For real estate investors, it’s relatively easy to look at all the news coming out about the real estate market and lament. You might feel like there’s no place for you anymore, and investing is too hard. Believe us, that’s not the case! Part of the problem is that many of these reports and analyses look at overall medians and averages. 

While these are concise ways to talk about overall trends in the country, investors need to zoom in. The real estate market is not uniform. It varies, and investors must take advantage of it. We found these maps by ResiClub (courtesy of Fast Company) helpful in illustrating this point.

These maps effectively represent median home prices within individual markets across the country. While the $380,000+ median price sounds scary, we must recognize that that number doesn’t reflect every market.

So, what do these maps tell us about the real estate market…and investing?

3 Realties About Investing in U.S. Real Estate 

Reality #1 - Most countries hit a median price of around $200k. 

While the median home price in the U.S. seems totally unreasonable, that’s not the reality for much of America. That number is thrown off by overpriced primary markets seeing local property price medians at sky-high levels. Take a closer look at the interactive map for the Western United States – countless zip codes see typical home values nearing or upwards of $1,000,000. That’s going to throw things off when all the numbers are aggregated!

By contrast, the South and Midwest see most zip codes with medians below $200,000. That number is much easier to swallow, particularly for real estate investors. There is an undeniable affordability crisis in the United States, but that doesn’t mean everywhere is unaffordable.

Reality #2 - Affordability isn't found in primary markets.

If you’re looking for a deal on a property, you won’t find it in the nation’s most desirable cities. New York City is notoriously overpriced. San Francisco and Los Angeles are much the same. Even hip markets like Denver, Colorado, and Austin, Texas, see prohibitive prices on typical homes. Investors would do well to look beyond the obvious choices. Secondary and tertiary markets will be the ones providing better opportunities.

Reality #3 - Investors must strike a balance between affordability and demand.

Just because you find a ZIP code with a median price of $95,000 doesn’t mean it makes a good investment market. Cheap isn’t the goal here. While investors can (and should) strategically choose markets more affordable than their local area, they must factor in rental demand. Areas with exceedingly low housing prices will be more rural, sparse, and have fewer amenities and job opportunities. That means rental demand won’t be there.

Investing in real estate has never been about finding the cheapest properties. It relies on converging factors that produce solid numbers in strong markets.

Rules for Finding Investment Properties in Today's Market 

Rule #1 - Look beyond the obvious.

Don’t limit yourself to the obvious suspects when seeking a new investment market. Look beyond the hype. We believe investing in real estate should be boring. No big ups and downs, no surprises. Just steady, reliable markets with a history of growth. These might not be exciting places, but they’re ones you can count on. Instead of Nashville, think Memphis. Instead of Austin, think San Antonio.

Rule #2 - Research, research, research.

The real estate market as we know it has changed. The fundamentals may remain, but we can’t expect a return to the pre-2020 market conditions. Because of this, investors must brush up and be much more diligent as they look at their options. Talk with other investors in these markets. Look at the metrics and trends. Contact turnkey providers operating in the area.

Rule #3 - Strike worthwhile partnerships.

Remember, you don’t succeed in SFR investing based on the property’s price. You succeed based on the quality of the home, your property management, and the preservation of value. Regardless of where you invest, prioritize the partnerships with providers and vendors that take your rental property to the next level with excellence, consistency, attention to detail, and unbeatable customer service.

Investors may have to look harder to get what they want these days, but hope isn’t lost. Don’t get bogged down in doomsaying. Instead, be focused, attentive, and thorough as you navigate the bold new normal in real estate.

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