Best Markets for Real Estate IRAs in 2015
Real estate is on the move. The broad-based recovery in housing prices is continuing nationwide, though it seems to have entered a more mature phase than it was in a couple of years ago. Regardless, that’s good news for real estate owners and real estate IRA investors, who are currently receiving the benefit of a double whammy: Rising home prices and rising rents. Of course, this situation always favors those who can move quickly.
Bottom line up front: The ‘sweet spot’ for price appreciation seems to be lining up in the Midwest – particularly for lower-priced homes below $95,000. For income-focused investors, the momentum is in the major cities along the West Coast.
Price Appreciation For Real Estate IRAs
Nationally, the median sale price for a single family home was reported at $186,523 at year-end. That represents a year-over-year increase of 6.4 percent, according to research from Clear Capital, a real estate data and analysis firm.
Home prices have not yet recovered from their pre-recession peaks, however. Indeed, they are well short of the mark, about 22 percent below their 2006 levels. The fact that so many homes bought around that time are still upside down is causing some difficulty for those still in those homes, of course. But that’s gradually becoming an issue for fewer and fewer individuals as home prices rise and they are able to build equity by paying down their mortgages.
The best 10 Rental markets for Real Estate IRAs
For rental property investors with an income bent, you may want to develop a bias towards the Left Coast. That’s because Multifamily Executive magazine has released its annual rent growth leaders for the just-ended 2014 calendar year:
Oakland +11.5 percent
San Jose +10.5 percent
San Francisco +9.8 percent
Denver-Boulder: +9.7 percent
Atlanta +6.8 percent
Portland +6.8 percent
San Diego +6.8 percent
West Palm Beach +6.5 percent
Los Angeles +6.3 percent
Seattle-Tacoma +6.1 percent
The biggest gains going forward are likely to be in lower-end properties, rather than million dollar beachfront properties and their little McMansion cousins. Clear Capital is reporting that the under $95,000 market actually led the real estate market last year, with gains of about 10.4 percent nationwide.
We should also see the Midwest finally catch up to the rest of the country when it comes to pent-up housing demand. The Midwest did not take it on the chin as hard as the coastal areas, but prices in these areas did not rise as spectacularly during the recovery period either (with the exception of housing near the booming North Dakota oil fields!
All told, Clear Capital expects the Midwest to lead the nation in house price appreciation by about 1.6 percent.
Overall, Clear Capital expects the growth in house prices to slow, as the economic expansion matures, but to continue a slow and sustainable increase.