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Austin v. Nashville: Where to Invest?

Nashville and Austin are two of the most popular real estate markets in the country in 2021. New business, jobs, and people are moving to these cities in droves every year. Economic opportunity, combined with good weather, a fun atmosphere, and affordable cost of living, has made these cities all-stars. But which one – Nashville or Austin – will deliver better real estate growth and returns into the future? This video uses deep data from the US Census, the BLS, and Zillow to answer that question.

Job Growth: Both Nashville and Austin are growing jobs at a much faster rate than the rest of the country. And they’ve both rebounded solidly from the COVID recession. However, Austin’s job growth wins out, at a dazzling +15% from 2016 to 2021. Simply put – there’s no area in the country with a faster-growing economy than Austin. Winner: Austin

Income/Wages: Once again, both Nashville and Austin have higher wages than the US average. Austin’s are about 3-5% higher than Nashville’s. But Nashville is catching up! As its economy has matured (Alliance Bernstein & Amazon relocations) it has started paying higher wages to its population. Winner: Tie

Affordability: A home buyer or real estate investor will need to pay significantly more – upwards of 25% more – for a property in Austin. That makes it harder for home buyers and apartment investors to compete. Moreover, the Price / Rent Ratio in Austin is much higher than Nashville, indicating that investors will need to accept lower returns. Winner: Nashville

Political Climate: Despite their similarities in terms of growth, weather, and culture, Nashville and Austin share one key difference: politics. Nashville is a fairly Republican metro, while Austin is very liberal (and becoming increasingly liberal). As a result of its increasing Democrat dominance, Austin’s city council has started to enact some perplexing reforms that will likely damage growth in the long run. Winner: Nashville

Atlanta: Top Growth Locations

Atlanta real estate is booming! Home prices and rents are up across the city, providing appreciation and wealth to local real estate owners. But not all neighborhoods within Atlanta, Georgia are created equally!

The fastest-growing ZIP codes have tripled – that’s right, tripled – their values over the last five years! These neighborhoods are located close to Midtown/West Midtown, and have provided home owners and real estate investors with huge profits. But why have these ZIP codes done so well? And what can their success say about which areas to invest in the future?

Well, first-time home buyers who care about appreciation will want to prioritize three things in the neighborhood they look for: 1) highly educated nearby population, 2) walkability, 3) affordability. Areas that combine these factors provide the best future appreciation and growth potential! The affordability point is key. ZIP codes that are expensive tend to have lower growth potential than areas that are affordable. That’s why neighborhoods like Buckhead have much lower growth rates than ones like Cabbage Town, Bankhead, and College Park.

Using data from the US Census Bureau and Zillow, Reventure Consulting has identified the following ZIP codes as the best for investment: 30318 (West Midtown) 30304 (East Point) 30337 (College Park) 30340 (Doraville) 30096 (Duluth)

Texas: Best City for Real Estate?

Home buyers and real estate investors throughout Texas are wondering one thing in 2021: what is the best city to buy real estate in? This video has the answer!

Austin: Joe Rogan, Elon Musk, and Oracle have all made Austin their new home over the last six months. While that’s great for real estate demand, Austin is a market to avoid for one central reason: too much supply. The city just permitted a record number of new homes and apartments in 2020 and is also pretty expensive to buy. For those reasons, it’s a market to avoid.

Houston: Hewlett Packard is relocating their headquarters from Silicon Valley to Houston, which is a big win for the city. Unfortunately, Houston has struggled economically over the last five years, with low wage and job growth due to stagnation in the oil industry. While Houston does afford good value to real estate investors, there are better options in Texas.

Which brings us to… Dallas: the Big D is a beast – the 4th biggest population in the US at over 7 million with tons of economic growth to boot. In fact, CBRE just announced they are relocating their headquarters to Dallas from Los Angeles. The great thing about Dallas is that it combines this growth with reasonable real estate prices and strong rents. That’s a winning combination for both first-time home buyers and apartment investors. Dallas is the top city to buy in Texas in 2021!

Dallas: Best Locations for Growth?

Dallas is the BEST real estate market in Texas. Forget Austin. Forget Houston. It’s Dallas that offers the best combination of future growth and affordability. But Dallas is a big place. Home buyers and multifamily investors are interested in knowing which neighborhoods across the metro are the best to buy? In this video we use deep demographic and economic data from the US Census and Zillow to answer that question.

Home values have gone up the most in Dallas and Fort Worth over the last five years (+50%). Prices have appreciated the least in Frisco, Plano, and Denton (+20%).

The neighborhoods in Dallas that have seen the most value growth are located south of downtown: Bishop Arts, Cedar Crest, and Highland Hills. Interestingly, popular and expensive neighborhoods such as Uptown and Highland Park have actually seen some of the lowest growth.

Home buyers and real estate investors interested in appreciation will want to focus on neighborhoods with strong demographics. This means high college degree rates, strong walkability, and good affordability.

The Best Markets for 2021

Denver: one of the top growth markets in the country, with new jobs, people, and businesses moving in each day. Despite this growth, Denver is permitting very few new housing units. This is creating a Housing Shortage across the metro that will push prices and rents up over the long-term.

Chattanooga: the fourth-largest city in Tennessee is perhaps its most attractive from a real estate standpoint. Its job markets is the best in the country, being one of the three cities to actually add jobs during the COVID pandemic. Huntsville: the tech capital of the south.

Huntsville has the 7th most tech jobs of any city in the US based on the presence of the US Military, NASA, and Amazon Blue Origin. Tech jobs are a great thing for real estate markets, as they provide income and economic growth to a region.

Cincinnati: while Cincy might not top the charts in growth, it offers an enticing combination of security and limited supply competition. The metro’s typical home value of $206k is 50% cheaper than Las Vegas and 2x cheaper than Salt Lake City.

Atlanta: the #1 real estate market in the country according to Reventure’s rankings. Atlanta has it all – growth, stable jobs, affordability, and limited new construction. All in a Tier 1 Market with a population north of 6 million. What else could you ask for?

DO NOT Buy in These 5 Cities

Austin: wait…what? I thought Austin was the hottest real estate market in the country? Well, it is. And that’s exactly why savvy investors will avoid Austin in 2021. Since every developer and home builder is flocking to Austin, the metro is now permitting too many new housing units for how many people are moving in.

New Orleans: can you believe that NOLA still hasn’t recovered from Hurricane Katrina? That’s right – 15 years later, the city still has fewer jobs than than it did pre-Katrina. And with stiff job losses occurring in the current recession this is a market for real estate investors to avoid.

New York: The city and its surrounding suburbs lost nearly 900k jobs in 2020. That’s a 10% decline, more than 2x higher than the city has experienced in any previous downturn over the last 30 years. This does not look like a situation where New York will simply bounce back!

Los Angeles: LA real estate is really, really expensive. Whereas the average home value in the US is roughly 4x the average income, Los Angeles home values are more like 15x the local average income. That ridiculous value to income differential simply isn’t sustainable going forward.

Boise: This market is a legitimate grower, with top-level population and income gains. However, home prices have spiraled out of control, increasing by 20% over the last year up to $370k on average. That’s higher than Austin and Phoenix, two markets with stronger fundamentals. Boise is in a bubble!

Boston: Is it Overvalued?

Boston’s real estate market is one of the most expensive in the country, with average home values exceeding $1 million in many ZIP codes across the metro. Growth rates over the last five years have been strong in some areas, but weak in others. What’s the consistent trend?

Affordability. Affordable ZIP codes – those in towns like Everett, Chelsea, Dorchester, and Brockton – are leading the way in growth for Boston’s metro-area real estate market. Appreciation in these neighborhoods is exceeding 10%/year! Meanwhile, the expensive ZIPs – those located in the Back Bay, South End, Seaport, Weston, Newton, and Wellesley – are lagging the rest of the market. Growth in these areas is barely exceeding inflation.

The other central question Boston real estate investors and home buyers need to ask themselves is if now is a safe time to buy. On the positive end of the spectrum, Boston has minimal construction of new homes. This means that supply in the market will remain tight, putting upward pressure on prices. But on the other end of the spectrum is Boston’s weak economy, which has lost 10% of its workforce in 2020. That’s one of the worst job loss figures in the US and will be drag on Boston’s real estate market.

Columbus: An Extremely Underrated Market

The Columbus metro area has added 500k to its population over the last 15 years, a remarkable +30% growth rate. That’s well above its Midwest-neighbors (Pittsburgh, Cleveland, Cincinnati) and on-par with hot growth markets in the South (Nashville, Tampa).

Due to all of this tremendous growth, the average home owner in Columbus has added +$100k of equity to their net worth in the last decade. Values have gone up by an astounding +57%!

But – despite all of that growth – Columbus maintains one essential characteristic: it is still affordable! The metro area’s average home value of $229k is well below the US average and provides buyers with a lot of value for their money.

Most of the action in the Columbus metro is situated in Franklin County, which accounts for 70% of the area’s population and is experiencing the highest levels of real estate appreciation.

Certain ZIPs/neighborhoods within Franklin County have experienced ridiculous real estate growth. We’re talking doubling of values in the last 10 years! They are: Old Towne East (43205) German Village (43206) South Hilltop (43223) Short North (43201) Grandview (43212) Linden (43211)

Nashville: Is the Music City a Winner?

Nashville’s real estate market is red hot, with home prices increasing by 70% over the last decade! But will the growth continue? And where are the best places to buy?

Despite Nashville’s strong growth, the average price of a home in the metro area is still only $299k. This is fairly affordable compared to the prices in other growth cities like Denver, Salt Lake, and Austin. Affordability means that there’s still room for values to go up!

Have a bit of money and looking for a more stable/secure location? Check out Williamson County. This is one of the wealthiest areas in the United States and has the highest home prices in Nashville.

Want something more affordable with better long-term growth potential? Look closer to Nashville’s downtown area, particularly the ZIP codes north of the Cumberland River. These ZIPs have more than doubled in value over the last decade and still have reasonable price points!

Altogether Nashville seems like a difficult area to go wrong. It has been a historically stable market with strong, incremental growth.

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