4 Markets with Unappreciated Potential for the Right Investors
by Carole VanSickle Ellis
As 2025 draws to a close, real estate investors around the country are watching market trends and local economies closely, hoping to identify the “next big thing” before the rest of the investing community catches on. For this reason, REI INK is highlighting four “markets to watch” in place of our usual “Regional Spotlight.” These markets are not typical “hot” markets designated by universal acclaim as poised to skyrocket in value in 2026, but they are markets with a unique potential to emerge in the next 6 to 18 months as surprising areas of interest for retail buyers and investors. This list is, truly, a list of markets to watch and, if appropriate, take action in them before the rest of the investing community realizes their true possibilities.
Warren, Michigan
In 2023, MoneyTalks News placed Warren ninth on its list of “The 10 Worst Places to Buy a Home if You Want It to Gain Value” and warned buyers there was a 42% chance of their home depreciating after purchase.
Just two years later, however, HomeLight has labeled Warren the 16th-most-likely housing market to become a “hot” housing market in 2026, crediting buyer desperation and rising unaffordability in other parts of the Detroit metro area. While it might not be the most flattering analysis, Warren does meet the criteria to heat up in 2026: Homes are spending around two dozen days on market; median home prices are rising but still only about half the national median home price; and Warren boasts a coveted “healthy” housing inventory of 5.4 months.
As the global operational hub for the General Motors (GM) Corporation, home to Daimler Chrysler’s Dodge City manufacturing complex, and the redevelopment site of the former Detroit Arsenal Tank Plant, which hosts an array of tech companies, research & development groups, and corporate headquarters, Warren offers a diverse array of employment opportunities and an affordable housing market, making it a market to watch closely in 2026.
Gary, Indiana
Gary is home to the largest integrated steel mill in the United States, and, in the 1960s and 1970s, this meant a booming economy and steady employment for tens of thousands of residents in the “Magic City.”
However, as automation improved productivity in the steel industry, the number of workers needed to pump out 6 million tons of steel annually fell from 30,000 to roughly 4,000, and the massive exodus that resulted devastated Gary’s economy. Since the 1970s, 100,000 residents have left the area. Gary city planners’ well-meaning but arguably misguided attempts to revive the economy through large-scale municipal construction projects have fallen short of revitalization goals. However, in the residential sector, dedicated local investors already know what national analysts are only beginning to spot: Gary’s rental market is poised to heat up while continuing to offer opportunities not just for appreciation, but cash flow as well.
“In Gary, affordability, momentum, and opportunity intersect,” said Tom Olson, founder of the Olson Group network, Olson Property Services, Inc., and real estate mastermind Good Success. Olson is a Gary native and has dedicated both resources and energy to revitalizing the market.
He noted rental rates have nearly doubled in the last five years, and after-repair values (ARVs) have “soared from $60,000-$75,000 to $150,000-$180,000, with many exceeding $200,000.” Olson said Gary stands out because “it remains one of the few U.S. markets where real estate can still cash flow.” He added, “In Gary, investors can acquire affordable properties, rehab them, and realize strong returns through both rental income and appreciation.” Olson also cited Nippon Steel’s multi-billion-dollar investment, a federal development deal, the new Lake County convention center and Hard Rock Casino, and the city’s renewed focus on “revitalization, neighborhood beautification, and public-private partnerships” as reasons “Gary is not just a city to watch, but a city in which to invest now before the rest of the nation catches on.”
Richmond, Virginia
In January 2025, Zillow named Richmond as its 9th-hottest housing market for the year. Analysts predicted a real estate market that would be “calmer” in 2025, but warned inventory would remain tight, and homes would likely still sell in less than two weeks (January’s average days on market in Richmond was nine days). Twelve months later, Richmond is positioned for another strong year in 2026, particularly given wage growth in the area is outpacing home-price growth, which is improving affordability in this highly desirable market.
In July 2025, the Virginia Housing Commission, working with Ryan Price, chief economist for Virginia Realtors, noted locked-in rates had been stifling sales activity, but observed inventory levels were “improving,” albeit still “tight.” Richmond homes had appreciated about 4% year-over-year, the report said. At time of publication, Realtor.com considers the Richmond market “balanced” and reported the market appeared to be stabilizing with homes staying on market for an average of 35 days. While Richmond may not be white-hot at this point in time, strong employment metrics and a recession-resistant, diverse economy will continue to make this market one to watch.
2026 is Packed with Unpredictability & Potential
While real estate remains one of the most reliable asset classes available to investors, the industry will remain susceptible to uncertainty in 2026. With interest rates and inflation still fluctuating, mortgage rates may continue to fall, which could be good for stressed, would-be buyers and sellers previously “trapped” by their own low, locked-in rates from the pandemic era. Ongoing concerns about tariffs and the cost of materials may also create instability, particularly in higher-priced housing markets. However, the national demand for housing and steady, moderate price growth overall are likely to mediate volatility over the next 12 months. Real estate investors dedicated to watching closely for opportunities and remaining dynamic and flexible in their strategies should find plenty of potential for growth in 2026.
Sidebar
Dauphin Island, Alabama
“Set to Boom” in 2027
Dauphin Island is a barrier island located just offshore of the Gulf Coast that, in contrast to many of its Gulf Shore cousins, appears remarkably resistant to development pressures and overvaluing. The island retains what local real estate professionals call “a quiet, residential character,” and the coastline is protected by environmental conservation policies. The result, observed TravelBinger analyst Marcel Kuhn in November 2025, is “a combination of natural beauty, accessibility, and affordability [that] creates ideal investment conditions.” Kuhn placed the island on his list of “7 Under-the-Radar Beach Towns Set to Boom by 2027” in November of this year.
According to short-term property management provider RedAwning, Dauphin Island is “experiencing a robust performance in its short-term renal market.” RedAwning cited 59% occupancy rates for short-term rentals, average daily rates of $342, and monthly revenues averaging $52,992. The analysts also noted the island’s “mild winter climate” and year-round visitor attractions like the Christmas and Mardi Gras parades “make Dauphin Island an excellent destination for both tourists and property owners.”
