You should aim for the wealthiest buyer market possible.
None of the following applies to cash flow properties. This is a set of observations on creating an optimal strategy for 'forced appreciation.'
1. People will take on a ton of debt.
Whatever your feelings are about debt for yourself, a great concept to recognize is that other people will indebt themselves enormously (and banks and the government and family members will assist those people in indebting themselves) for the purpose of buying a place to live.
If this rule applies to a young couple trying to scrape together a $10K down payment, it applies equally to a lawyer and a doctor making $500K per year. Society generally agrees that borrowing a ton of money is okay if one is doing it to buy a house. Why not be the person who receives the net proceeds of that enormous borrowing? Much better to aim for the folks who can borrow a million bucks instead of the ones who fight to borrow $200K.
2. People buy homes based on feelings.
If you can create (develop, redevelop, flip, fix up) a place for people to live that "feels" like a million dollars (and you have chosen a market that supports million dollar valuations) you will get a million dollars for your work. People who work in complex, highly-compensated jobs seldom have the time or the desire to take on home improvement or construction etc.. It would be quite a stretch for any person to raise the resources necessary to build a Lexus or a BMW or a Mercedes automobile franchise from scratch. At the same time, once you have done a $25K cap-ex flip, you know most of the ropes for doing a $250K renovation flip or even a $1mm renovation. You can build one-off luxury (the house version of a Mercedes), if you are in the right market.
3. High income people will be able to borrow and buy even if times are tough. If you are taking on the risk of rebuilding a house, you might have uncertainty about when you will finish, how much it will cost, etc. Valuations are not low generally now, in many markets. So how does a flipper 'hedge'? Ironically, in my opinion, the best hedge is building a quality, expensive product that will sell in all circumstances. You limit your downside by putting more chips on the table.