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Real Estate
William Edwards
- Home prices in pandemic boomtowns have dropped since mid-2022, creating investment opportunities.
- Zillow Chief Economist Skylar Olsen says these markets are good for buying rental properties.
- The growing labor force in these cities should boost appreciation and cash flow for investors.
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Home prices in pandemic boomtowns — Austin, Phoenix, and Nashville, to name a few — soared to record highs during the first years of the COVID-19 outbreak as people sought warmer and more affordable cities.
But since mid-2022, prices have returned to earth in many cities.
For real-estate investors, this means opportunity, according to Zillow Chief Economist Skylar Olsen.
In an interview with Business Insider this week, Olsen said that the once-high-flying pandemic markets are good places to buy rental properties for the years ahead. That's because prices in most of these metropolitan areas have corrected meaningfully, yet job growth in them continues to rise, signaling they have strong fundamentals for appreciation going forward.
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"Seek out investments in areas that have good legs or have long-run prospects. I always like to look at job growth for that kind of thing," Olsen said. "If we think about job growth since pre-pandemic and we rank that, you'll kind of see the stars of the pandemic headlines."
In addition to appreciation opportunities, Olsen said that the growing labor force in each city should support continued rent growth in the years ahead, meaning cash flow from the properties there should also rise in the future.
Below, we've listed the 11 pandemic-darling cities Olsen says she favors. Home-price-change data from Redfin since May 2022 — around when the national median home price peaked — is also included. Context is also included for cities where home prices had a different timeline of peaks and troughs than most of the country.
Year-over-year, non-farm job growth from November 2023 is also included from the Bureau of Labor Statistics. Job growth in all of the cities was higher than the national average of 1.8% over this period.
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1. Austin, Texas
Median home price: $509,500
Home price movement since May 2022: -23.8%
Year-over-year job growth as of November 2023: 2.8%
Sources: Redfin, Bureau of Labor Statistics
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2. Nashville, Tennessee
Median home price: $439,950
Home price movement since May 2022: -6.3%
Year-over-year job growth as of November 2023: 2.1%
Sources: Redfin, Bureau of Labor Statistics
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3. Dallas, Texas
Median home price: $385,000
Home price movement since May 2022: -20.7%
Year-over-year job growth as of November 2023: 3.3%
Sources: Redfin, Bureau of Labor Statistics
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4. Tampa, Florida
Median home price: $393,000
Home price movement since May 2022: -2.9% (prices are down by 13.6% since their August 2023 high)
Year-over-year job growth as of November 2023: 1.9%
Sources: Redfin, Bureau of Labor Statistics
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5. Las Vegas, Nevada
Median home price: $415,000
Home price movement since May 2022: -4.6%
Year-over-year job growth as of November 2023: 3.8%
Sources: Redfin, Bureau of Labor Statistics
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6. San Antonio, Texas
Median home price: $250,000
Home price movement since May 2022: -15.2%
Year-over-year job growth as of November 2023: 2.6%
Sources: Redfin, Bureau of Labor Statistics
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7. Charlotte, North Carolina
Median home price: $384,182
Home price movement since May 2022: -4.6% (price are down by 9.6% since June 2023)
Year-over-year job growth as of November 2023: 2.5%
Sources: Redfin, Bureau of Labor Statistics
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8. Sacramento, California
Median home price: $463,000
Home price movement since May 2022: -12.6%
Year-over-year job growth as of November 2023: 2.2%
Sources: Redfin, Bureau of Labor Statistics
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9. Atlanta, Georgia
Median home price: $360,000
Home price movement since May 2022: -20%
Year-over-year job growth as of November 2023: 2.5%
Sources: Redfin, Bureau of Labor Statistics
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10. Pheonix, Arizona
Median home price: $430,000
Home price movement since May 2022: -8.5%
Year-over-year job growth as of November 2023: 1.9%
Sources: Redfin, Bureau of Labor Statistics
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11. Miami, Florida
Median home price: $599,000
Home price movement since May 2022: +8.9% (Prices in Miami fell by 7.2% from May 2022 to December 2022 and have since rebounded)
Year-over-year job growth as of November 2023: 3%
Sources: Redfin, Bureau of Labor Statistics
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