#4 Lubbock, Texas
Population in 2006: 210,178
Rent Strength: 9
“The economic center of a 25-county region that is home to more than 500,000 people, Lubbock boasts a strong, diverse economy that is grounded in agriculture, manufacturing, and wholesale and retail trade, as well as government, education, and health care,” according to the official Lubbock, Texas Community Profile report.
Lubbock has a low median home value at $102,700, coupled with a comparatively high median gross rent of $676. There is also a high percentage of young people in the city’s population, with 27 percent younger than 18 and 61 percent of working age, between 18 and 61, according to the Lubbock Community Profile.
The high number of young people in the city is likely because of the presence of Texas Tech University, which has a student body of more than 28,500 students from 50 states and 99 countries, according to The Princeton Review. Having a major university in town makes the market a good bet for investors, increasing the reliability of price appreciation and tenant demand.
#5 Laredo, Texas
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Population in 2006: 217,559
Rent Strength: 8
Laredo boasts the greatest population growth of the cities on this list, at 23.21 percent between 2000 and 2006. It also has one of the youngest populations, with a median age of 26.5 in 2000 and a projected median age of 27.9 in 2008, according to the 2000 U.S. census. This could make Laredo a prime location for economic growth and vitality both now and in the future.
The median housing price in Laredo is low, at $98,500, and average monthly owner costs are at just $409.
Despite Laredo’s massive population growth between 2000 and 2006, it still has a rather low population density of 2,772.87 per square mile compared to the average of all cities analyzed. High population density is often considered desirable for faster appreciation, but such a high rate of population growth could indicate that this density may increase in the future as more residents arrive. Investors purchasing before this happens could stand to profit handsomely, assuming the growth continues, and still enjoy a respectable cash flow in the meantime.
Fort Wayne has low median housing prices as well as low median monthly owner costs| House in an Indiana subdivision|]#6 Fort Wayne, Indiana
Population in 2006: 252,121
Rent Strength: 8
Fort Wayne on this list despite the fact that many cities in this region suffer from declining populations and struggling housing markets. Of the 10 riskiest markets for mortgage default, one was in Indiana and eight were in neighboring Michigan and Ohio, according to the Core Mortgage Risk Monitor’s third quarter report.
The city has a low median housing price of $99,700 and median monthly owner costs of $341, with a median gross monthly rent of $579.
Fort Wayne’s economy is “experiencing a ‘steady but gradual rebound’ from the recession that occurred in the early years of this decade. The job creation numbers for the last twelve months appear to support that assessment,” according to the Indiana Workforce Development 2007 Outlook Report.
Fort Wayne is right behind Laredo, TX in population growth, having experienced a 22.55 percent increase between 2000 and 2006. Yet despite population increases, the rental vacancy rate in Fort Wayne is high, at 11.8 percent, and the city experienced a -.09 percent job decrease between 2000 and 2006.
However, the most recent statistics indicate that Fort Wayne’s economy is back on the upswing. “Between the first quarter of 2005 and the first quarter of 2006, the area gained 2,203 total jobs, a growth rate of 0.8 percent. During the same time period, Indiana’s total employment grew by a just slightly higher rate of 0.9 percent,” according to the Indiana Business Review.
These negative numbers may be remnants of a recession earlier in the decade that is now on its way out. Property in Fort Wayne may be set up for an increase in value that could prove profitable for investors who choose to buy before the market begins appreciating at a faster rate.