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Top 10 Real Estate Investment Markets

More and more wealthy investors are moving away from the stock market in fear of further loss because of volatility, as documented by recent articles in the Wall Street Journal.

Interestingly, when asked where they are putting their money, the answer was “cash and real estate”. In keeping with this investment direction, we have compiled a list of the Top 10 Best Real Estate markets for investment of retirement funds.

Data has been analyzed based on lender trends, home values in relation to job growth, unemployment, population and ownership-to-rent ratio. Information has been correlated from reports released by The Wall Street Journal, CNNMoney, Inman News and Local Market Monitor. (Click here to download the Metro Chart.)

If you have been thinking it’s time to diversify your retirement portfolio, here are 10 of the best markets in the USA to purchase investment real estate:

Number 10: Fort Lauderdale, Florida

Average Listing Price: $228,000
Unemployment: 8.2% (June 2011)
Median household income: $33,912

Seen as one of the most expensive areas in Florida, house prices are still expected to drop with the large amount of housing boom new construction inventory still on the market. Rents however are on the rise and are expected to rise 10% over the next few years.

Real estate investors can expect a 2.3% premium over the national average that is forecast for returns on rentals.

Number 9: Boston, Massachusetts

Average Listing Price: $498,000
Unemployment: 7.1% (June 2011)
Median household income: $33,889

Multi-family homes and apartment buildings are top picks for investors as prices have increased by only 3% in the last year.

There is an expected 41% decline in construction projects putting further pressure on the rental market which should increase rental rates over the next few years.


Number 8: Bakersfield, California

Average Listing Price: $183,500
Unemployment: 11.7% (May 2011)
Median household income: $21,496

Bakersfield was seen as the worst performing housing market after the burst of the housing market bubble. House prices fell almost overnight leading to high foreclosure rates and delinquencies. Unemployment soared to 15% as local industries depended solely on the real estate growth of new construction.

Real estate investments are expected to return 2.5% higher than the national average as unemployment improves and rental rates climb.

Number 7: Orlando Metro, Florida

Average Listing Price: $159,000
Unemployment: 10.8% (June 2011)
Median household income: $35,732

Home to Mickey Mouse and all the other Disney characters, Orlando experienced a boom-then-bust market over the last five years seeing housing prices fall 43% since 2006. These prices are not expected to rise anytime soon but rents, however, are expected climb by 17% over the next few years.

Tourism and seasonal workers still flock to amusement parks, but unemployment remains high and job market poor.


Number 6: Oklahoma City, Oklahoma

Average Listing Price: $137,000
Unemployment: 5.3% (June 2011)
Median household income: $34,945

Oklahoma saw a 15% increase in population according to census data as people are moving to the metro areas for work and a stronger economy.

Unemployment rates remain below the national average and industries such as oil, gas and aerospace are attracting a high number of college graduates from the 18 universities in the area.


Number 5: Rochester Metro, New York

Average Listing Price: $78,000
Unemployment: 8.4% (June 2011)
Median household income: $27,123

Rochester experienced a below national average employment rate, but is a city which has seen a slow-growth pace with a few older corporations headquartered within the metro such as Kodak and previously Xerox.

Rents have remained consistent and are projected to rise about 15% by 2014.


Number 4: Indianapolis, Indiana

Average Listing Price: $61,000
Unemployment: 8.2% (April 2011)
Median household income: $23,049

With a population growth of 15.2% from 2000 to 2010 compared to the national average of 9.7%, Indianapolis is a city on the move. With the city offering large performance-based tax credits to growing business creating jobs, as well as investing in city infrastructure and improvements, Indianapolis is seeing a large economic development and strong job growth.

Foreclosure rates in the area remain stubbornly higher than the national average, but delinquency rates are in decline indicating the drop of foreclosures in the near future.


Number 3: Stockton, California

Average Listing Price: $123,000
Unemployment: 16.7% (June 2011)
Median household income: $45,730

Local housing prices have dropped 57% since the housing market bubble, allowing single-family homes and investment properties to become more affordable.

Rents are also set to go up 11% over the next three years with a demand in rentals increasing as the foreclosure and housing market continues to drop.


Number 2: Las Vegas, Nevada

Average Listing Price: $374,000
Unemployment: 13.8% (June 2011)
Median household income: $53,000

With the highest foreclosure rate in the nation, many former homeowners have now become renters. With a large casino workforce who rent and cannot afford mortgage payments the home-ownership rate is one of the lowest in the country at 55%.

Unemployment has grown and rents have decreased about 10% since 2007, but rents are expected to rise and residential investment is predicted to yield at 4.7% above the national average.


Number 1: Phoenix, Arizona

Average Listing Price: $123,500
Unemployment: 9% (June 2011)
Median household income: $22,209

Home prices soared by double digits annually over three years, until they crashed in 2007, falling 47% since. The foreclosure market is widespread, pushing families out of their homes and into rental properties. Rents are increasing at an alarming rate. Estimated at $100 a month increase over the next three years.

The job market is slowly improving and unemployment still remains below the national average.


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Research References and Data

Safeguard Research Results
Inman News
The Wall Street Journal
Local Market Monitor
New Homes Section
Housing Predictor
Norada Real Estate
2009 USA Census
US Unemployment Data