Identifying Emerging Real Estate Markets: Key Indicators for Lucrative Investments

As a real estate investor, it’s important to learn how to identify emerging real estate markets. There are several key indicators that show when an area might be a lucrative investment opportunity. While some cities will always be desirable to live in, a great investor can learn how to spot locations that others miss. Here are some examples of what to look for when considering your next real estate investment.

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Rising rental prices

Rental prices are a solid indicator of whether an emerging real estate market is growing. If an area consistently has rising rent prices, it means there is demand for housing in the area. It’s also good to monitor how long rentals stay available. If rentals have multiple applications and fill quickly, it’s likely a good indicator that the area is an up-and-coming market worthy of consideration.

Population growth

Keep an eye out for areas in the country with increasing population sizes. In particular, look for areas with growing numbers of young professionals and young families. This segment of the population will be looking for homes and rentals, which you can capitalize on as an investor. Cities that are listed as the best places to live, especially those that don’t typically appear on “best of” lists, are also great to consider.

READ: A Guide for First-Time Colorado Homeowners Moving to Our Rocky Mountain State

Company announcements

Another economic indicator to follow is company announcements. For example, if a tech company or a car company announces they’ll be opening a new office or factory in a particular location, take notice. Typically, these announcements create excitement and help grow the local economy in whichever city will be home to new businesses. They’ll likely draw in workers looking for places to live, and that demand brings enticing options for investing in single-family homes and rental units.

Infrastructure development

If an area implements new infrastructure improvements, like new highways, public transportation systems and airport hubs, it could be an indicator of a good investment opportunity. People want to live in cities with shopping, ample housing, new roads and proximity to airports. If a city’s infrastructure starts rapidly improving, it could attract more people to live there.

Government incentives and policies

Changes in zoning laws, tax incentives and other policies can spark economic growth in an area. Locally, you can attend community meetings to learn about upcoming votes and potential new laws that might positively impact real estate investors. It’s also important to follow these developments on the state and federal level as well by keeping abreast of emerging real estate markets.

Urban revitalization

Pay attention to areas that are undergoing major redevelopments. These might be historic areas where a city offers incentives to save specific buildings. Or, it could be a neighborhood making efforts to revitalize and improve. Sometimes local governments offer incentives, like grants, to businesses willing to open shops in areas they want to revitalize. By following the news and tracking these types of developments, you could identify areas that are up and coming to invest in.

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School district accolades

Stay on top of education news, as public school systems are a big part of why people live in specific areas. If a particular school has won a grant, improved its technology, raised test scores or received a particular award, it could be an indicator that people will be interested in moving to that area in the future.

Foreclosure rates

Low levels of foreclosures in a particular area indicate a healthy market. Typically, you can access foreclosure data online. If you notice an area with low foreclosure rates, it could indicate a stable economy and solid job market that supports the local community. Conversely, high foreclosure rates would be a red flag for investors.

Insights from industry leaders

Lastly, it’s also a good idea to meet and develop relationships with changemakers, industry leaders and experienced realtors in various areas. Realtors who work full-time selling homes and managing rentals can give you an on-the-ground perspective on the state of the market. 

These professions can identify neighborhoods that are beginning to see an influx of residents and tourists. Speaking to them regularly can help you stay in the loop about flourishing communities in your area.

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Turning tips into action

By being aware of the emerging real estate markets indicators above, you can spot areas that might be profitable investment opportunities, even after accounting for commissions and other buying costs. Furthermore, being aware of these signals can help you to avoid investing in areas that are either stagnant or in decline.

Luke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times and more.