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Regional Spotlight

Savannah, Georgia

The “Hostess City of the South” Continues to Heat Up in 2024 By Carole VanSickle Ellis Long before it was known for its beautiful square gardens, rich history, and the largest and fastest-growing container terminal in the United States, Savannah, Georgia, was known as the capital of the Royal Colony of Georgia. As the oldest city in the state of Georgia today (although no longer its capital), Savannah holds a unique place in the state’s housing market and broader economy thanks to a thriving film industry, a burgeoning tech and manufacturing community, one of the largest ports in the country, and a highly attractive housing market that continues to heat up as 2024 continues. In fact, some analysts believe the entire metro area will become “unaffordable” by 2029 as home values continue to rise in the area. According to a study conducted by GOBankingRates and published in May of this year, Savannah is “outpacing the national average for growth” with home values a year ago of just over $312,000 and expected one-year growth of nearly 9%. The analysts conducting the study projected that by 2029, median home values in Savannah could exceed $511,000, roughly $6,000 more than the U.S. median projected home value for the same time period. By 2033, they wrote, home values could be nearly $712,000 in the area. This growth trend has been in place for a while, now. In late 2023, Urbanize analyst Josh Green observed, “Savannah has bucked a national trend that has seen new housing permits dip by 17.5% vs. the same time period last year,” adding, “Savannah’s total of 2,090 new housing permits in the first six months [of this year] pointed to…a resilient local economy.” Green cited a “booming jobs market, growing port-related industries, and record tourism” as primary drivers for the Savannah market. The Allure of Savannah Real Estate Remains Strong As the population in Savannah and the surrounding metro area (Savannah is the seat of Chatham County, and the Savannah MSA includes Chatham, Bryan, and Effingham Counties) continues to climb, fix-and-flip investors continue to find opportunities in Savannah and the surrounding region. According to data from ATTOM Data Solutions, in 2023, Savannah, Georgia home flips surged in average ROI, rising from 14.3% to 56.8%. New single-family construction appears poised to continue the trend, also, with 7.5% more permits for single-family units issued in 2023 than in 2022. As demand stubbornly rises, Chatham County inventory has responded with slightly lower listing prices (median list price was 4% lower in April 2024 than a year prior) and slightly increased listing volumes (the county’s 764 active listings in April represented a 78.9% increase over the year prior). An increasing number of homebuyers appear unwilling to compromise when it comes to single-family living despite still-low volumes of available inventory, although local developers seem to be counting on eventual capitulation in favor of larger and modern multifamily options. According to data from the U.S. Census Building Permit Survey, applications for small multifamily residences (2-4 units) fell over the course of the past year by nearly 91%, while applications for larger 5+ unit buildings rose by just over 63%. “It seems that Savannah is leaning toward larger housing complexes,” observed Point2 researchers in light of the data. “[This] could be a sign that smaller multifamily residences are going out of style.” In the Savannah luxury market, however, nothing is going out of style yet. Top-tier homes in the area were selling for 137% more in May 2024 than they were the year prior. “In many areas, [luxury] prices came back down or plateaued [when pandemic-related remote work ended], but in some cities, luxury price growth has continued unabated,” wrote Realtor.com data journalist Evan Wyloge. Realtor.com senior economic analyst Hannah Jones observed cities that have retained price growth in the high-end space in the wake of the pandemic often are “strong retiree destinations” or have historically been areas where buyers could obtain “relatively more affordable, wide-open spaces.” She also noted regions like Savannah hold their appeal thanks to “sunny, warm climates and the lifestyle those attributes allow,” concluding, “Even as some markets have seen luxury prices stabilize, these cities continue to attract affluent buyers.”  Savannah’s “Southern luxury vibe, with big, old trees and historic homes,” is the perfect fit for this trend and continues to attract out-of-state buyers seeking affordability and a pleasant location. During the pandemic and in the two years following, California alone contributed nearly 26,000 people to Georgia’s population as homeowners sought the relative affordability of the southeast. The Savannah Economic Development Authority (SEDA) reacted quickly to this trend, establishing the Savannah Technology Workforce Incentive (STWI), a program that reimburses individual moving expenses for tech workers moving to the area. Local planners at SEDA viewed the incentive program as a growth move designed to create a workforce that would attract tech employers in the coming years. “If the next tech company wants to move here and hire 30 people, we want to have people already here who can do the job,” explained Jen Bonnet, who oversaw the program at the time. Incoming Employers Could Change the Face of the City’s Housing Market Savannah’s concerted effort to bring in qualified potential employees for high-value employers in lucrative industries like technology appears to be paying off. As of May 2024, global startup funding and support company F65 was tracking 26 promising tech companies and startups in the Savannah area, including patent developer Team RGE, medical prescribing platform MedView Systems, and 3D development gaming and film studio Tupelo Labs. The region also welcomed the Hyundai Metaplant, a multibillion-dollar electric vehicle plant projected to bring in 8,100 jobs over the next five years and create roughly $1 billion worth of investment from suppliers. This is the second electric vehicle plant to commit to making its home in the state and the first in the Savannah area. Although Rivian, the first EV manufacturer to commit to Georgia with plans to build a plant closer to Atlanta, has currently

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York, Pennsylvania

Investors Prepare for Pivot in the “White Rose City” By Carole VanSickle Ellis York, Pennsylvania, is one of the oldest cities in the country. Also known as “The White Rose City” in a nod to the white heraldic rose of England’s House of York, the city was initially named Yorktown in 1741 for its namesake across the ocean. York, which also  styles itself “the first Capital of the United States” (this is debatable since Philadelphia, Baltimore, and Lancaster all preceded it), is home to many historic sites and has emerged as a top retirement location in the past few years thanks to high quality healthcare, relatively affordable cost of living, and a vast array of attractive, seasonal events, including the York Fair, which opened in 1765 and is generally considered “America’s first fair.” Opportunities for real estate investments abound in the area, whether an investor prefers long-term investments or shorter-term fix-and-flip options. According to ATTOM Data, fix-and-flip deals are particularly attractive in York right now and showed profit margins of more than 107% as of Q3 2023. “Pennsylvania is home to…four of the 10 best markets for house flipping by ROI,” observed Motley Fool research lead Jack Caporal in March 2024. In addition to York, Caporal listed Scranton, Pittsburgh, and Harrisburgh/Carlisle. Caporal also used Q3 2023 numbers in his report, indicating York’s 2023 gross flipping profit was nearly $105,000. While York, like most areas of the country, is struggling with low housing inventory, local real estate investor Eric Brewer observed that the “frenzied activity” of 2021 and 2022 has eased off. “We are not seeing people putting in offers sight-unseen or waiving inspections very often anymore,” he said. Brewer, who is the owner and founder of Integrity First Home Buyers (IFHB) and helps train and coach other investors to be prepared for any market condition, called the current buyer approach to making a home purchase “more disciplined,” but noted that his company is still consistently listing homes and seeing them spend only about 10 days on the market after being listed. IFHB invests in rental properties and fix-and-flip deals, and Brewer reported most successful offers are coming in at or slightly above list price. He credited realistic listing prices and solid renovations for this, noting, “You must price according to location and condition or your property will sit.” Inventory is Falling, but Prices Remain Steady Traditionally, real estate analysts have been able to predict future market shifts based on the amount of inventory available and the current sales prices of homes in an area. When prices rise out of reach due to tight inventory and, in many cases, rising interest rates, analysts expect the market to hit a “tipping point” at which prices will begin to fall and, at around the same time, inventory will begin to increase because fewer home purchases are made at the peak price point. However, in York, while home purchase volumes have been declining steadily and prices have held more or less steady (rather than risen) in recent months, the market does not appear to be closing in on its tipping point just yet. Brewer noted that an investor with a strong off-market lead generation program will likely not experience the same strain the broader York market is experiencing when it comes to finding properties to purchase. “When it comes to off-market inventory, we have not seen a substantial change, but that is likely because we have a history of spending a significant amount of capital on marketing and keeping ourselves top-of-mind for people who are in a position that forces them to sell,” he said. For example, he said, IFHB does not deal with “discretionary buyers” who may be weighing their options, deciding whether to remain in their current home or sell and purchase a new one. Instead, they deal with homeowners who must sell, possibly due to an employment-related relocation, divorce, or job loss, and are in the process of deciding how to accomplish the sale. According to Realtor.com, there are currently just over 600 homes for sale in York, with 241 rentals also listed. Although sold and listed prices began to diverge in March 2024, York properties still are typically selling for “approximately the asking price,” Realtor.com analysts stated at that time. Rocket Homes analysts agreed and, the following April, reported the median sales price of York properties was up about 15% over the same month a year prior, and inventory was down nearly 1% compared to April 2023.  Relatively flat inventory levels could have something to do with local population trends as well. Since the 2020 U.S. Census, the York population has increased by only a few thousand people. However, a growing interest in retiring in the York area could turn that particular trend around in the coming years. According to U.S. News & World Report’s “Best Places to Retire in the U.S. in 2024” report, York is the fifth-most-attractive location in the country in which to spend retirement years. The area’s relatively low cost of living also makes it attractive to professionals working in the Baltimore area. “This small metro is known for its rich history, museums, and numerous hiking trails,” raved USA Today reporter Amritpal Sandhu-Longoria. Multiple colleges and universities in the area attract a consistent population of students as well, and the York Historic District, a national historic district that encompasses more than 300 buildings, attracts thousands of tourists annually as well as retirees. New Legislation Could Eliminate Unprepared Investors At present, York is still a highly attractive market for investors, and competition for off-market deals remains fierce. Cash buyer activity remains high as well. However, at least some of that cash-buyer activity could fade away as more Pennsylvania cities adopt legislation requiring residential property wholesalers to apply for and receive a license before entering the business. A number of Pennsylvania cities have already passed legislation requiring residential wholesalers, who typically get properties under contract and then assign the contract to another investor for a fee, to

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Bridgeport, Connecticut

“Park City” Real Estate Bucks Post-Pandemic Trends, Presents Headwinds By Carole VanSickle Ellis All around the United States, luxury real estate markets are softening, but Bridgeport, Connecticut, also known as “Park City” for its 1,300 acres of public parks, is home to one of only three luxury markets bucking the trend. In the northeastern town that shares a metropolitan statistical area (MSA) with Stamford, Connecticut, luxury property listings increased toward the end of 2023 while prices in this housing tier continued to rise. In fact, the entirety of the Bridgeport market is still going strong in 2024 due to ongoing, strong demand for housing in the area and limited inventory. Bridgeport is part of a cluster of northeastern markets designated by Realtor.com as some of the hottest housing markets in the country. These markets, wrote Realtor.com economic research analyst Hannah Jones in June of last year, “boast strong employment conditions…high housing demand, and tight inventory.” For real estate investors, the Bridgeport market is more accessible than many other northeastern markets due to the availability of land for multifamily development and a relatively large number of older WWII-era homes in need of updates and renovations. “About 40% of Bridgeport’s housing stock was built prior to 1940 and would benefit from the kinds of energy-saving, cost-saving upgrades that would occur more routinely in a housing market that features significant new production,” noted city planners in a 2023 housing analysis. “Bridgeport is home to a great concentration of construction-related businesses… [and] this industry-cluster uniquely positions the city to capitalize on increased housing production,” the research team concluded. “Residential development can be a core industry within Bridgeport just as it is in the U.S.” “[Bridgeport] has been sort of a diamond in the rough, but we are getting discovered,” local developer John Guedes told the New York Times in late 2023. Guedes. His construction firm had just acquired a former Holiday Inn and announced plans to convert the 268-room hotel into roughly 100 one- and two-bedroom luxury apartments catering to young professionals. Guedes predicted his residents would likely “take the train for work to New York City” and would pay rents averaging $2,750 a month. The project has been underway since 2022, when the hotel closed its doors and fell victim to hospitality industry struggles in the wake of the COVID-19 pandemic. Guedes’s company, Primrose Companies, recently received approval to move forward with a riverfront condominium development on the Housatonic River after a local judge ruled its application for development rights could not be denied by the municipal Planning and Zoning board, which had bogged down the process for six years. Guedes expects those townhouse units to list for just under $500,000. The ruling is important for Guedes and other local developers because the judge stated in the ruling, “If an application conforms to regulations, the board has no discretion and must approve it.” As is the case in many markets presently, Bridgeport’s housing inventory struggles with affordable housing availability. For investors, the acquisition process is challenging because many owners are electing not to sell due to difficulties finding and financing another home in the area. A Prime Location for Commuters, but More Single-Family Housing is Needed Thanks to a median home price more than $100,000 lower than national prices, more than $450,000 lower than median prices in New York City, Bridgeport has emerged as an ideal location for commuters to the Big Apple. Trips into New York City and surrounding areas are entirely manageable by train, bus, or ferry. Commuters on the Metro-North railroad reach Manhattan in less than an hour. To serve this commuting population, Bridgeport has a number of multifamily developments currently underway. However, local inventory of single-family residences remains low. In 2023, Bridgeport posted a 61% year-over-year increase in housing permits, but most of those permits were for multifamily buildings. Interest in multifamily assets from out-of-state investors has also pushed demand for these developments (and their price tags) higher, creating a space in the market for investors willing to think creatively about the creation and acquisition of single-family properties. Connecticut Realty Trust chairman Robert Kligerman told the Hartford Business Journal in late 2023 rising prices in the distressed multi-family sector pushed his family company into build-to-rent single family residential (SFR) construction and duplex developments. Kligerman leveraged the purchase of a multifamily property with an attached 35 acres approved for single-family development in neighboring Danbury to ultimately build 23 duplex-style houses and 19 single-family homes that will be exclusively rentals. The community includes a pool, clubhouse, and dog park, and residents pay between $3,400 and $4,500 a month in rent for their units. However, there is an ongoing need for more single-family housing. In March 2024, Construction Coverage ranked Bridgeport in its “Bottom 15” for small cities with single-family homes. Currently, only about 41% of housing in Bridgeport is single-family. Local real estate professionals and analysts blame the failure of local, residential construction to “bounce back” after the 2008 housing crisis. According to data from the Connecticut Department of Economic and Community Development, residential construction rates were far below peaks reached in the early 2000s and actually falling in 2015 and 2016, when the rest of the country was marking the start of recovery from the Great Recession and the housing and financial meltdowns. A combination of suppressive factors contributes to Bridgeport’s lack of single-family residential construction, writes CT Mirror housing reporter Ginny Monk. “The state faces a shortage of construction workers as well as rising costs of land and materials,” she said, adding, “Many construction projects are also slowed or halted by what experts say are restrictive local zoning ordinances.” For an investor able to acquire properties for renovation or develop new single-family units, there is great opportunity in Bridgeport. Connecticut has tried to incentivize developers to build more units of all types and consistently include “middle-income units” through a combination of tax credits, loans, and grants, but experts say inventory will not loosen any time soon. Nandini Natajaran,

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San Jose, California

“The Capital of Silicon Valley” Still Holds Opportunities for Investors By Carole VanSickle Ellis If you live in San Jose, California, then some in the real estate space believe you might need to steel yourself for something most Californians are not very used to: falling home prices. According to Zillow economists, San Jose could see the largest decrease in home prices in the country over the course of 2024, with estimated losses exceeding 6%. The analysts cited high mortgage rates and limited opportunities for new construction as reasons for falling home values. “Builders have limited opportunities with a severe lack of available land,” the team observed, adding potential sellers may add to the local inventory if interest rates fall because lower interest rates will create more mobility among homeowners. Of course, with median sales prices still in excess of $1.3 million and up nearly $25,000 year-over-year as of February 2024, the San Jose market is still a rich one from most perspectives. Nevertheless, local investors say the market is full of opportunities for investors willing to put in some effort. Derek Torculas, owner and CEO at California-based NorCal Home Offer, cited accelerated appreciation as one of the biggest draws for investors interested in Golden State investing. “I find properties that make sense all the time,” he said, adding his company is currently engaged in both fix-and-flip deals and buy-and-hold strategies. As of early 2024, Torculas’s tactics still hold strong, but stiff competition from other investors continued to drive prices skyward. In fact, according to a Redfin analysis published in August 2023, San Jose topped the list of metro areas with the highest median sales prices for investor-bought homes, tying with San Francisco with a median sales price of $1.8 million. To Lori Greymont, president and CEO of the San Jose Real Estate Investors (SJREI) Association, ongoing strength in the market simply indicates San Jose will not follow other west-coast markets into a downturn any time soon. “The San Jose market is like an island,” Greymont said. “While we saw a slow-down in the number of sales over the last year-and-a-half, the price of homes has not only held steady but new and newly renovated homes are turning as quickly now as they did in the past.” Greymont has been buying, selling, and managing both single- and multifamily properties for more than 25 years. A “Builder’s Remedy” in Jeopardy Clearly, there is not currently a surplus of housing in the San Jose area, something that local officials have tried to combat using a vast array of city plans designed to bring in affordable housing options without succumbing to what some insist is a dire threat of “overdevelopment.” However, as the battle continues, many developers accuse the city of simply dismissing many solutions to the problem out of hand without presenting viable alternatives. This conflict stems from a state law in California that permits developers to build projects of nearly any height and size in cities that lack state-certified housing plans. San Jose was one such city until February of this year, resulting in 29 new developments receiving builders-remedy approval between January 2023 and February 2024. However, now that the city’s plan has been approved, only two-thirds of the approved projects will be permitted to continue, thereby chopping more than 4,000 pre-approved units from the city’s pending housing and creating financing complications for the city and private developers. “Less density is better than zero density,” said Erik Schoennauer, a local land-use consultant and representative on seven of the rejected builders-remedy projects. “Having plans that can’t be financed means nothing gets built, and the city has a lot of plans that are financially infeasible to build,” he warned. In response to criticism of this nature, the city announced a streamlining initiative to enable older and underutilized buildings to gain approval for residential upgrades and renovations more quickly. Jerad Ferguson, a San Jose principal planner, told the San Jose Spotlight in February 2023 the infill ordinance will “enable the construction of more affordable housing and allow projects to skip public hearings.” San Jose also plans to update zoning codes to permit housing development in three local business corridors as early as next spring. Those corridors are 13th Street, Japantown, and Willow Glen. However, critics of this move say the proposed zoning changes threaten historic businesses, so investors in the area should monitor local discussion closely, particularly around the Japantown area. San Jose’s Japantown, which grew from the site where Japanese immigrants originally settled in the Santa Clara Valley, is one of only three historical Japantowns still extant in the United States today. Hospitality Sector Could Indicate Ongoing Weakness in 2024 The entire state of California has long been considered a premier travel destination, and San Jose enjoys a top position in the ranks of places tourists like to visit. However, post-pandemic, the city’s tourist sector has not entirely recovered, and this could mean long-term problems for both the local hospitality industry and hospitality-related real estate. Matthew Martinucci, vice president of sales and destination services at nonprofit destination marketing organization Team San Jose, told the Silicon Valley Business Journal in February of this year that he believes San Jose’s reliance on tourist interest from visitors to San Francisco has hurt the city’s post-pandemic recovery. “Much of the international focus for the Bay Area is negative now,” he explained, adding, “San Jose has enough [positive elements] to stand on its own.” In 2019, San Jose boasted roughly 20.6 million international and domestic trips with an annual cumulative spend of nearly $3 billion. The most recently available numbers today (2022) indicate a loss of nearly 1 million trips (still up 35% over 2021) and an annual cumulative spend down about $1 billion compared to 2019. 2023 numbers have not yet been published, but in September 2023, Silicon Valley Business Journal reporter Devan Patel warned, “The slow post-pandemic recovery in business and international travel is still weighing on the [tourism] sector.” This weight is making itself known

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Detroit, Michigan

The “Motor City” is Coming Back for More By Carole VanSickle Ellis At the end of 2023, Detroit, Michigan, was enjoying some unseasonably warm weather thanks to a “no-snow December” that posted high temperatures in the 40s and about one-tenth of an inch of snow for the Motor City (vs. “normal” December temperatures around 30° Fahrenheit and snowfalls of more than 10 inches). Maybe it was the real estate market. Detroit’s housing prices have been significantly hotter than usual – just like the weather. “Detroit raced past Miami as the fastest-appreciating housing market,” gushed the New York Post in early January 2024. Miami spent 16 months in the top spot, but fell in November, CoreLogic reported, thanks to Detroit’s 8.7% year-over-year appreciation (vs. 8.3% in Miami). Al Bazzy, Detroit turnkey provider Strategy Properties broker and property specialist, thinks Michigan business and tax policies could have something to do with the Motor City’s “win.”  “Michigan has one of the lower corporate income tax (CIT) rates in the country at just 6% and a flat income tax of just over 4% on taxable income,” Bazzy observed. Detroit is also among the most affordable major metro areas in the country with a cost of living lower than most other cities of its size. A Downtown Revitalization Continues to Yield Returns a Decade Later In 1903, when Henry Ford founded the Ford Motor Company in Detroit, he laid the foundation for what would become a booming economic engine that would power much of the state. By 1920, the “Motor City” was the fourth-largest city in the country and hosted General Motors, Ford, Chrysler, Packard, and Studebaker. When the automotive industry began to decentralize in the 1960s and 1970s, the Motor City and its residents suffered in the fallout. Between 1950 and 2010, the city lost 61.4% of its population and experienced a dramatic increase in poverty. In the wake of the housing crash in the mid-2000s, nearly one-third of Detroit’s 139 square miles were considered abandoned land and the city lacked resources for basic municipal services like streetlights. Many believed the city had seen its last heyday, but groundwork laid by Dan Gilbert, CEO of Quicken Loans, when he decided to move his company’s headquarters and 4,000 employees to downtown Detroit in 2007, changed the city’s downward trajectory. Following Quicken’s lead, Blue Cross Blue Shield of Michigan, DTE Energy, and other corporations also moved into the downtown area, acquiring properties and redeveloping vacant land. Beginning in 2014, JPMorgan Chase committed more than $200 million to the downtown revitalization, including putting funds toward reviving real estate, launching small businesses, and jobs training for residents. Michael Illitch, founder and owner of Little Caesar’s Pizza and longtime supporter of Detroit professional sports, also fulfilled his company’s own $200 million promise of private investment in the downtown area when he opened Little Caesars Arena and “District Detroit,” a commercial, entertainment, and residential district with the arena as its “nucleus.” The development required $2.9 million in workforce training and ultimately cost Illitch companies $539 million. The arena alone brought in nearly 2,000 jobs, and District Detroit created more than 20,000 construction and construction-related jobs as well as 3,000 other permanent jobs. More recent analyses put that number closer to 9,000. “Detroit has rebounded to a degree few would have thought possible,” wrote Fortune contributor Matthew Heimer in September 2023. “Thousands of small businesses have helped revitalize neighborhoods. New housing is replacing dilapidated, vacant buildings. Startups are flocking to a rebuilt downtown, and the jobless rate is down to 6.4%,” he continued. In 2018, Google moved into the District from the suburbs; Microsoft offices followed in 2019, and Tesla announced in late 2022 it would bring a “unique new R&D facility” to the Detroit area. Bazzy noted the city’s revitalization is still ongoing; investors in the metro area are almost exclusively focused on fix-and-flip strategies that enable them to sell for top dollar to retail buyers. If an investor wants to own single-family rental (SFR) properties, he continued, they must look to more suburban areas. “So many areas of the city are so hot, we focus on acquiring a couple streets down from the really in-demand sub-divisions where prices have doubled or tripled,” he explained. “More Competition” Than Ever As the Detroit housing market heats up and fewer homeowners elect to sell their properties, competition for available assets in the Detroit area is heating up as well. However, median home prices are still much lower, relatively, than in other cities of comparable size; Detroit-area median home prices hover around $250,000 (vs. nearly $400,000 nationally). Prices are still climbing, and local analysts say it is unlikely that the Detroit market will correct to the same degree as other pandemic-boom markets. High levels of housing demand will keep the value of rental properties high for the foreseeable future, although investors interested in short-term rentals could find themselves in a position where conversion begins to look appealing. According to data from AirDNA and Axios, Detroit hosts are experiencing below-average income despite the state of Michigan’s overall appeal in this space. In fact, Detroit hosts earned about $7,000 in 2022 (the most recent numbers available) compared to a national median of $14,000. Investors should note, however, Detroit’s long-term rental owners face strict compliance requirements, with the city demanding rental property owners obtain a certificate of registration, pass inspection by the city each time a property gets a new resident, and obtain a lead clearance report. All of these requirements feed into a municipal certificate of compliance, which indicates a Detroit property is safe for occupancy. This process is handled by the Buildings, Safety Engineering & Environmental Development (BSEED) Department on a municipal level. Bazzy observed that many rental properties in Detroit were built prior to World War II, making them more susceptible to code and health issues, one of the primary reasons for the development of the BSEED programs. The age of inventory in the city and surrounding areas also means there are

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Indianapolis, Indiana

The “Crossroads of America” Gears Up for a Busy 2024 By Carole VanSickle Ellis In January 2023, Zillow analysts released their much-anticipated “hottest housing markets” list. Not surprisingly, last year’s list was dominated by the south and southeast; only two midwestern cities even made the list. This year, however, Indiana’s “Crossroads of America,” Indianapolis, catapulted to number four on the list, leaping over all of last year’s frontrunners to snag the spot. Zillow analysts placed only three markets ahead of Indy: Buffalo, New York; Cincinnati, Ohio; and Columbus, Ohio. “2024’s hottest markets all boast solid economic fundamentals, relatively fast-moving for-sale housing inventory, plentiful likely buyers, and expectations for stable home values,” observed Zillow economic analyst Anushna Prakash. She added, “[The top 5] should stand out as strong in a housing market still buffeted by low inventory and relatively high mortgage rates and prices.” The real estate data giant bases its rankings on analysis of forecast home value growth, recent housing market velocity, and projected changes in the labor market, home construction activity, and number of households, Prakash noted. For investors already active in Indianapolis and the surrounding area, the news that the market is heating up is nothing new. However, investors like Dustin Malloy, CEO and founder of Cash4Homes and an active wholesaler in the area, are thrilled by the activity and insist that rising demand in the area is affecting their businesses positively despite relatively low inventory. “There is always someone in a situation you can help sellers out of while making great income on the transaction,” Malloy explained, adding, “There are lots of buyers, and many will buyyour deals with only one call.” Malloy, who is active throughout central Indiana, noted there is a substantial demand not only for larger three- or four-bedroom properties, but also smaller two-bedroom units to serve as rentals in the area. Many developers have reported seeing falling demand for smaller single-family rental (SFR) properties elsewhere in the United States, which makes the steady demand in Indianapolis intriguing and somewhat unusual. Bruce McNeilage, co-founder and CEO of Kinloch Partners, a real estate investment company specializing in SFR development and management in the southeast, noted, “We have been following growth patterns outside the urban core [in southeastern markets] because the value is better for us and our residents and fits their lifestyle.” While this trending demand for larger properties may emerge in the Midwest a year or more down the road, demand for all sizes of rental stock has skyrocketed so dramatically in the past 12 months that competition in Indianapolis has nearly doubled for each rental unit. According to the U.S. Census Bureau, nearly two-thirds of Gen Z renters in the Indianapolis area are spending one-third or more of their annual income on rent. While rents in many major metro areas around the country have eased off or even fallen in recent months, the Harvard Joint Center for Housing Studies reported midyear 2023 that Indianapolis had posted 7.7% rent growth year-over-year. However, the center predicted rents in still-warm markets would “likely also slow in the future… [based on] softening of other rent indicators.” Until this happens, Indianapolis renters may find smaller, older properties more affordable and attractive. So far, however, all systems (and rental investments) appear to be “go” in the Indianapolis area. “We consider Indianapolis to be an excellent destination for cash-flow rental properties,” said Marco Santarelli, founder and CEO of Norada Real Estate Investments. “Indianapolis has a record of being one of the best long-term real estate investments in the U.S. over the past 10 years.” A Growing Economy Going Full Speed Ahead As the home of the famous Indianapolis 500, Indianapolis gets its fair share of speedway jokes and “full speed ahead” references. The Indianapolis Motor Speedway, itself, is an incredible economic engine for the area, generating $1 billion in annual economic activity as a result of events and operations at the venue itself. “Of this total, more than half — $566.4 million — is attributed to the Month of May and the world-famous Indianapolis 500 Mile Race,” observed Forbes contributor Bruce Martin in October 2023. Martin was reporting results from a newly published study by the Indiana University Public Policy Institute that focused on breaking down economic activity related to the speedway. In the report, the researchers credited the speedway alone with 8,440 “direct and indirect full-time equivalent jobs, totaling and estimated $360 million in labor income.” Investors should note short-term rental activity in the area spikes during speedway events, with Airbnb reporting hosts in the Indianapolis area collectively made more than $1 million in the two weeks leading up to the race in 2021. A “typical host” earns more than $1,000 over the race weekend, Airbnb representatives said. The speedway is only one facet of Indianapolis’s accelerating economic momentum, however. Statewide, the Indiana Economic Development Corporation (IEDC) is leveraging a variety of investor- and business-friendly programs to incentivize economic growth in the area. In Lebanon, Indiana, a suburb of Indianapolis roughly 20 minutes from the city center, Eli Lilly and Company recently broke ground on a $3.7 billion investment that will ultimately bring in a projected 700 direct jobs. The manufacturing operations center is part of the LEAP Research and Innovation District in Lebanon. The district consists of 9,000 specially designated acres on the Indiana I-65 Hard Tech Corridor and boasts, according to the IEDC, “an experienced workforce of 1 million+ within a radius of 60 minutes.” The Indianapolis Chamber of Commerce notes there are many local and municipal programs designed to keep the Indy economy growing, also. In a recently published report on the topic, the chamber reported average hourly wages of $44/hour, $134.7 million in active tax abatement projects, and a “land strategy” incorporating public land, Opportunity Zones, and remediated properties in order to “catalyze investments” from developers and target businesses. The program is part of an evolving initiative that has already created a highly attractive industry ecosystem in the area with the top six industries

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