You can’t build a real estate success story on short-term price spikes. Markets that rise and fall quickly, are not profitable in the long-run. What you should focus instead is places that support income growth, and economic diversity.
The recent migration reports show how people are moving away from high-cost metro to affordable yet convenient areas. As an investor, you should eye those “hot emerging” real estate markets. Because that’s what offers steady residential appreciation over short-lived booms.
So if you are interested in higher ROI (who isn’t), stay with us as we uncover the “emerging” market in different US regions.
What Drives Long-Term Residential Appreciation
Population growth and In-Migration
It’s common sense that more inward migration into an area will result in more demand for housing. This ultimately results in home price appreciation. But when we talk about population growth, we don't see areas that boom in population suddenly. Instead we will focus on metro areas with sustainable population growth above 1% annually. Such areas tend to outperform the national home price average consistently over time.
Here’s an example, Cleveland, Ohio saw a decline in population from 2010 to 2023 (by almost 6%). As a result, the home price growth during that period is around 2%; which after adjusting for inflation is close to zero.
On the other hand, Raleigh-Durham, North Carolina saw a 20% increase in population. And, it reflected in its long-term home price growth (6-7% per year).
Even during national slowdowns, Raleigh-Durham prices have historically recovered faster due to continued demand pressure.
Job+Wage Growth
This is a crucial thing to understand. Job growth and wage growth are two different things. And, when it comes to home appreciation rates, wage growth matters more. Because wages dictate our purchasing power.
Two metros can have the same number of jobs. But if one adds mostly low-wage positions while the other adds higher-income roles, the second will almost always see stronger appreciation. A household earning $55,000 can typically afford a home roughly 40–45% cheaper than a household earning $90,000, right?
So,look for growth in professional, technical, healthcare, and education jobs. Check whether the city has multiple employment sectors or just one dominant industry.
Infrastructure investment
Infrastructure spending doesn’t always make headlines. But it moves markets. We are talking about transportation upgrades, healthcare expansion, and university growth. All of these investments contribute to long-term demand.
For instance, Columbus, OH got massive investment in a large-scale tech field (mainly semi-conductor). It resulted in expanding the employee base and increased housing demand. You usually don’t notice the change in home price overnight. It takes at least one year after the initial investment for home prices to be impacted.
Retention Rate
So, it’s good that a city attracts people. But can it keep them? That’s a more appropriate question. To understand how “livable” a city is, you check out some key lifestyle metrics. For example, how many top schools are there? Are healthcare institutions close by? What are the cultural and recreational amenities people can enjoy here?
You make a checklist depending on your target buyers. So, if you want to sell single-family homes, all the above questions are relevant.
Top Emerging Markets by Region
Western Region
Colorado’s Denver-metro area has consistently seen higher housing demand. And, no, it’s not a FAD. The long-term appreciation of Colorado houses comes from income expansion due to increasing industry size. We know that Google recently expanded its official presence in Denver, attracting software engineers for its hefty cloud infrastructure. Then there’s Lockheed Martin, Ball Aerospace contributing to advanced engineering wages, which tend to be higher than the national average wage in the US (up by 35-40%). This extra purchasing power translates into a jump in home prices.
Other Alternatives: Boise (Idaho), Colorado Springs (Colorado). Both cities saw an increase in income over the past decade (by 35%). Due to mountains (in Colorado) and rivers (Boise), the areas have strict zoning policies limiting a surge in housing supply.
Southern Region
Remember the “population+wage growth” factors we mentioned earlier? Raleigh-Durham embodies that perfectly. The city is home to major employers like IBM, Cisco, Red Hat, and Biogen. All of these offer critical research and engineering jobs with a pay-scale higher by 40% than the national median.
The income quality led to the 50% increase in home price in the last 10 years. This area is giving high ROI to its investors quietly, thanks to a research-and-biotech economy that stays consistent and pays higher.
Some Other Alternatives: You can also check out Charlotte (North Carolina). It revolves around finance and banking. Hence, the income pool is on the high spectrum supporting housing demand.
Sunbelt Region
We can’t talk about the Sunbelt region without Tampa, Florida. Its unique natural property (warm sun, sandy coasts) has always attracted tourists. But tourists are not the end game. It’s the retirees who are a majority of the city’s resident pool. The older demographic has started moving here from high-cost states like New York or New Jersey. They tend to purchase single-family homes outright in high-end neighborhoods with lots of coastal amenities and privacy.
They are the main reason that Tampa’s median home prices have risen over 45% in the past 10 years. What’s also great about attracting the retiree segment is that older people tend to be less price sensitive and less interested in changing homes, adding stability to the rising demand.
Some Other Alternatives: Raleigh-Durham (North Carolina), Phoenix (Arizona) and Orlando (Florida) have also risen in demand consistently due to welcoming economic diversity.
Bottom Line
The word “emerging” suggests the particular city has yet to catch major media attention. To be honest, the most durable markets are those where household incomes are rising at or above the national pace, backed by a limited housing supply. You should check out the population growth rate as well as migration rate over the last decade to truly visualize the appeal. Because the “gem” might not be in the headlines yet. So, before it catches everyone’s attention, you make your move.
