Best Cities to Invest in 2023

Over the past two years, most housing markets around the country have seen unprecedented growth. It was a great time for investors, syndicators, and homeowners. But the tides have turned.

High inflation triggered the Federal Reserve to jump into action. Throughout most of 2022, the Fed has been implementing rate hikes, effectively doubling the consumer home mortgage rates. As a result, many would-be buyers have been forced to put their plans on hold, investment activity has slowed, and the US housing market appears. But while higher interest rates may have initially put a damper on the real estate market, they also present an opportunity for savvy investors to snap up properties – but you need to select the right markets.

The US housing market might be in turmoil, but there are still housing markets across the country with excellent investment options.

When picking a metropolitan market to invest in multifamily, self-storage, and mobile home parks which will carry you through an economic downturn, you want to focus on areas with:

  • Job growth: When new jobs ad businesses are added to a local economy, it helps increase the median wage, contributing to rental growth.
  • Population growth: An expanding population will help drive up competition for rental properties and, therefore, will drive rental rates. A good comparison figure for strong population growth is the national average, 6.3% between the 2010 and 2020 censuses.
  • Decreasing crime rates: Areas that are improving or gentrifying will have decreasing crime rates. If an area you’re looking to invest in has increasing crime rates, you should consider looking elsewhere.

While interest rates are climbing, cities with lower price points will likely be the most resilient. Most investors are used to seeing big names like Austin, Boise, or Phoenix appear, but times have changed, and there are some new top runners investors should shift their focus.

Let’s dive into some of the country’s best cities to invest in 2023 (despite rising interest rates!). You’re going to be surprised by these new names!

Tulsa, Oklahoma

Tulsa’s position on this list comes a little out of left field, as it certainly hasn’t been at the top of any investment lists for a long time (if ever). Behind its growth as one of the world’s oil capitals, however now has a diverse local economy that includes aerospace, finance, manufacturing, education, medical, and high-tech. Furthermore, Google and Amazon have made investments in the Tulsa metro area, contributing to the area’s job growth. The market is attracting residents and investors because of the low cost of living and high quality of life – there’s no wonder that Tulsa’s population grew 8.3% over the past decade.

Augusta, Georgia

The city of Augusta is located right on the Savannah river, which is the border of South Carolina. You might have heard of it before, as it’s home to one of the most prestigious Masters golf tournaments. Its warm climate, low cost of living, and affordable housing prices make it an attractive market for many. Over the past decade, Augusta’s population grew by 8.2%

In recent years, Augusta has emerged as one of the top markets for remote investors. Investors like this market because it’s had historically strong appreciation (10.5% over the past year), but home prices are still affordable, with the median price sitting at $210,000. Unlike other major markets, the prices in this secondary city are expected to continue up over the next year. This is why Augusta is one of the best cities to invest in 2023.

Fort Wayne, Indiana

best cities to invest in 2023

Indiana is considered one of the most landlord-friendly states, and investors are taking notice. Median home prices are still around $230,000, making market entry achievable for most. Furthermore, the rent-to-income ratio is 18.12%, which means the market still has room for further rent growth. Over the past ten years, its population growth has been about 6%, consistent with the national average. Investors in this market can find cash-flowing assets that are likely to appreciate in the coming years.

Toledo, Ohio

Toledo earned the name the Glass City because of its history of glass manufacturing, however, the economy has expanded and diversified. Toledo has one of the lowest costs of living in the United States and the current median sale price is just over $115,000. Unlike most major US markets, Toledo is a buyer’s market with staying listed from 30 to 90 days – so investors, this is your opportunity to snag a deal in one of the best cities to invest in 2023.

Cleveland, Ohio

best cities to invest in 2023

Much like Detroit, Cleveland has had a rough history of housing prices, but in the past couple years, the market has started to bounce back. It has a diversified economy that no longer relies on manufacturing. Instead, Cleveland is seeing growth in construction, transportation professional and business services, and leisure. One thing for potential investors to note is that Cleveland’s population has shrunk over the last decade, but its median income has grown.

What makes Cleveland most attractive to investors is its affordability, especially when compared to local wages. Inventory in Cleveland is low, so you need to act quickly. However, Cleveland investors can expect to benefit from both good cash flow and long-term appreciation. For investors, that’s the best of both worlds!

Wichita, Kansas

Kansas has been steadily creeping up in the ranks in desirable real estate markets, and Wichita is the leading city. It’s benefitted from consistent population growth over the past decade, contributing to the 15.3% year-over-year growth as of October 2022. Part of what makes Wichita such an attractive market is its affordability. Despite recent appreciation, the median home price still sits at $219,000.

Wichita comes in as the second most recession-proof city in the US, which is great news for investors concerned about rising interest rates and an economic downturn. It’s expected to perform well because of its steady job and population growth as well as its affordable prices.

With the US housing market in the middle of a major shift and some of the country’s most popular investment markets no longer have such a strong outlook. When selecting markets for investing in multifamily, self-storage, or mobile home parks, you want to select markets with growing demand that leads to strong rental demand. Bring value to your clients and your investors by choosing markets that will hold up during the looming economic downturn.

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