Location, Location, Location!: The Best and Worst Places to Invest in Real Estate

An elusive equation makes one city prime real estate while others stand out as real clunkers. This list of the best and worst places to invest in real estate will help you separate the good opportunities from the bad ones.

Austin, Texas: One of the Best

Austin Real Estate

Image Courtesy of StuSeeger via Flickr

Purely from a numbers standpoint, Austin looks like a safe investment for real estate buyers. Even after home prices across the country plummeted, Austin prices remained relatively unchanged.

When you take a peek at the details, it becomes more obvious that the factors that made prices consistent also make Austin a great city to live in. The city has a highly educated population that has built a miniature Silicon Valley of tech businesses.

Austin also benefits from its reputation as one of the nation’s coolest destinations. The South-by-Southwest Festival attracts musicians, performers, fans, and reporters from all over the world. Other festivals that have popped up around it also contribute to the city’s glamour.

When it comes down to it, people want to live in Austin. That makes the city’s real estate a good investment.

Toledo, Ohio: One of the Worst

Toledo Property

Image Courtesy of Joel Washing via Flickr

Toledo hasn’t recovered from the repression very well. In fact, things continue look worse all the time.

For starters, Toledo has an unemployment rate over 10 percent. That might sound enticing to real estate investors at first. High unemployment often means foreclosures, which means cheap buys. And it’s true. Home prices did fall by 20 percent during the worst parts of the recession.

Unfortunately, Toledo also has a falling population. It’s like a sinking ship and everyone wants to get off before they down. If you buy real estate here, you’ll just end up as one of the unlucky rats looking for an escape hatch.

Tucson, Arizona: The Best of the Best

Real Estate in Tucson

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Tucson has a lot going for it. The consistently warm, dry weather attracts people who don’t want to deal with the cold and rain. In many cases, that means it’s a destination for retirees. Many retirees have money to spend, but they don’t want to buy more property. They’re looking to rent for a few years before settling.

Tucson’s numbers look promising, too, but you need to buy as soon as possible. Home prices are slowly going up and they are selling at a faster rate than just a year ago. Many of those sales have been done with cash. That sounds like a lot of investors buying up property.

Get in there and buy before they push the prices up even higher.

Detroit, Michigan: The Worst of the Worst

Property in Detroit

Image Courtesy of Ann Millspaugh via Flickr

There’s no reason to kick Detroit while it’s down, so let’s just look at some facts showing why it’s a bad idea to buy anything there:

  • It has a 19.9 percent unemployment rate.
  • It’s violent crime rate is 21.37 per 1,000 people. That’s the highest in the country.
  • The city doesn’t have any money. Moody’s gives bonds from the city government a junk status, putting them at a very high default risk.
  • Plus, it gets really cold there during the winter.

Those all add up to a big “no, thank you” in the investment world.

What are some of the best and worst cities that you’d add to this list?

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