All Forum Posts by: Nick Gerli

Houston has had some of the worst real estate returns of any market in the US over the last five years. Its price appreciation is worse than rust belt markets like Albany, NY and Harrisburg, PA. 

But is a rebound around the corner? After all, oil is now up around $65/barrel, which could return Houston to the strong job and wage growth it experienced from 2005 to 2015. 

Moreover - will that rebound be felt across the metro? Or in specific neighborhoods? There are big variations in how different ZIP codes have performed in value growth in recent years.

The video below uses hard data from the US Census and Zillow to analyze Texas' big four real estate markets:  Austin, Dallas, Houston, and San Antonio. The central question being: what is the best one for investment in 2021?

Austin has the most growth. But it also has the most permitting and lowest yields. Houston has the lowest growth, but offers the most value. Dallas and San Antonio are somewhere in between. Which one comes on top?

Take a look at the video below and let me know your thoughts. The results aren't what you would expect!

@Costin I. 

I agree with your take. I speak to many investors from around the country who want to buy up properties in Austin for "appreciation". However, they have no plans on moving there. 

Combine this speculation with record-setting new permitting in 2020 and you have a recipe for disappointment for anyone getting into Austin right now.

Great point! I need to start incorporating Breakfast Tacos / Capita into my market modeling. 

Austin and Phoenix are two very hot real estate markets. Both have a lot of demographic growth. Both have seen strong appreciation in recent years.

But they have very different histories. 

Phoenix has a boom or bust past - highlighted by the massive swings in annual value appreciation in the graph below.

Austin has a much more consistent history, although with generally lower rates of appreciation during the good times. 

What market do you expect to be the superior performer over the next five years?

 Great question Danny!

Zillow's market data is fairly consistent with CoStar/Yardi overall. 

However, Zillow rent growth in 2020 appears a bit higher than those other sources because Zillow has a heavier weighting to duplex and single-family rentals, which have outperformed.

CoStar/Yardi focuses more on large multifamily.

 Thanks for the feedback Thomas! It's great to see local insight aligning with the data. 

Originally posted by @Jon Q.:

Originally posted by @Nick Gerli:

Many rental markets did well in 2020 despite the headwinds of a recession and pandemic. The graph below charts the markets that performed the best in terms of rent growth. They're a surprising list to say the least!

Notes: covers the "metro area" for each market; source of data is Zillow

Memphis:  not many would have predicted this being the leader at +8.3%. The market has some moderate growth. However, I suspect a lack of new supply might be the driving force behind this performance.

Tucson: Phoenix's little brother to the south has been rip-roaring over the last couple of years.

Syracuse: definitely would not have called this. Most investors I talk to hate Upstate NY. 

Riverside: one of the least affordable markets in the US when comparing rents to incomes. Yet rent keeps growing!

Boise: #1 for appreciation and #9 for rent growth in 2020.

Indianapolis: a very underrated Midwest market with lots of growth and affordability. 

Chattanooga: one of three markets in the US to have gained jobs in 2020.

What do you all think about this list? Do you expect repeat performances in 2021? Are you invested in any of these markets?

Not accurate. Zillow is worthless / junk data. I wouldn’t use it.

This is from multi housing news. Much more accurate ranking of rent growth for 2020: 

Why do you think Zillow is "worthless" data? Why is your source better?

Originally posted by @Remington Lyman:

Originally posted by @Nick Gerli:

Many rental markets did well in 2020 despite the headwinds of a recession and pandemic. The graph below charts the markets that performed the best in terms of rent growth. They're a surprising list to say the least!

Notes: covers the "metro area" for each market; source of data is Zillow

Memphis:  not many would have predicted this being the leader at +8.3%. The market has some moderate growth. However, I suspect a lack of new supply might be the driving force behind this performance.

Tucson: Phoenix's little brother to the south has been rip-roaring over the last couple of years.

Syracuse: definitely would not have called this. Most investors I talk to hate Upstate NY. 

Riverside: one of the least affordable markets in the US when comparing rents to incomes. Yet rent keeps growing!

Boise: #1 for appreciation and #9 for rent growth in 2020.

Indianapolis: a very underrated Midwest market with lots of growth and affordability. 

Chattanooga: one of three markets in the US to have gained jobs in 2020.

What do you all think about this list? Do you expect repeat performances in 2021? Are you invested in any of these markets?

 I am still a firm believer that Columbus, Ohio is the best market.

 I love Columbus - it has so many great attributes (affordability, demographic growth, reasonable supply pipeline)!

Many rental markets did well in 2020 despite the headwinds of a recession and pandemic. The graph below charts the markets that performed the best in terms of rent growth. They're a surprising list to say the least!

Notes: covers the "metro area" for each market; source of data is Zillow

Memphis:  not many would have predicted this being the leader at +8.3%. The market has some moderate growth. However, I suspect a lack of new supply might be the driving force behind this performance.

Tucson: Phoenix's little brother to the south has been rip-roaring over the last couple of years.

Syracuse: definitely would not have called this. Most investors I talk to hate Upstate NY. 

Riverside: one of the least affordable markets in the US when comparing rents to incomes. Yet rent keeps growing!

Boise: #1 for appreciation and #9 for rent growth in 2020.

Indianapolis: a very underrated Midwest market with lots of growth and affordability. 

Chattanooga: one of three markets in the US to have gained jobs in 2020.

What do you all think about this list? Do you expect repeat performances in 2021? Are you invested in any of these markets?