These Cities Are Set to Have Rising Home Prices for Longer—Here’s Why

These Cities Are Set to Have Rising Home Prices for Longer—Here’s Why

By Jorge Vazquez, CEO of Graystone Investment Group

If you’re new to real estate investing, you’re probably asking yourself one key question: “Where should I invest to get the best return?” One of the best indicators to watch is income growth—when people in a city make more money, they can afford to buy better homes, which pushes home prices up. In this article, I’ll break down which U.S. cities are experiencing significant income growth and how that’s leading to long-term home price increases. And yes, I’ll focus on Florida, which is not only where I live and invest but also where some of the best opportunities are right now for real estate investors.

Why Income Growth is a Key Indicator for Real Estate Investors

Income growth is one of the most important indicators of a city’s real estate potential because it directly impacts demand for housing. When people earn more money, they want to upgrade their lifestyle, and a big part of that is improving their housing situation. This could mean buying a bigger home, moving to a more desirable neighborhood, or even purchasing their first home.

The relationship between income growth and home prices is simple: As more people have the financial ability to buy homes, demand for housing increases. This leads to home price appreciation because, let’s face it, there’s only so much land, and when demand goes up but supply stays the same, prices rise.

As a real estate investor, following income growth can help you spot hot markets before they peak. For example, a city with rising wages will likely see both rental and home prices increase. So, whether you’re a buy-and-hold investor or a flipper, investing in cities where incomes are rising can lead to solid returns over time.

Top U.S. Cities with Rising Incomes and Home Prices

Several U.S. cities are experiencing strong income growth, which is driving up home prices. Below are some of the top cities where income growth has a strong correlation with home price appreciation.

1. Wilmington, NC

• 5-year wage growth: 9.05%
• Employment growth: 2.45%
• 5-year home price growth: 10.48%

Wilmington tops the list for wage growth, with a staggering 9.05% increase in income over the past five years. This high wage growth, coupled with employment growth of 2.45%, has led to home prices increasing by 10.48% over the same period. Wilmington is a prime market for investors looking for both long-term appreciation and strong rental demand.

2. Boise, ID

• 5-year wage growth: 6.74%
• Employment growth: 3.42%
• 5-year home price growth: 9.94%

Boise has been a hot market for several years now, and for good reason. Wages in Boise have grown by 6.74% annually, while employment has increased by 3.42%. These strong fundamentals have pushed home prices up by 9.94% over the past five years. With a growing tech sector and an influx of people moving from more expensive areas like California, Boise remains a strong market for investors.

3. Fayetteville, AR

• 5-year wage growth: 6.21%
• Employment growth: 3.24%
• 5-year home price growth: 10.86%

Fayetteville is a smaller market but one with huge potential. Wages have grown by 6.21% annually, while employment has increased by 3.24%. These two factors combined have driven home prices up by 10.86%. This makes Fayetteville an attractive market for investors looking to get in early and enjoy long-term appreciation.

Why Florida is Leading the Way in Rising Home Prices

Now, let’s talk about Florida—the state where I’ve built much of my real estate career. Florida has been an attractive destination for years due to its warm climate, favorable tax environment (no state income tax!), and vibrant economy. But in recent years, certain Florida cities have seen their real estate markets take off, driven by strong income growth, job creation, and an influx of new residents.

1. Tampa, FL

• 5-year wage growth: 3.96%
• Employment growth: 2.48%
• 5-year home price growth: 11.03%

Tampa is one of Florida’s hottest real estate markets, and it’s not hard to see why. The city has experienced a wage growth of 3.96% annually, with employment rising by 2.48%. The result? Home prices have surged by 11.03% over the past five years.

One of the key drivers behind Tampa’s growth is its diverse economy. Tampa is home to a mix of industries, including tech, finance, healthcare, and tourism, all of which provide good-paying jobs. For investors, Tampa offers an ideal balance of rental demand and price appreciation. If you’re considering buying rental properties, Tampa should be at the top of your list.

2. Tallahassee, FL

• 5-year wage growth: 4.40%
• Employment growth: 1.91%
• 5-year home price growth: 8.09%

Tallahassee, Florida’s capital city, might not get as much attention as other Florida markets, but it’s quietly becoming a great place for real estate investors. Wages have grown by 4.40% annually, with employment increasing by 1.91%. While home price growth here is slightly lower than in Tampa, rising 8.09% over the past five years, the city’s relatively low cost of living makes it an attractive option for investors looking to get in on the ground floor.

3. Port St. Lucie, FL

• 5-year wage growth: 5.79%
• Employment growth: 2.88%
• 5-year home price growth: 11.09%

Port St. Lucie has benefited greatly from the post-pandemic migration trend. Many people have been moving from crowded cities to more affordable areas like Port St. Lucie, where they can still enjoy the Florida lifestyle without breaking the bank. Wages have grown by 5.79% annually, while employment has increased by 2.88%. Home prices have risen by 11.09%, making this one of the best markets for investors looking for both appreciation and rental demand.

Rental Properties in High-Income Growth Markets

So, what does all this income growth mean for real estate investors, especially those focused on rental properties? When incomes go up, so does demand for rentals. Here’s why:

1. Higher Rental Yields: As people make more money, they can afford to pay more for rent. This means that landlords can charge higher rents and still find tenants. For example, in Tampa, where income growth is strong, rents have been rising by about 7% annually.

2. Lower Vacancy Rates: Cities with strong income growth and job creation tend to have lower vacancy rates because people are constantly moving in for new opportunities. In a city like Boise, for example, the growing tech sector means that there’s always a demand for rental properties as workers relocate to the area.

3. Price Appreciation: Even if you’re investing in rental properties, the value of the property itself will continue to rise in cities where income growth is strong. This gives you the best of both worlds—steady rental income and long-term appreciation.

Real Estate Market Outlook for Florida

Florida, as a whole, is in a unique position. Not only does it offer great weather and a favorable tax environment, but it’s also attracting companies and workers from all over the U.S. As more businesses relocate to Florida or expand their operations here, the state’s employment opportunities are growing, which drives income growth. And as we’ve seen, income growth leads to home price appreciation.

Let’s not forget that Florida is still relatively affordable compared to other high-growth states like California or New York. This affordability, coupled with income growth, is creating a perfect storm for real estate investors.

Here’s a look at how Florida compares to other top markets in terms of home price appreciation:

• Tampa: Home prices are up 11.03% over the past five years.
• Port St. Lucie: Home prices have increased by 11.09%.
• Tallahassee: Home prices have risen by 8.09%.

These numbers make it clear: Florida is a real estate investor’s dream.

Final Thoughts: Why Income Growth Should Guide Your Investment Decisions

If you’re serious about real estate investing, tracking income growth is one of the smartest strategies you can adopt. Cities where people are earning more money are cities where home prices will continue to rise. Whether you’re focused on flipping homes or buying rental properties, income growth is a key indicator of long-term success.

Right now, cities like Wilmington, Boise, Fayetteville, and several Florida cities are leading the way in both wage growth and home price appreciation. These markets offer some of the best opportunities for investors, especially those looking for long-term appreciation and steady rental income.

So, if you’re considering where to make your next real estate investment, keep an eye on these income growth trends. They just might lead you to your next big investment