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8 Homerun Housing Markets of 2022 (and Beyond!)

8 Homerun Housing Markets of 2022 (and Beyond!)

39 min read
On The Market Podcast Presented by Fundrise
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When choosing a 2022 housing market strategy, you’ll need a few key ingredients. Things like job growth, population growth, affordability, and new construction are just a few ways to see whether or not a real estate market will stand the test of time. As the housing market begins to see some stalled demand and we enter into potentially “bubblicious” territory, the smart investor begins looking for the best place to park their money for the long term.

Back again for our second episode of On The Market is VP of Data and Analytics at BiggerPockets, Dave Meyer, buy-and-hold addict, Henry Washington, head honcho of wholesaling, Jamil Damji, and our resident Californian, Kathy Fettke. This time, we’ll be touching on the latest data and news claiming that the US is starting to enter into a housing market bubble and how demand has sharply declined since interest rates have begun to rise.

We also share our favorite 2022 housing market picks for investing, with some markets you’ve heard of and others you may have never thought to invest in. If you want to get ahead of the curve while dodging the housing market hype, you’re in the right place.

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Read the Transcript Here

Dave:
This is On The Market, a BiggerPockets podcast presented by Fundrise. Welcome everyone to On The Market. In this episode, we are going to be exploring headlines through a game called News or Noise.
Then, we’ll be talking about how to pick a great market to invest in. Our panel of experts are going to bring their favorite markets in the US, and we’re going to bring in your help to vote on the best investing market in America.
Okay, let’s jump up into our A block today, which is Between the Headlines. Just as a reminder for everyone, if you weren’t here for the first show or just need a reminder … This is where we break down this week’s top stories in a fun and interesting way.
This week we have an awesome panel, as we always do. We have the genie of wholesaling, Jamil Damji. The wise investor of woo-woo, Kathy Fettke. And the buy and holder, Henry Washington. How are you guys doing?

Kathy:
Wonderful.

Jamil:
What’s cracking?

Dave:
I miss you guys. It was so much fun having you in Denver.

Kathy:
I miss you too.

Dave:
I haven’t even known you guys that long and I feel like we’re all old friends at this point.

Kathy:
I haven’t been fed like three meals an hour for a while.

Dave:
I know we got to get back to BiggerPockets headquarters, and they’ll just keep pumping us full of food as we keep recording.

Jamil:
Guys, BiggerPockets feeds you.

Kathy:
Yes. In so many ways.

Dave:
That was deep. All right. Let’s jump into this week’s game. We’re going to play a game called News or Noise. It’s pretty simple. I am going to read you some headlines, some background information. You tell me if this information is news or if it’s noise.
The first story this week is all about jobs in the US. Recent data that just came out showed that US first-time unemployment claims fell much more than expected, and are now at the lowest rate they have been since 1968.
Other data that was released earlier this month shows that the unemployment rate is now right at where we were pre-pandemic. At about 3.6%. Henry, let’s start with you. Is this news or noise?

Henry:
I call it news. The unemployment rate is lower. That means more people are working. If more people are working, more people are making money. If more people are making money, then you’ve got more people that are probably wanting to buy houses.
Positive news. You couple that with interest rates going up … Maybe it flattens itself out, as far as buyers are concerned. But if people are working and people are making money, then there’s more money out there. And there’s more people looking to buy houses. Positive for real estate investors.

Dave:
Jamil?

Jamil:
It’s noise to me. Because if there’s all these people taking all these jobs … I want to know. Where are they? I can’t find them. I can’t find them at the movie theater. I can’t find them at the restaurants. I can’t find them anywhere.
People are not working. So if everyone’s going back to work, I want to know, “Where have you gone to work?” Because that’s where I want to go. Because I’m looking for people to help me.

Dave:
Dude, I totally agree. Everywhere I go … I don’t know if it’s people are not working or what is going on. But every single business I’ve been to at least claims that they can’t provide the normal level of customer service, because there was a shortage.

Jamil:
Right?

Dave:
I don’t know if that’s true or if they’re just coming up with excuses. But the level of customer service at every single business seems to be down considerably.

Jamil:
Everything is down. Guys, I don’t want to come off as Bougie Beau over here … But even First Class. When you’re flying, First Class sucks.
There’s no ice cream. There’s no towels. There’s no nothing. I’m just waiting for the seats to get small. I’m waiting for the seats to get small.

Dave:
That’s so sad. Your champagne worries.

Kathy:
You’ve got to get a private jet.

Dave:
All right, Kathy. What do you think about the jobs report? News or noise?

Kathy:
I think it’s definitely news. We are in a very strange time where there’s … We just came out of this crazy one-year or one-month recession. Whatever it was. It was a scary time in March of 2020. Here we are, already recovered for the most part and with over 11 million job openings.
That is news. And so, where are these people? That’s the big question. Are there so many people retiring? Did people decide staying at home was really a cool thing? “It’s not mandated, but I like it.” I hear there’s people that are taking care of others, so they can’t get the job.
They’re either taking care of the elderly or they realize, “Well, I think I just want to take care of my kids and not have someone else do it.” I hope we’re not going in the way of some other countries, where they don’t have enough workers for the jobs that are needed, because of an aging population and not enough babies.
But we do have more younger generations than some of those other countries like Japan and China. But it does feel that way. Where are the workers?

Henry:
Look. Jamil needs his towels. I get it.

Kathy:
Absolutely.

Jamil:
Guys, let’s not focus on that. Okay. Let’s just go back to the movie theater.

Dave:
No. Everyone go have more babies, so Jamil can get his towel in First Class.

Henry:
Everybody’s in their first 30 days of orientation. They’ll show up in about a month. It’s fine.

Kathy:
You know what’s interesting? My nephew, who is a classic Gen Z-er, he’s like, “Auntie, a bunch of my friends have three jobs. Three full-time jobs. They work like three hours at each.”
And so, if that’s true, these young tech kids … They’re raking in the dough, but taking up three jobs. And there’s still all these jobs.
But it could be those job openings are in lower paid jobs, where we perhaps aren’t grooming that demographic like it has done in the past, which is usually through immigration.

Dave:
It’s a good point. It does really feel like … Whether it’s workforce participation, the birth rate, or immigration. We have about 11 million job openings right now. And I just don’t see where those 11 million people are going to come from at the current rate.
I also think this is interesting news, personally. Just because the only thing that was keeping the Fed from really aggressively raising interest rates was they wanted to see full employment. We’re pretty much at full employment. They’ve already indicated they’re going to go really aggressive raising interest rates. And this is probably just more green light for them to do just that.
For our second story, Redfin has released some data that they are starting to see early signs of the housing market slowing down. This is not being reflected in prices, certainly. But they have some internal metrics that show that home buyer demand is actually starting to scale back.
They’re seeing less online searches and applications for mortgages are down over this period last year. Kathy, is this news or noise?

Kathy:
Again, I would say it’s news. This is a shock to the system. It’s sticker shock to people who were really spoiled over the past couple of years. A large demographic who’s just looking into their first-time home.
Things were affordable at a 2%, 3% interest rate. Now, as it’s gone up, it’s terrifying those younger people that maybe just don’t know that it’s still low. These are still really good rates, but it does affect affordability for a lot of people.
It’s news. We are in a changing market. We are in a changing market. It’s still a good market. You just have to look at things a little bit differently.

Dave:
Henry, what do you think?

Henry:
Meh. It’s news.

Dave:
Enough said, “Meh.”

Henry:
Yeah.

Kathy:
Totally know what you mean.

Henry:
It’s technically news. But when you look at the perspective of homes and rents … Rents are also increasing dramatically. And so, these people that aren’t buying homes or are not buying as many homes right now have to live somewhere. And I think what you’re going to start to see is that rent increases haven’t caught up yet.
There are still landlords that haven’t raised their rents to these new market rates. And so, as those leases come due and they start raising those rents, people are still going to do the math and say, “Well, I can rent this for $2,000 a month. Or I can have a mortgage payment of $1,900 a month.”
Even though that $1,900 is more than the $1,700 I would’ve got three or four months ago, it’s still better than paying this new rent. And so, I think … There’s still so much demand. There’s still more demand than supply. And so, it’s news.
It’s slowed down a little bit. But once rents catch up, and all these people show up to work that we just talked about, then I think you’re still going to have a bunch of buyers out there.

Dave:
Jamil, what do you got?

Jamil:
Right now, I think it’s news. I’m noticing just in our flipping business … Typically, when we would put a property on the MLS, we’d have showings immediately. We’d have offers immediately. And that has actually slowed down.
In the last week or so that we’ve put on four new flips, it’s been tremendously slower than it was weeks prior. And so, it makes sense to me. If Redfin, a technology company whose algorithm and whose data people are actually looking at … How many people are searching? How many people are looking? What are they looking for?
If they’re seeing that’s tremendously down, or if that’s taking a downtick, then that tells us something. I like reading the writing on the wall. Especially, from technology companies that are tracking this information.
Because it gives us a glimpse into what’s coming around the corner. I think it’s news. I’m actually paying attention to it. We’re going to be pricing our flips more aggressively, because I hate days on market. I think it’s news to me.

Kathy:
Dave, it’s like if the Fed says that they want to slow down the economy, they’re probably going to do that. That is the biggest metric to look at, “What’s the Fed going to do with interest rates?” Because they intentionally want to slow things down and they usually get what they want.

Dave:
They tend to do that. Jamil, though … Are you seeing this to the point where you’re getting less offers? Or you’re getting no offers?
Just generally speaking, is it actually affecting your business? Or is it just you were having 10 over-asking offers and now it’s five?

Jamil:
This week, we’ve had none. It’s a huge difference than it was just last week. Now again, guys, I’m at a cross section of the United States. My flipping business is my flipping business. Maybe we were aggressively pricing. Maybe we were a little bit high.
We’ve been coming off this drunken party that we were just at. And so, the hangover right now is still there. It’s possible that we might have just been a little bit overpriced in our property. And so, I’m looking at it … The fact that, just this last week, we literally had no offers.
That would never happen. Our flips are gorgeous. We would always get at least showings. People talking to us. Agents saying, “Hey, I think you might be a little overpriced.” Whatever that is. It’s been silent. Radio silent. Something’s happening. I sense it.

Henry:
Definitely, market-specific. For sure. I’m in a much smaller market, a much lower price point. And so, much more quote, unquote, affordable, if you look at a national perspective.
I’ve seen a downtick in offers, but a small downtick. Instead of nine offers, I’ll get seven or five or something like that. But they’re all still really competitive offers.

Dave:
All right. Well, that’s a good segue to our last story this week, which is that the Dallas Fed came out and said that they are worried that the housing market is in a housing bubble.
They came out and said that the behavior of people in the housing market is unhinged from fundamentals and abnormal for the first time since the boom of the early 2000s. Jamil, I can see the anger on your face building up right now. Is this news or noise?

Jamil:
This is noise. Okay. What the hell are they doing? The Dallas Fed. The fact that it’s the Dallas Fed. Guys, quit shooting your guns in the air. Let’s pay attention to what’s happening in the world. All right? Honestly, calling a housing market, “Unhinged.”

Dave:
Sorry.

Jamil:
Unhinged? It’s irresponsible to me. I don’t like inflammatory language. Especially, when we’re talking about a body that has so much influence. They carry a lot of influence.
To use words like “unhinged” and “abnormal” and make a statement like that. I think it’s irresponsible. And I think it’s unfounded. Yosemite Sam, come on. Let’s stop it.

Dave:
Kathy, what do you think?

Kathy:
Jamil, I think the housing market is unhinged. No, I really do. It’s an incredibly unhealthy housing market. We just look at certain areas like Phoenix. Rents went up how much?

Jamil:
It’s like 30%.

Dave:
30%.

Kathy:
30%. In Boise, in Austin, home prices went up 50%. That’s not healthy. That’s not good. Now, as investors … Sure. Who doesn’t want to make a lot of money? But we can’t be so selfish and only think about what’s good for us. We’ve got to look at what’s good for our world.
For somebody trying to buy a house, it’s now 50% more than it was last year. That’s just not normal and not sustainable and not healthy. That’s why the Fed maybe has woken up and said, “Maybe we were giving out a little too much free money. Maybe we were making this a little too easy.”
At a time when it really wasn’t needed. The Fed is supposed to come in when there’s a horrible recession. Of course, there was in COVID, but it was a forced recession. People weren’t allowed to work. It was a pretty strong economy before that.
Obviously, when people weren’t allowed to work, they needed to do something. But they kept that going way too long. And things got out of control. If there had been a way to raise interest rates just for mortgages … I know the Fed doesn’t really control that.
Maybe that would’ve kept things more in line with a steady growth? But we’ve got a situation where … Or if there was a way for more money to go just to new construction and make that easier. But all at once, it became super affordable with low interest rates to buy housing. At a time when there wasn’t enough supply and it was really hard to bring on new supply.
And then, you have this massive Millennial generation. Right at the peak home buying age, with the largest group of Millennials. It all came together at a time that … Again, it was great if you already owned real estate. For those who do? You just made a ton of money.
But for those trying to get in or trying to rent? It’s going to be really difficult. It’s hard on families. And that’s just not healthy. I would say there’s a bubble. The question is, “Will it pop?” I do believe there’s a bubble. But I don’t think it’s going to pop. Kind of a weird situation.

Jamil:
Don’t all bubbles have to pop though? Would it be called something else if it’s not going to pop?

Kathy:
Wow. I’ve never defined a bubble before. Thank you.

Jamil:
I think we’ve got to …

Henry:
It’s a spike.

Jamil:
Is it a sphere?

Henry:
It’s a spike.

Kathy:
Maybe it’s a globe?

Jamil:
I don’t know. I don’t know if we can call it a bubble, if it’s not going to pop.

Henry:
It’s a spike. We’ve talked about this before. Real estate as a whole, when you look over time, is an increasing trend line. Just like any stock or trend that’s either always going up or always going down. When you zoom in from the macro into the micro, you’ll see that is really peaks and valleys. Peaks and valleys.
But overall, it’s trending up. This is obviously a peak. And so, will it come down at some point? Probably. But right now, all the indicators are saying that things aren’t really coming down. My take? This is noise. You’re still going to be able to … You’ve still got people who need to buy homes, who want to buy homes, and who are figuring out ways to buy homes.
This isn’t like 2008 with subprime lending. A lot of these homes that are going over asking price are not the lenders giving them more money. It’s their appraisals coming back under value. They’re just saying, “Well, I’ll throw an extra 50K at this house, so that I can get in there.” It’s those buyers that are throwing the extra money.
And so, the buyers are saying, “The appraisal is this. But this house is worth more than that to me, so that I can own a home.” It’s a different reason for people overpaying for homes. The people in the market are dictating what they’re saying the home is worth to them. That is essentially what makes home prices go up. Because now, we comp the rest of the homes based on what they’re selling for, once we get closed sales.
Man. To me, it’s noise. People are still figuring out ways to buy homes. Is it harder for some people to buy homes than it was a year or two ago? Absolutely. But there’s still always been a subset of people who are just on the cusp of being able to buy. That subset is just a little larger right now. When tides change and the economy shifts a little bit, then it’ll be a little easier. It’s the way real estate has always gone.

Dave:
That’s a great point. I think that, one, the terminology here really matters. Because it seems that people who look at the housing market and say, “This is insane. It is unhinged. It is a bubble.” Some people do genuinely believe that. But I think it’s important to separate the idea of a bubble, which as Jamil and Kathy were just talking about, has to pop.
Or is it just a super unhealthy housing market? Because that’s how I see it. I don’t necessarily think it’s going to pop and we’re going to see a 20% decrease in prices. But I do think what is going on right now is abnormal and is probably not good for anyone.
It’s not good for the housing market. It’s not good for home buyers. It’s not good for investors. This is not a sustainable thing. Personally, I think we’ll see housing prices go down in the next few years at some point, but not to pre-pandemic levels. I don’t think this is going to pop in that way. I think we’ll see it go down 5%, maybe 10% at the very most.
In my mind, that’s not a bubble. That is a normal economic cycle where asset prices do go down. But that’s just me. Kathy, what do you think about that? When you think it’s a bubble and it’s unhinged … Do you think we’re going to see a huge retraction in prices at some point?

Kathy:
Well, I just want to say to Jamil, you must not have been very good at chewing gum. Bubble gum. Where you get really good at practicing blowing bubbles that don’t pop. No, I do think that this is inflated. But I think it will, depending on what the Fed does … It all comes down to what the Fed does.
If interest rates go up a lot this year, then it could be different than if they just do a slow raise of rates. Now, they’re talking about being more aggressive. To me, it all comes down to the flow of money and the cost of money. And that’s a gift. It’s a gift from the Federal Reserve.
I don’t think too many of us could just go out and buy a house with all cash. Some can. Most people can’t. It all depends on your access to money and the flow of money. The Fed controls that. The Central Bank. So if the Central Bank said today, “We’re just going to stop altogether. No more money for anybody.” You’d see a lot of problems.
They’re obviously not going to do that, but they’re going to raise the cost of money and they’re tapering how much is out there. They’re pulling money out of the market and they’re raising the cost. Will they do it right? We don’t know. There’s just a lot of unknowns. That’s why, for me, in my investing strategy, I’m going to stay in less Bubblicious markets.
I’m going to be … If I bought something in Austin or Boise, I might consider selling it today and 1031-ing into an area that isn’t so out of control. That’s why we choose … We’re going to be talking about those markets. But that’s why still our strategy hasn’t changed. I’m always looking for markets where the average person can afford the average rent or property.
I don’t want to be in an unbalanced market. Now, if I got into a market that becomes unbalanced, I might just take my money and run. Go to another market where it’s more stable. So that, for me … We’ll talk about that later. How you find those markets.

Dave:
All right. Great. Well, Kathy, professional newscaster over here. Putting in a perfect segue into our next segment, where we are going to be talking about the 2022 housing market and how to pick a housing market. We are going to start the process of anointing the best housing market in the country in 2022. We’ll be right back after this.
Welcome back, everyone. We are going to jump into our Due Diligence section. Just as a reminder. Each week on On The Market, we will have a Due Diligence topic, where we dive into a super important topic for real estate investors. Today, what we’re doing is we’re going to talk all about selecting markets to invest in.
We’re going to have brief conversation about what indicators and data everyone on the panel looks at. And then, we are all going to pitch our favorite markets and have you, our listeners, vote over the next couple of weeks on the best housing market to invest in, in 2022. You guys ready for this?

Kathy:
Ready.

Henry:
Sure.

Jamil:
Yes, sir.

Dave:
All right. Jamil, let’s start with you. When you are looking at a market either to wholesale, flip in, or buy a long-term rental in. What are the main indicators or data points you start with when trying to narrow down where to invest?

Jamil:
Well, for me, population growth and jobs are really important. And so, I’m looking at … Do we have net positive population growth? If we do, what industries are moving into that market? I want to understand. How are people going to be earning a living?
Are we going to see trends that are going to attract more people to that specific market? For me, those two pieces are my primary pieces of information. Then, I’m just looking at median housing prices. Is it still an affordable place to live?
And if I can hit those three things in a nice, cohesive way … I’ve got great population growth. I’ve got affordability. And I’ve got good industry. To me, that makes sense. That’s where I’m going to be placing my bets as a wholesaler.

Dave:
What about you, Kathy? You were just talking about staying away from Bubblicious markets. How do you avoid those Bubblicious markets?

Kathy:
Well, I like to get into those markets before they bubble. That was what we did back in 2005. We were buying in Dallas. I can’t tell you how many people just thought I was crazy. Because they looked at the past. “Prices have never gone up there. There’s nothing but land.” But the metrics we were looking at is exactly what Jamil said.
There was job growth, population growth. It doesn’t matter how much land is there. It takes a while to get things up and running. You need utilities. Looking at the markets that we’re interested in, we want to make sure that it’s affordable currently, but that there’s going to be changes coming.
Because I like a dirty little word in real estate. I like appreciation. I know most people say, “Just look at cash flow,” but I’m from California. All we know is appreciation. So I still want to find it, but I want to at least have all the expenses covered with some cash flow left over.
But mostly, expense is covered. We want to see an area that’s been historically pretty linear, stable, affordable. But something’s about to change in that market. There’s a big employer coming. Or a lot of job growth. Or in this case, we’ve got migration patterns that are really changing things.
People from high price markets are going to other markets that are extremely affordable to them. Those are the main things. I like everything Jamil said. I actually think he might have copied my preparation for this.

Jamil:
No. No. Kathy, I was channeling you. Because I was thinking, “Hey. Californians make California into the rest of America.” You guys just want to just make everywhere California. I get it. I understand it. I understand it.

Kathy:
And then, we go somewhere else and we’re like, “I want to go back home.”

Jamil:
This place needs to be more like California. How do we make this place more like California?

Kathy:
It’s true … Honestly, a lot of people are saying, “Get me the heck out of California.” That’s what we’re seeing. Some of these areas where people had to live, because that was where their job was. Job centers like New York and LA and San Francisco.
And so, you’re forced to live in a very expensive place that was maybe just a room. Just a studio and not much for you. Now, that is shifting. That is shifting thanks to technology. And that’s not changing. Technology’s going to make it easier and easier for people to live anywhere and not have to be crowded into an inner city, into a big city.
Again, that’s what we look for is, “What’s happening?” And so, in addition to everything Jamil said, I love to see population growth and job growth. But once you see those metrics, you might have already missed it. Getting in before that is finding out where the infrastructure is changing.
Again, when we decided to invest in Dallas … Oh my gosh. Almost 20 years ago, what we saw was massive construction of infrastructure. There were new freeways going in. New headquarters going in. New hospitals. New schools. That tells you something. That’s preparing for population growth, so you get there before everybody else.

Dave:
Henry, what about you? I know you’re mostly focused in your own local market. But are you looking at new markets?
Even within your own local market, how do you try and identify neighborhoods or specific areas of the state that you’re particularly interested in?

Henry:
It’s similar to what Kathy said. Also, that’s how you know Kathy’s got all the money. Because she’s like, “I just want appreciation. Who needs cash flow? I got cash flow. Just give me all that appreciation.” That’s a good boat to be in. I like that.

Jamil:
Cash flow is so boring.

Henry:
Money every month.

Jamil:
Cash flow is so middle class. Ew.

Kathy:
You need both. You need both.

Henry:
Kathy wants appreciation. Jamil wants First Class. It’s cool. I’m just over here in Arkansas buying a $50,000 [crosstalk 00:27:59].

Jamil:
I want wet towels.

Henry:
Right.

Jamil:
Oh boy.

Henry:
Look, I look for similar things in market growth. Am I actively looking outside of my market? Kind of yes, kind of no. I have started to buy about an hour or 45 minutes away, in Southwest Missouri. The reason I’m doing that is because my market that I’m in now is starting to get more popular … For reasons that we’ll talk about later.
I’m just trying to be strategic. And so, what I looked for is … What are some areas in a short driving distance that I feel like have strong enough jobs and industry that it’s still going to demand that people need and want to live there? But it might not be as cool or sexy as some of the markets around it.
Because what happens is … It’s like the Austin, Texas effect. Before it was cool, people were buying in Austin. And then, as it started to get more cool, the buying starts to spread. The town gets bigger. People are willing to buy a little further out. And so, I just started looking at, “Where is a market that’s close?”
Not as cool or sexy, but that has the solid fundamentals. The jobs. Steady population. It doesn’t have to be massive growth. As long as it’s steady and the jobs are jobs that aren’t going anywhere. I love what Kathy and Jamil said about looking at jobs and industry.
What I like to look for is … Yes. What jobs or what industry is there? And then, what types of industry is it? Because I really like industry that is definitely not going anywhere or growing. If you’ve got tech companies, that’s amazing. Because then your workforce moving in is going to be younger.
We all know that technology is not going anywhere. It’s just improving. And so, I also like healthcare. And I like the mix of both. I like biotech, where you get a mix of the technology and the healthcare. And so, I’m looking at, yes, does it have jobs? But does it have jobs that are on the rise?
Whereas, if the economy is built around manufacturing or blue collar … Some of that stuff is starting to taper down. And so, I just pay attention to what that is. And then, I like to look at what everybody else is doing and where everybody else is investing. And then, not do that.

Jamil:
You’re contrarian.

Henry:
It’s like that with most things in life. If there’s something that you want to be good at, if there’s something that you want to be exceptional at, look at everybody else that’s doing it. And then, find the niche that’s what they are not doing.
And so, for me, I’m looking at markets that meet all these criteria, but that are also places that people say they don’t like. Because if they have all of these factors, it has all the formula.
It’s perfect for making money. It’s just not sexy. And so, people don’t want to buy there. Not because the numbers don’t make sense, but that it’s just not sexy. I like to look for that, “not sexy,” factor with all of the right metrics as well.

Dave:
Henry, where do you find this data? Is there any one source? How could people listening to this follow in your footsteps and look for that type of information?

Henry:
I absolutely use this super ninja tool. The internet and Google.

Dave:
Tell me more.

Henry:
No. But in all seriousness, it just takes a little leg work. We can’t trust every internet source that we find. But when you look at … When I’m doing research, I’m typically looking at three or four different articles speaking about the same thing. And then, I figure the truth is somewhere in the middle.
And then, if you take that and you couple it with a trusted source … You can pretty easily get on BiggerPockets and hop in the forums and do some searches, and find out similar things that actual investors in the market are saying. Or connect with somebody who’s in that market that can verify some of this stuff.
I think what happens is people just want to type it in Google, get an answer, and be like, “Perfect. This is the word. Now, I’m going to go throw hundreds of thousands of dollars at this market based on this.” Just do a little bit of extra research. If you can’t find a viable source, or if you don’t trust the source that you’re reading, BiggerPockets is a huge resource to find actual people doing deals in every market in the country.
Just take the extra step to connect with somebody and try to verify some of your statistics. Or spend a couple hundred dollars on a plane ticket and go. If you’re going to spend thousands upon thousands of dollars buying property there, you can spend a couple hundred on a plane ticket to go there.
Research for yourself. I don’t know why people rule that out. And I only said a couple hundred dollars, because we’re probably going to fly coach. Jamil is going to fly First Class, so he’ll spend like $1,000.

Jamil:
Henry, don’t front, man. You don’t fly coach.

Henry:
Well, I can’t fit in coach. I don’t have an option. I am coach, so I have to fly First Class.

Dave:
Henry, I love that advice about going and visiting a market. Because I am doing that right now. The reason I’m in this beautiful hotel room, as you can see in my background, if you’re watching this on YouTube, is because I’m in central Texas. Going to look at a couple different markets to drive around.
I flew here and there were no towels and there was no ice cream. And it was very disappointing, because I was in the last row of the plane. In the middle seat. Crunched between two people. It was not very enjoyable, but very worth the money to come here and see this for myself.

Henry:
I’m the guy you get stuck next to in coach.

Dave:
We’d have a great time. All right. Before we go into our pitch, where I want to hear what you guys think are the best markets in the country … Jamil or Kathy.
Do you guys have any other thoughts on where our listeners can find good data? Or any tips on doing research on good markets?

Jamil:
I like the data that Redfin is releasing. I think that they’re paying a lot of attention to what’s going on. I’ve been reading The Wall Street Journal as well. That’s been, for me, my two main sources of information. What about you, Kathy?

Kathy:
We used to use City-Data a lot. That seems like they’ve changed their metrics, which is a bummer. Because it would show you … Unless, I’m just using it wrong. But it would show you changes in wages and crime rates. But traditionally, for me, it has been calling.
First of all, we have a big network. And I had a podcast. One of the first ones, so I would get a lot of feedback just from people, boots on the street, what people are doing. And then, I would jump on a plane and go meet with the planning commission. Go to the chamber and just find out what’s going on.
And then, another source is property managers. That was in the beginning. Still, I want to know what they know. They know. They know who’s calling, where they’re coming from, what their jobs are. It was always … When I went to a city, I would meet with 10 property managers to find out.
They would show me maps and they’d say, “We’re getting calls from here. I don’t know why.” And then, I’d look into it. “Oh. There’s this big job. This company moving in there,” or whatever.

Henry:
That’s an amazing tip. Property managers are a huge source. An underrated source of information. And I think another underrated source of information are title companies. They’re doing all of the closings for all of the things that are happening.

Jamil:
Yes.

Dave:
Really good tips. I’ll also say just as a reminder … If you didn’t listen to the first episode, we did give away a ton of great data in our first ever data drop. You can go to biggerpockets.com/datadrop and check that out.
If you want to get more rent data, we have a lot of that in BiggerPockets. I also highly recommend the FRED website. I don’t know if you guys ever use that, but it’s the Federal Reserve Bank of St. Louis.
They aggregate a lot of government data like unemployment rates. Or what Henry was talking about. Looking at what industries are growing and where jobs are. They have a lot of that kind of data. It’s all entirely free that you can get that there for yourself.
Okay. Now that we have talked about what you guys look for in a market, I want to hear your best two markets in the US right now. I was very inspired by watching some March Madness over the last couple of weeks. We’re not going to do a 64-city tournament. I think that’s a little too much.
We’re going to start at the Elite Eight. Each of us are going to give two of our top markets and we’re going to explain why. You’re each going to get, let’s say, two minutes to pitch why the market you like. And then, we are going to take this all to social media and everyone who’s listening here can vote on which matchup.
We might have one of Henry’s cities versus one of Kathy’s. You’re going to be able to go on the BiggerPockets Instagram and social media channels and you’ll be able to vote there. Henry, let’s start with you. Pitch us your top market in the US for investors right now.

Henry:
I have selected two. But one of the ones I’ll talk about outside of my home market is … I like Cleveland. I like Cleveland, Ohio as an investor’s market. I talked a little bit about looking for industry and what types of industries are there. I also talked about looking for those metrics in areas where people think it’s unsexy.
If it’s a sexy part of the world and it has all these metrics, most everybody’s seen it. But sometimes, just the fact that it’s a cold place, or a place that has sports curses like Cleveland … People just tune out to how amazing of an investment market it can be. And so, the things I love about Cleveland.
What I look for in a market is I want to grow and scale my portfolio. It’s easier to grow and scale your portfolio when your median home price is on the lower end of the national scale. In Cleveland, you’re at $115,000 right now for a median home price. It’s the 34th largest metropolitan area in the US, but you’re still at about $115,000 as a median home price? That’s amazing.
But if you look at the rents, average rents are at $1,000. $1,050 a month. That’s insane, man. That’s really good cash-on-cash return if you can buy the right house. And so, with it being such a large metropolitan area, you start to look at the jobs. What are the jobs? What’s keeping people there?
You look at technology. They’re big in biotech. They’re big in fuel cell research. They’ve got a NASA research center. They’ve got the Cleveland Clinic. Healthcare is massive there. Tons of hospitals. Tons of schools. This is industry that’s not going anywhere. You’re always going to have jobs.
You’ve got a huge traveling nurse population. That’s great for short-term rentals. And then, you’ve got your home values that are increasing. They’re up 23%, but your price to enter is still fairly low. And so, that number isn’t too intimidating. And then, 50% of the population rents. 50% rents.
So it just seems like a great market if you’re a new real estate investor. Where you want to buy something … Where you feel like you’re not priced out of that market, but you want your money to be safe, because you feel like people are going to continue to live and work and travel to that area. Then, I think, what a great market to get started in.

Dave:
All right. I like it. Probably, one of the few cities in the US where you can actually find deals that meet the 1% rule on the MLS. There’s probably a handful in the whole country, but Cleveland is definitely one of them.
All right, Kathy. What is one of your two markets that you want to pitch to us? You’ve got two minutes on the clock.

Kathy:
I’m going to see if you can guess. Okay. All right.

Dave:
This is fun.

Kathy:
This city past San Francisco is the 15th largest. Redfin’s Data Migration Tool shows that New York, DC, LA and Chicago metros are searching the most to migrate to this area. It has high paying financial jobs and job growth is expected to be 45% over the next 10 years.
Very landlord friendly and affordable. Relatively speaking. Especially, for people looking from New York and DC and so forth. Around $350,000 for a new home. With prices going up 26% last year. Rent growth has been around 10%.
Not as massive as other areas, but that tells me there might be still some room for growth there. And a metro of 2.2%. I’m going to give you some more … You’re definitely going to figure it out, so I’m not going to tell. Any guesses?

Dave:
I feel like it’s in Florida.

Kathy:
Close. All right. This might give it away. But number one, it was voted number one in tech by some … They all have different voting, but this was CompTIA. So tech … This is going to give it away, though. NASCAR.

Dave:
Charlotte.

Kathy:
Charlotte.

Dave:
The amount of financial jobs, like you said, is unbelievable. There’s just so many big banks, insurance companies there. A lot of high paying jobs. The whole state just seems to be on fire right now.

Kathy:
You can’t say, “on fire,” to a Californian, because that just scares us.

Jamil:
Triggered.

Henry:
I’m sorry. It’s not on fire. It’s like a mudslide there. I mean, oh gosh.

Kathy:
It’s like a high tax … I mean, no.

Henry:
I’m from California. I’m from California. I can make these jokes.

Jamil:
That was just a tsunami of distaste. Well, I’m going to go full sex and bubble gum here. Because for me, as a wholesaler, I’m looking for flipping activity. I’m looking for appreciation. I’m looking for population growth. I’m looking for strong jobs.
I’m looking for a lot of Californians moving there. Because again, for what we do as wholesalers, we’re typically looking for opportunity for fix and flip activity. And so, my number one pick. And the reason for it is because of population growth. 2.79%. We’ve got a median household income of $102,876. People there are rich.
Not only that. But year-over-year, the rent growth was the highest in the nation. We’re seeing incredible, incredible, incredible growth in terms of jobs and different industries going there. It’s the 48th best city to flip in. It’s going to be none other than sexy, sexy, sexy, Austin, Texas.

Dave:
Going with the high price market. I am sitting in Austin, Texas right now. Just last night, I went out.

Jamil:
And you love it.

Dave:
It’s awesome. I went out to the South Congress neighborhood, which is that really iconic strip. I’d been there six years ago and it was already cool. There was a lot going on.
But I went out there last night. Just walking around. I saw two Ferraris, a Lamborghini and a Bugatti. It’s like, “Since when did Austin become Miami Beach?” It’s this really incredible place. There’s just so much money flying around here. It’s insane.

Jamil:
It really is.

Kathy:
I just want to go back to that … Oh, I’m sorry. I’m taking Jamil’s spot. But I’ve just got to.

Jamil:
No. You’re good.

Kathy:
It’s one of those places, when we talked about cash flow versus appreciation … I didn’t invest there 20 years ago, like a dummy, because it didn’t have as good a cash flow as Dallas. Dallas was still great, but I knew what was happening in Austin.
And I knew that from the San Francisco Bay Area. I knew that the tech industry was moving there, but it still was like, “I can get better elsewhere.” Again, if I had just put on my appreciation thinking cap, then I would’ve just bought and been okay with breakeven.

Jamil:
The thing about it is … Kathy, I know how Californians want to make California everywhere. I think Austin is becoming California faster than anywhere else.

Kathy:
Sorry.

Jamil:
And so, if we’re looking at massive, massive, massive appreciation. Sex and bubble gum. That’s what it is. I think Austin has a way to go still. And I think that it’s attracting a lot of liquidity. A lot of activity.
I’m really bullish on it. I’m not saying for the long term. I’m saying, for the next year, that’s where we’re paying a lot of attention.

Kathy:
And the slogan is, “Keep Austin weird.” Right? California’s going to totally help you with that.

Jamil:
Correct.

Dave:
That’s why we called you the wise woo-woo investor, Kathy.

Kathy:
Thank you. Thank you.

Dave:
All right. For my first one, I am going to Florida. It is a market that saw 28% year-over-year growth, and 30% year-over-year rent growth. And that is none other than Tampa, Florida. I’ve been saying this for a while. I think Tampa’s going to be the fastest growing market for 2022.
One of the things I really like about Tampa is that, although the rent-to-price ratio in the city is about 0.6, and I’m rounding there … You still can find some decently cash flowing deals in Tampa. I think that there’s huge appreciation prospects. Because you’re seeing tech companies move in.
There’s a huge healthcare presence. Henry was talking a lot about this, but Pfizer just brought in a new office there. Johnson and Johnson. Bristol Myers Squibb have good ones. And there’s something to say about good weather. People love the beach and they want to be close to good amenities. I think that’s why we’re seeing Florida blow up right now.
And I’ll just add two other things that I really like about Tampa. One, people seem to a love the, “no income tax,” States right now. That’s Florida, Texas. Washington also. But Florida and Texas, you see a lot of companies moving there for this reason. And I think that’s going to help Tampa.
One thing, as a data guy, I don’t know how to quantify this. That I also really like … This idea of having a geographic boundary in a city. Everyone wants to get close to the water, but you can’t make more beachfront. And so, those prices, the things that are close to the water and those amenities are likely to go up.
You see this in cities like Manhattan. It’s a tiny island, so everything goes up. But if you see in the Midwest, where things can grow out, there’s often less appreciation. That is my first round pick, is Tampa.
Just to remind everyone. First round picks. We’ve got Henry with Cleveland. We have Jamil with Austin. Kathy with Charlotte and me with Tampa. Jamil, what’s your second round pick?

Jamil:
My second round pick is a little different, but for the same reasons. Again, I’m looking at this as a wholesaler. I’m looking for flip activity. I’m looking for opportunity for a lot of housing that still needs to be repositioned. There’s a strong resale market over there.
Population growth in this market was 1.3%. We’ve got a population of 2.9 million. The median household income of $72,882. Big, big, big tech coming into this place. And it’s also the home of the BiggerPockets headquarters. How could you not place a bet there?

Kathy:
Right?

Jamil:
How could you not place a bet there? My second market. And I think that there’s a great opportunity here. It’s going to be Denver, Colorado.

Dave:
Just forget about Denver. Don’t even worry about it.

Kathy:
And the food.

Jamil:
I know you don’t want me to say Denver, Dave. You don’t want me to say Denver because you don’t want people to come to Denver.

Dave:
It’s selfish. No, it’s a great market.

Jamil:
You think it’s yours.

Dave:
Obviously, it’s a great market. All right. Henry, what’s your second pick?

Henry:
This was easy for me. Because I live here. I had to go home. I live in Northwest Arkansas. And so, I’m labeling it … Well, I’m not labeling it. It’s called Northwest Arkansas. It’s a smattering of four small cities right on top of each other.
And so, the area itself is fairly small compared to the markets we’ve been talking about. We’ve got a population of about 546,000. But what people … Again, I like the unsexy. People don’t see Arkansas as a sexy market, but you can have sexy in an unsexy city. I’m telling you.
This place. It houses very large recession-proof companies, and what comes with that are high paying jobs. It is the headquarters of Walmart. One of the largest employers in the world. And so, their corporate offices are here. You’ve got people literally moving here from all over the world. Not just the country, but from all over the world. They’re moving to Northwest Arkansas.
The Waltons. Several of them are on the Forbes List. There’s a ton of money in that family, and their Walton Foundation pours that money into this community. And so, it’s like Austin, Texas, before Austin, Texas was cool.
And so, what also plays into that is we have a huge outdoor industry. It’s the mountain biking capital of the world. People love to come here and camp and fish and ride the trails and go hiking. And so, for people in the know in those industries, they know that Northwest Arkansas is a great travel destination.
But most of the country doesn’t realize that. Most of the country doesn’t know that not only is Walmart, one of the largest employees in the world, headquartered here. But you also have Tyson Foods. Tyson chicken. Everybody’s eating some Tyson Chicken Tenders. If you had had chicken today, it probably came from a Tyson plant. They have that industry on lock.
And so, you’ve got Tyson Foods. They own Hillshire Farm and a bunch of other brands. And so, they’re a massive, massive employer. They’re even going to get more important as we start to enter in what they think is going to be this food shortage. And so, Walmart and Tyson Foods is going to be huge.
Another employer that is huge and that is headquartered right here in Northwest Arkansas. J.B. Hunt Transportation. You might be thinking, “That sounds familiar.” I promise you. Go get on the freeway and drive somewhere today, and look to your left or your right. You’ll see a J.B. Hunt truck. Transportation is huge.
Walmart sells goods and services at a low price. Tyson Foods sells food. J.B. Hunt moves all that stuff. These companies thrive in a recession. These companies thrive when things are bad and they thrive when things are good. And so, you’re always going to have jobs and people moving to live in this area. And it’s awesome, because it’s still Arkansas. Your entry price is low.
The cost of average cost of a home is around $325,000, which you might think is a lot for Arkansas, but it’s gone up a lot in the past year. But you can still find plenty of homes under $200,000. It’s getting harder now, but you can get those low entries. But you can also get great rents.
Because you’ve got people who want to move here from all over the world and they go, “Well, I don’t want to live in Arkansas.” And so, they rent. And so, you get great rents. You get great rents from people with great jobs. You got low entry prices, and you’ve got the University of Arkansas rounding it all out down there. It’s a great, great market.

Kathy:
You forgot one thing. Crystals.

Henry:
Crystals?

Kathy:
You can go crystal hunting.

Henry:
You know what? You’re like the third person that’s talked about that recently. Yes.

Kathy:
I want to go there.

Jamil:
You can’t call it hunting when the crystals don’t run away.

Henry:
That’s a fair point.

Kathy:
Digging. I don’t know.

Dave:
Okay.

Kathy:
I’m coming out. I’m going crystal shopping.

Henry:
Because you better believe I’m coming to Malibu.

Dave:
All right. Kathy, what’s your second market?

Kathy:
Well, it’s a market that has at least one month of summer. It has an industry that might come back someday. And I have some land there I can sell you. It’s in North Dakota. Just kidding. I really do have land there and I’m so happy to sell it to you. That’s not my market today though.

Dave:
At least one month of summer. I was like, “Uh-oh. What is this?”

Jamil:
What’s happening here?

Kathy:
I bought some land in North Dakota when it was booming. One industry of oil. Don’t do that, people. All right. The other more diversified place that I’m going to talk about is a metro with 1.2 million people. There’s been 10% growth since 2020, so pretty good. That’s in two years.
Unemployment. This city had the lowest unemployment during the worst part of COVID recession. In fact, it had more jobs in 2020 than before 2020. Crazy. Just continues to grow. Future job growth, 39%. It’s the fifth fastest growing city and there’s lots of babies being born there. Guesses?

Henry:
Clueless.

Kathy:
Okay. It’s by a very great ski resort that I like to go to, where we do have land. And that actually is good land, that ski resort.

Dave:
Salt Lake City.

Kathy:
Yes. Yes. Salt lake city.

Jamil:
That’s great. Lots of babies. That’s a good choice. I like it.

Dave:
All right. For my last one is one I am going to drive down to tomorrow. I’ve actually never been here. But on paper, I really like the idea of San Antonio. Having invested in Denver for the last couple of years, as Denver has gotten so expensive, I’ve seen that these markets an hour away in either direction have really started to see people move to them.
You move out of Denver to Colorado Springs or to Longmont or to Arvada and Aurora. You’re starting to see these secondary cities really take off. The more affordable cities. I think with the expansion of work from home, we’re going to start to see that. As Austin just gets so expensive, San Antonio has a lot to offer and it’s still really affordable.
The median home price is only just above $300,000 right now. Rents really haven’t caught up yet, so I think a lot of people are ignoring it. Because you’re not seeing great cash flow. But I think, as Kathy was saying, you want to get somewhere a little bit before it starts to pop. And I think San Antonio.
It might be a little bit riskier, because it’s not as developed of a market. It is the eighth biggest city in the country though. It’s a big market. But from an investing perspective, you haven’t seen the economic growth that you see in a lot of the other cities that we’ve talked about so far. But you’re starting to see tech companies move there.
One of the things that I really like about it is that, over the last two years, San Antonio has seen a 24% increase in tech worker migration. And that’s one of those types of things I look at for a lead indicator that might lead to future economic growth. I’ll report back to you guys after I go visit it tomorrow, but I’m really big on San Antonio on paper.
Okay. That brings us to our last section of today’s podcast, which is our crowdsource section. Our opportunity to interact with you, all of our listeners. For today, we want you to vote. We have our March Madness bracket.
We are recording this now. But in the time between us recording this and you listening to this, I’m actually going to seed all of our markets and make an Elite Eight bracket for you. And if you go on the BiggerPockets Instagram, you can go and vote on which market. We’ll pit them against each other.
Just as an example, we might have San Antonio against Charlotte and you can vote. We’re going to carry out the whole bracket until there is one winner, and we’ll have a prize for whichever one of our panelists brought the winning market to the table. Do you guys have anything to add before we part ways this week?

Jamil:
Always bet on sex and bubble gum.

Henry:
My markets are unsexy, but they’ll get you wealthy.

Kathy:
I guess my tip would be, “Don’t tell all your secrets on BiggerPockets.”

Jamil:
Guys. Just so you know, Kathy didn’t really share. She didn’t tell us.

Kathy:
No, I really did. I really did and now I’m nervous.

Dave:
Well, my advice on top of just, “Please vote for my cities,” is to go and look at this research for yourself. There is a lot of free data. You can either download this data on BiggerPockets or you can go to the FRED or any of the other sources that Henry, Jamil, and Kathy shared today.
If you’re interested in going and investing in a new market, or maybe you just want to gain confidence investing in the market where you live in … Maybe I’m wrong, but generally speaking, I think all of the advice that we gave today applies for neighborhoods within a market too.
Look at where cool jobs and where new company headquarters are. That is the challenge for the week. Go on BiggerPockets’ Instagram and vote for your favorite cities. But also, do the research for yourself and learn about your market. Get a really good, solid understanding of the fundamentals that underpin your investing market.
Thank you guys so much for joining us for our second ever episode of On The Market. This has been so much fun. Henry, Jamil, and Kathy. It is always a pleasure to have you on. And I’ll see you guys in a couple of weeks.
On The Market is created by Dave Meyer and Kailyn Bennett. Produced by Kailyn Bennett. Edited by Joel Esparza. Copywriting by Nate Weintraub. Special thanks to Lisa Shroyer, Eric Knutson, Danielle Daly, and Nathan Winston. The content on the show On The Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.

 

Watch the Podcast Here

In This Episode We Cover

  • Whether or not low unemployment numbers will change the course of the economy in 2022
  • Why (and how) housing market demand changed and what investors can do to take advantage
  • The Fed’s “housing bubble” alert that has homebuyers stalling to make offers
  • How expert investors research, vet, and pick their real estate investing markets 
  • The eight best housing markets of 2022, plus how to vote for your favorite
  • Why 2022 may be the best time to NOT fly business class
  • And more economic obscurities!

Links from the Show

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