BiggerPockets Real Estate Investment Market Index: The Best (and Worst) Major Markets for Real Estate Investors, 2015


BiggerPockets (, the world’s largest online hub for real estate investors, today released its 2015 BiggerPockets Real Estate Investment Market Index (downloadable spreadsheet available here). This Index analyzed the 50 largest US MSAs to determine those that were most likely to produce outsized returns for residential real estate investors between 2014 and 2015. BiggerPockets also breaks down those markets of the top 50 MSAs that were most likely to produce the worst returns for real estate investors.

The 10 Best Markets for Real Estate Investors

Dallas, TX tops the list of real estate markets over the period studied, exhibiting strong price appreciation, while remaining a market in which investors saw strong rents relative to property values. Investors in Dallas stood to earn an almost 20% unleveraged return for residential real estate investments before expenses.

Falling closely behind Dallas, Denver, CO takes the number two spot, driven largely by the strongest appreciation in home values of any major market studied over the period. Residential real estate prices increased a staggering 13.4% year over year across the Denver metro region.

Rounding out the top 10 are three Florida markets, including Miami, Tampa, and Orlando; the two Texas cities of Houston and Austin; as well as Detroit, Las Vegas, and Atlanta. 

Top 10 Cities Offering the Most Opportunity for Real Estate Investors, 2015:

1) Dallas, TX

2) Denver, CO

3) Miami, FL

4) Houston, TX

5) Atlanta, GA

6) Tampa, FL

7) Detroit, MI

8) Austin, TX

9) Las Vegas, NV

10) Orlando, FL

BiggerPockets Top Appreciating Real Estate Markets 2015

The 10 Worst Markets for Real Estate Investors

The worst markets in the country for the most part had relatively low rents per dollar in home value and suffered negative or low appreciation over the time period. The Northeastern part of the country in particular provided below average returns in all of the major metros studied.

Related: The Real Estate Market: How to Analyze and Predict Cycles

Hartford, CT was the market in the study that offered the least opportunity for residential real estate investors overall. In a year when most markets saw strong appreciation gains, residential real estate prices actually fell about 2.2% year over year in the Hartford MSA. The poor returns offered by Hartford were followed by Salt Lake City, UT and Louisville, KY.

Los Angeles, CA also found its way into the list of the top 10 worst markets for residential real estate investors, though it managed to see a decent appreciation rate of about 2.9% year over year. Los Angeles is notable for its extremely unfavorable rent-to-price ratios. Investors can expect to receive less than 3.5% of the value of their property in gross rental income. The only markets offering less opportunity from a cash flow standpoint over the last year were Santa Clara and San Francisco, though investors in those neighboring markets continued to see strong price appreciation on their investments.

The chart below shows the 10 worst markets for real estate investors:

Bot Appreciation v2

The Top 10 Markets for Residential Property Appreciation

Appreciation gains drove much of the return for residential real estate investors, and if we isolate the 10 markets with the strongest appreciation gains, we see a lot of familiar names with overlap to the top 10 overall markets.

The Denver-Aurora, CO metro region tops the list with a whopping 13.39% year over year increase in sales prices for residential real estate. Following closely behind Denver are three Texas markets mentioned previously—Dallas, Houston, and Austin—as well as San Jose, CA and the two Florida markets of Miami and Tampa. San Francisco makes its way into the top 10, as San Francisco investors continue to see strong appreciation gains in what is already the metro region with some of the highest average residential real estate prices of any major US market.

The chart below shows the 10 best markets for appreciation for real estate investors:

image (1)

The Top 10 Markets for Strong Rent-to-Value Ratios

Many investors prefer cash flow potential of residential real estate over appreciation potential. While appreciation is notoriously difficult to predict and highly speculative, it is perhaps more likely that the large metro regions in this study will continue to see similar levels of gross rent relative to the value of their property over the next few years. At the very least, HUD releases 2016 Fair Market Rents well in advance, and with a price floor set by the government, investors can rest a little bit easier with their assumptions about cash flow.

This study suggests that the best places to look for cash flow given the returns over the past 18 months are in Southern and Midwestern markets. Memphis, TN offered residential investors the largest amount of gross rent in relation to property value of the markets studied. It is closely trailed by Detroit, MI and Tampa, FL.

Once again, we see familiar Dallas and Florida markets in this top 10 list, as should be expected given that this study concludes that investors in the Dallas region had the most opportunity of any market studied for strong investment returns. Other markets with excellent cash flow potential include Atlanta and Kansas City.

The chart below shows the 10 best markets that offered strong rent-to-value ratios for residential real estate investors:

Rent to Value v2


The Most Favorable Large US Metros for Real Estate Investors Last Year, Measured by Appreciation and Rent/Price Ratio

Purpose: This index seeks to determine which of the 50 most populous US metro markets were most likely to have provided strong returns for residential real estate investors between early 2014 and early 2015. This index measures both appreciation and gross rents as a percentage of average purchase prices.

Analysis: Investor returns in real estate are largely driven by two key factorsappreciation and cash flow. Appreciation is fairly straightforward in most calculations. In this study it is simply the percentage price increase in residential real estate over the time period studied. Cash flow, conversely, is a function of both gross rents collected and expenses. Because a large number of factors influence rental property expenses and many of these factors are difficult to accurately quantify (landlord friendly/unfriendly laws, for example), we ignore expenses for the purposes of this study and focus solely on gross rents as a percentage of purchase price.

Calculations: Gross rents are calculated as a function of average Fair Market rents, as provided by HUD, as well as median property values in early 2014, as provided by Zillow’s Home Value Index. For example, a property purchased for $100,000 in early 2014 might receive $1,000 in rent in 2014 and $1,100 in 2015, averaging $1,050 per month, or $12,600 annualized. Gross rents in this instance average to 12.6% of the initial value.

Appreciation is calculated as the change in price from the beginning of the period studied to the end of the period studied. For example, if the average purchase price in an area studied was $100,000 in early 2014 and increased to $105,000 in early 2015, then appreciation would be 5%.

Method: A multi-step process was used to aggregate data that allowed for a reasonable estimate of appreciation and gross rents collected as a function of beginning property values in the top 50 metro areas.

Aggregate property data ultimately derives from Zillow’s Home Value Index. Here, we look at the median sales price, and an original copy of the dataset is available upon request or at for those looking to dig deeper.

This data is a reflection of Zillow’s data for actual sales prices in the respective regions studied. To combat the limitations of Zillow’s data, which may not include ALL sales data in every metro, the study is limited to only the top 50 US metropolitan markets as measured by population. Higher population regions of the country are more likely to experience a higher volume of transactions, giving Zillow more data points to work with, therefore increasing the likelihood of an accurate reflection of sales prices. Furthermore, by taking an average of sales prices across six months, we increase our sample size and lessen the risk of specific months significantly skewing our results.

The average property value across the first six months of 2014 is considered the “initial” property value or “purchase price,” and the average value across the first six months of 2015 is considered the “final” property value or “sale price.” The difference between the the two prices is then used to calculate appreciation.

Rent data is pulled directly from HUD ( HUD Fair Market rents vary by county and were not readily available by metro. In order for the study to compare Fair Market rents to the property values taken from Zillow, county data needed to be converted to reasonable estimates for each metro area. This study converts the data using a weighted average of Fair Market rents across each of the counties comprising a given metro area.

Related: Don’t Believe the Housing Bubble Rumors — Unless You’re in These 7 Markets

In calculating a weighted average, many metrics could have been used, including population, land area, total housing units, etc. In this study, Fair Market rents are weighted by population. This “weighted average” of Fair Market rents is then applied to the entire metro area.

10_Best_Real_Estate_Markets_in_the_USNote that Fair Market rents also vary by number of bedrooms. This study averages Fair Market rents of units from 04 beds for each county and uses that as the “Fair Market rent” for that county.

This process is repeated using Fair Market rents for both 2014 and 2015.

This Fair Market rent for the each metro area is then used to calculate gross rents as a percentage of the beginning purchase price. Again, as mentioned previously, a $100,000 property receiving $1,000 in rent in 2014 and $1,100 in 2015 would average $1,050 per month, or $12,600 per year. Gross rents per dollar invested would come to about 12.6%.

The final step in this process adds together appreciation as a percentage of initial property values and average gross annual rents as a percentage of initial property values. This calculation reveals in percentage terms the markets where real estate investors looking to buy residential real estate properties were most likely to receive a favorable combination of both gross rents and total appreciation per dollar invested over the period from early 2014 to mid-2015.

It will be obvious to any investor looking at this data to note that expenses are not included in this study. Expenses vary widely across the 50 metros studied and are impacted by factors such as taxes, insurance, weather/climate, cost of living, landlord friendly/unfriendly laws, contractor costs, and other similar variables. Furthermore, even if accurate data on each of the many expenses listed were readily available to the public, expenses can also vary from investor to investor based on non-market forces like diligence in property management, variations in tenant screening processes, experience with contractors and handyman work, and other experience-related advantages. Because of the complexity in creating any kind of index measuring expenses in the top 50 metro areas, expenses were excluded from this study entirely.

Special thanks to Zach Gwin and to Alec Neita, our summer 2015 data intern, for their contributions to the study!

About Author

Scott Trench

A longtime fan of BiggerPockets and a Real Estate Investor managing his first property, Scott is the company’s Director of Operations. BiggerPockets is a BIG website, and Scott’s background in finance and big data analysis will be instrumental in the next phases of company growth and in helping to bring the resources of BiggerPockets to more investors worldwide. Scott is passionate about helping others build wealth and serving his community in whatever ways he can. In his spare time, Scott enjoys skiing, biking, and cooking, and he is a lifelong rugger.


  1. Congrats on the new venture, BP! Nice work Scott.

    I’m in a tiny college town market, but I use Charlotte and Atlanta as my proxy since they are nearby. I’m surprised Charlotte isn’t on the list as they’ve been a strong rental market with a lot of appreciation.

    I find it interesting that even the highest ranking markets hover around 7-8% for rent-to-price rations. If we assume 50% expenses, that means on average investors would get 3.5-4% cap rates. Ouch.

    Even with appreciation 3-4% doesn’t excite me too much, because rental income is the consistent return long run, not appreciation. But obviously there are plenty of buyers in the market who are ok with that.

    • Scott Trench

      Thanks for this comment Chad!

      Charlotte is definitely in the dataset – which provides a little more detail on many markets not listed here. I believe that that town in particular was smack in the middle in terms of overall opportunity – I just don’t think it had the same levels of appreciation as those seen in the Atlanta MSA.

      I totally agree with your point here about the cap rates – just note that those are averages across ALL residential property. As investors, we’d hope to invest in properties that beat those averages every time – after all many homeowners might pay prices for their primary residence that would not make sense for a cash flow investor.

      • Chad Carson

        Yeah, I get that it’s all residential properties and investors. This index is a good starting point and a way to compare one metro area to anther. And of course we always want to buy below the average (or at a better rent/price ratio) in whatever our market.

        But I will say, a lot of hedge fund type buyers and many other newly-excited investors have bought in at market prices over the last few years. If they’re doing it now, those cash flow numbers should really make them pause.

  2. Matt R.

    Nice work. LA in particular is a unique market. More than twice as many people live in the greater LA area than the entire state of Colorado. There will be many zip codes that experience more appreciation than the 2.9% in one year. Some might be at 25% appreciation for example. Real estate is extra local here that way.

    There is a forecaster at UCLA/Anderson who has identified a 12 year cycle for LA going back to 1975. That is 7 years bull followed by 5 years bear. During the 7 years bull prices increase on average 68%. He says that we are in the 3rd year of the bull with 38% more to go. There will be fluctuations in any case. I am not sure a 12 month snap shot is how investors should evaluate RE but all can data help.

    • Scott Trench

      Matt – thanks for the comment here – I agree that this is a broad look at markets a whole. There are a ton of factors that can impact an investment, from a town within these MSAs, to individual blocks within those towns. The goal here is to just give a rear view look at the last year as to which markets performed well for investors.

      The study could certainly be repeated over a 5, 10, 15, or 30 year time period, and the results would likely be very different!

    • Karen Margrave

      Not to mention the many investors that buy Vacation Rental properties in the coastal areas. If you look at a map showing the coastline of southern California, and imagine the thousands of homes that are being rented by the week, etc. in most of those areas, it’s a goldmine.

      Add to that the huge demand for rentals that are driving up rents creates opportunities for new construction. There was recently an article in the Orange County Register addressing both the rising rents, and the increased demand for office space (pm me and I’d be happy to forward).

      As they say, all real estate is local. Here in southern California there’s so many things that drive the market, and it’s unlike any other. High tech sector, education, health care, tourism, amusement parks, beaches, major shipping ports, etc. and all of it affects real estate values.

  3. Gene D.

    So many holes here, where does one begin…
    I will not take the time to go through all the data, but…to say miami is a great rental market….ummm…maybe.
    Lets say you are buying a horrible little 3/2 valued at $75k that will get you shot, you may pull $950 per m, vacancy galore, decepit, etc. Or, you can also buy a fairly decent condo for $800k and rent it for $3500, plus monthly taxes of a minimum $600 and another $700 HOA’s MINIMUM… Im clearly painting with very broad stro strokes, but neither scenario lands us near the “study” rate.

    • Scott Trench

      Hi Gene – thanks for pointing this out. Obviously markets will vary greatly depending on where in that market you operate. HOA fees, taxes, landlord friendly/unfriendly laws, and more will all impact your return, just like in choosing the right location.

      The problem we face is in whether to look at every individual neighborhood in the country, or the broad markets with lots of reliable data points. We chose the latter, and it will certainly be up to the individual investor to figure out where and how within those markets you they can achieve great actual returns.

  4. A quick perusal showed Washington, DC on your bottom ten list, which surprised me. I think it depends on what your strategy is and how you measure. From a buy and hold perspective, Washington has to be one of the most stable cities in the country. With the government here and constant turnover of rental housing every two or four years, it seems like an obvious place to invest. When the rest of the economy and the suburbs collapsed, the urban core of DC didn’t lose a lot of value and the rental market stayed strong. I’d be curious to know if others think I’m crazy, because I’m ready to start investing in condos here!

    • Scott Trench

      Danny – thanks for your comment here. I don’t know too much about the D.C. market specifically. I think that like a lot of other markets out there, returns and strategy within the D.C. market are going to vary considerably depending on where you invest and how you invest. This index is simply meant to show the averages across the entire market. There can and will be huge variations with sectors in various parts of each market and this should be no more than a starting point in delving into your research.

  5. Atul Saxena

    Great job Scott! Appreciate publishing all the information behind the index.
    For a beginning investor, who is solely focused in his/her hometown, I don’t know how it can be used. I guess, overtime, a trend can be extrapolated from the past market performance.
    Do you plan to update this regularly?
    Once again, thanks a lot for all your efforts.

    • Scott Trench

      Hey Atul – thanks for the comment here! I think that like many data studies out there, this index is a great way to look at the data behind what happened. I think that this provides a look at how some of the biggest markets in the country performed last year, and then to add that information to your arsenal. Like any historical information, the question is, “why did things work/not work in these markets?” and “Are the factors that led to success or failure in my market likely to continue, repeat, or not?”

  6. Darren Sager

    Interesting article Scott however I have to admit I cringed when I read that the data you’re using is coming primarily from Zillow. I can’t say that I would agree with the top markets because many of them experience the greatest crashes when the market went south last time. I guess higher risk of crashing gives you higher rate of return on the upswing after they’ve crashed. If you’re going to be conservative in your buy and hold approach then appreciation is merely icing on the cake and should not be a deciding factor for you to invest in an area. There are so many other factors to take into consideration and if you’re just skimming the surface then this seems to make sense. I prefer saturated market places where it’s hard to add to inventory. Long term they seem to be safer bets and don’t have the down swings in prices like all the markets you can easily add inventory to. The only places that I think are worth while in the top markets is Houston and Dallas. Texas will remain strong because of economic factors that are long term favoring it. Detroit? Nothing going on there that excites anyone long term in my opinion. And the fact that the NYC area in in the bottom markets yet has more development going on on dollar wise than I think the next 10 markets combined boggles me.

    • Scott Trench

      Thanks fo the comment here Darren! I will say that Zillow provides comprehensive data and that across large regions like this, I believe that it’s pretty much the best source available. It’s hard for me to envision a source that can more succinctly provide actual, real sales data across areas like those studied than Zillow.

      I totally agree that these markets may not be the best ones for investors to buy in today. This index does not rank any markets on what will be the best going forward, it merely demonstrates who did the best looking back.

  7. I like the data on Dallas. What I don’t like is that there is no data on the cost of taxes.
    Taxes in texas wipe out any gains. The average $200,000 property in Dallas would cost you $5000 plus a year in taxes

    • Scott Trench

      Hi Peter – thanks for this comment – I discuss some of the reasons why I don’t include things like property taxes in the article but I chose not to include expenses because of this:

      Expenses, while in some cases like property taxes can be calculated with relative ease, are often impossible to quantify (think landlord friendly/unfriendly laws and states) or subjective to the skill and experience of the investor – think vacancies, contractor costs, maintenance, etc. Rather than attempt to account for millions of these small data points, I thought that we could provide much of the high level value with just tens of thousands of data points ;). You are 100% correct though – investors will absolutely need to understand expenses on a local level and their impact on any investment returns.

  8. John Thedford

    Thanks for the excellent article and spread sheet. I did notice Cape Coral is #50 on your list and is my primary investment area. No matter where you choose, it is not the quality of the investment, property it is the quality of the deal that makes or breaks the return.

    • Scott Trench

      This is completely correct. Baltimore is a great example, as the inner city prices, with some of the poorest zipcodes in the nation, are significantly lower than those of the surrounding suburban counties (included in the MSA here, “Metropolitan Statistical Area”) which are some of the wealthiest zip codes in the United States.

  9. Adam Christopher

    The rent to buy ratios make sense for opportunity. However, how does recent appreciation equate to opportunity? I own a house in Fort Collins that saw appreciation of 17% last year. While that is great for current landlords, how does that represent opportunity for someone else? I think is represents missed opportunity.

    • Scott Trench

      Adam – this is a rear-view look at the 50 major markets, and the study does not look forward. Though, I do hope to one day soon produce a sophisticated look forward at some of these markets!

      This is a list of the 50 major markets, and we simply show the markets that offered the most opportunity for investors over the PAST year.

  10. Viviana Rueda

    Interesting data on Miami. I will find it illuminating to see the 2015 data as that I believe it paints a very different picture. Miami expenses are high, acquisition costs are high and yes rents are increasing (as per a recent report now outranking rental costs in LA) but that has to have a cap b/c the job market doesn’t have high-paying positions so your typical working class rental or lower-income rental will have a ceiling as the working class here just can’t pay the increasing rents. The trouble is that vacation rentals and vacation appreciation tends to tweak the picture out of proportion.
    Thanks for compiling and sharing Bigger Pockets.

  11. Great job Scott!
    I think index is a great way to look at the data behind what happened.this provides a look at how some of the biggest markets in the country performed last year.
    thanks for all your efforts.

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