term prospects are awful. Cost of living is going to absolutely skyrocket given the effects of global climate change. Who wants to live in state that is battered by hurricanes every year? Who wants to live in a city that might be underwater in 10 years? The reasons to live in Florida generally have exceptionally little to do with urban attractions and more to do with weather and tax regime, neither of which Miami is particularly well placed vs the rest of the state to exploit. The politics (in Florida in general) get more and more deranged. All well and good to talk about major infrastructure projects that might make the city more livable, but Florida is known as a low tax state, and the aging retiree population has historically shown little interest in paying for things like schooling or infrastructure, and that will likely continue. Historically, Miami goes through boom and bust cycles because it's a place for people to buy second/investment homes; the whole "lets everyone go to Florida" exodus in early COVID saw a major bounce back, because a lot of wealthy urbanites realized living in Florida full time kinda sucks.
Personally, I think good bets are secondary cities in the north and northeast, especially ones that used to be more prominent. Cleveland, Pittsburgh, etc. Places with strong in-place infrastructure, excellent healthcare, relatively little to worry about in terms of extreme weather/climate change, centrist governments, low housing costs (at the moment), etc.
I guarantee you Miami won’t be underwater in 10 years. Maybe the keys but even then it’s a reach. Deranged politics? The population loves the government. Sure cost of living will go up but compared to other large cities it’s peanuts. That’s what happens when a city grows right?
Biggest risk are the hurricanes and flooding but guess what you have plywood and hurricane shutters. Voila. You obviously been to Miami like three times in your life
Right, but the appeal of Miami is, in part, the low cost of living. When the cost of living goes up (and again, it has nothing to do with the size of the city in this instance and everything to do with the growing cost of global climate change)
You have no fucking clue what you're talking about. Hurricanes do billions of dollars in damage when they make landfall. This isn't an issue of "I'm going to die in a Hurricane" it's "my insurance premiums are going to be tens of thousands of dollars and I won't be able to afford a home in Miami/Florida".
So from a real property investment standpoint, Florida is set to see massive increases in running costs, which makes it (to my mind) a bad bet for major appreciation
Miami actually has a pretty good public transit system in the form of metro, buses and the trolleys and they have extremely good medical care as well so I think you’re off base on the infrastructure piece here.
”Deranged politics” is a very odd statement because the residents of the Miami and the state are voting. They get what they wish for, even if it’s not what you want.
Even if Miami actually goes underwater, the city will just shift to gondolas and ferries and businesses will run on higher floors of all their buildings. There’s simply too much money in the area that people will just abandon the city and leave.
Rust belt around the great lakes with plenty of water and established infrastructure 50 years from now will see a big reverse Sunbelt migration due to global warming, when winter avg. temp is 50 degrees in Minneapolis and summer is 120 in Phoenix and drinking water in the west has to be rationed. Florida will just be tattered hurricane ruins and California will be bankrupt if it hasn't fallen into the ocean yet. Where will the manufacturers go that consume water? Like why are semiconductor factories being built in Phoenix?