Residential real estate investors, these are the best cities to buy in

Aly J. Yale
The Mortgage Reports contributor

Q1’s best spots for investors

Real estate investors looking to increase profits this year may want to head inward. According to new data, the Midwest region is home to the nation’s three best cities for residential investments.

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The best spots to invest in real estate

According to the Q1 Residential Real Estate Investment Rankings from Compound, the Midwest is rife with investment opportunities. In the first quarter of the year, the region claimed all three of the nation’s best spots for residential real estate investing.

Indianapolis took the cake, with home price appreciation topping out at 12.5 percent. The city’s Sharpe Ratio — which reflects the return on investment compared to risk — was 2.4 percent, the highest in the country for Q1.

At No. 2 was Cincinnati, which saw home prices jump 8.4 percent. The Ohio town’s 1.65 percent Sharpe Ratio inched out No. 3-ranked Kansas City, where home prices rose 8.9 percent over the year.

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Other cities in the top 10 for Q1 residential investing were Charlotte, North Carolina; Dallas-Fort Worth, Texas; Columbus, Ohio; Atlanta; and San Antonio and Austin, Texas. All 10 cities saw home price appreciation higher than the national average (5.5 percent).

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The worst cities for residential investments

The West Coast was the worst spot for Q1 investors, with California’s San Jose, San Diego, San Francisco and Los Angeles at the very bottom.

San Jose ranked No. 1. On Compound’s list of worst investment cities with a 0.34 percent decline in home prices and a Sharpe Ratio of -0.26 percent. All three other California cities also had negative Sharpe Ratios, indicating investors likely took a loss during the first quarter.

Other names on the worst cities list include Seattle; Washington, D.C.; Baltimore; Virginia Beach, Maryland; Portland, Oregon; and Chicago.

Real estate investing: How much do you need to get started?

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