5 Best (and Affordable) States to Invest in Real Estate
2024
Last Updated: February 20, 2024
Written by
Kyle Adam
Kyle Adam, BComm
Kyle Adam is a seasoned content creator, editor, and SEO specialist with over four years of experience. Presently, he serves as a Marketing Writer at LawDepot. Holding a Bachelor of Com...
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Sarah Ure, BA, JD
Sarah Ure is a Legal Writer at LawDepot. Sarah has undergraduate degrees in English and Psychology from the University of Calgary, as well as a Law degree from the University of Victori...
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Key Takeaways:
- Real estate investing is the practice of purchasing real estate and selling or renting it to make a profit.
- Not all states have the same real estate investment opportunities.
- Factors like home price, population and job growth, taxes, and vacancy rates affect whether a state is ideal for investing.
Table of Contents
According to a 2022 survey by CNBC, 23% of Americans think real estate is the best way to build wealth. Despite that, only 12% of survey respondents invested in real estate in 2022.
Investing in real estate can be a great way to build wealth and achieve financial stability. However, not all locations are created equal regarding real estate investment opportunities.
So, before you make any offers or sign a mortgage, let’s discuss where buying in the United States might be most beneficial.
In this article, we'll explore the best states to invest in real estate in 2024 based on various factors like population and job growth, affordability, and tax rates.
But first off, what does it actually mean to invest in real estate?
What does “investing in real estate” mean?
In this article, we define real estate investing as purchasing real estate and selling or renting it to make a profit.
In the case of a sale, an investor may flip a house, meaning they would buy at a lower price, renovate, and then put it back on the market at a higher price. Or, they may simply hold onto a property until the market conditions are favorable for a profitable sale.
Alternatively, an investor may rent out a property, whether it be residential or commercial, generating a stream of rental income that can be used to cover the property's expenses or as a source of reliable, passive income.
Investing in real estate can also mean investing in a real estate investment trust (REIT), a publicly-traded company that owns and manages real estate properties.
What makes a state good for investing in real estate?
For this article, we used the following nine key metrics to come up with the top five states:
- Average home price
- Average household income
- Cost of living
- Home appreciation
- Population growth
- Job growth
- Average property tax rate
- Rental vacancy rate
- Gross domestic product (GDP)
Cost of living refers to the amount needed to maintain a certain standard of living, including basic expenses for housing, food, transportation, healthcare, and other essential needs.
A cost of living index helps us compare costs across the United States by establishing the national average as the baseline, designated with a value of 100. Then, states are assessed in comparison to this baseline. For instance, a state with a number below 100 indicates its cost of living is below the national average. In contrast, Hawaii has a cost of living of 192, according to Dwell Hawaii.
Gross domestic product (GDP) is a measure of the total economic output produced within a specific area. A higher GDP generally indicates a more robust and diverse economy which attracts individuals and businesses, leading to a higher demand for real estate.
Our methodology
After determining metrics for an investable state, we researched all the necessary statistics by looking at the following sources:
Next, to compile our list, we ranked all 50 U.S. states based on each metric and assigned points accordingly. For example, when we ranked the states on home affordability, the most affordable state got 50 points, and the least affordable got one point.
After tallying up all the points, we had a final ranking of the best states to invest in real estate. Let’s take a look at the top five states in order of their scores.
Kentucky
Kicking off the top of our list is Kentucky — the Bluegrass State.
Kentucky is a promising state for real estate investors due to its economic stability and affordable housing market, among other things. Despite having a lower household income than the national average, Kentucky's typical home value is only $196,000 as of December 2023. This affordability aligns with Kentucky's median yearly household income of $56,000, ensuring that housing remains within reach for residents.
Contributing to its investment appeal, Kentucky’s cost of living score of 93.80 is considerably lower than the national average of 100. Investors can appreciate the equilibrium between housing costs and income levels, creating a favorable environment for both homeowners and potential tenants.
Kentucky experienced an annual home price appreciation of 6.1% in the second quarter of 2023, highlighting its real estate market's resilience and growth potential. From 2022 to 2023, Kentucky had a 0.3% increase in population and a 2.4% increase in jobs.
The average property tax rate in 2023, standing at 0.89%, adds to the allure for investors seeking favorable taxation environments. There was only a slight drop in the rental vacancy rate from 5.1% to 4.9%.
Kentucky's economic vibrancy is further supported by a gross domestic product of $244 billion in 2022, underscoring its diverse and robust economic landscape. Collectively, these factors position Kentucky as a top choice for real estate investment in 2024, offering a harmonious combination of affordability, growth potential, and economic stability.
| State #1 – Kentucky | |
| Typical home value December 2023 | $196k |
| Median yearly household income 2022 | $56k |
| Cost of living index 2024 | 93.80 |
| Annual home price appreciation Q2 - 2023 | 6.1% |
| Population growth July 2022-23 | 0.3% |
| Job growth December 2022-23 | 2.4% |
| Average property tax rate 2023 | 0.89% |
| Rental vacancy rate Q4 - 2023 | 4.9% |
| Gross domestic product 2022 | $244 billion |
| Score | 278 points |
| Sources: Federal Reserve Economic Data (FRED), Seidman Research Institute , Statista, U.S. Census Bureau , Wisevoter, World Population Review, and Zillow Home Values Index | |
South Carolina
Next on our list is South Carolina. With a mild climate and 187 miles of beautiful coastline along the Atlantic Ocean, South Carolina presents promising opportunities for real estate investment in 2024.
According to Zillow, the typical home value in South Carolina was $284,000 in 2023, which is affordable compared to other states. Of course, some cities and towns in South Carolina are cheaper than others. In addition, the average home increased in value by 6.6% from 2022 to 2023.
South Carolina's median yearly household income of $62,000 ensures a balance between income and housing costs, making it an attractive prospect for a diverse range of residents. Also, the cost of living score of 96.50 in 2024 is substantially below the national average, enhancing the state's appeal.
South Carolina also boasts a favorable property tax rate, with an average property tax rate of 0.58% in 2023. This low tax rate means better returns for real estate investment, making the state an attractive option.
Additionally, the state's resident population grew by 1.7% from July 2022 to July 2023, indicating a demand for housing.
The state also experienced a significant increase in job growth, with a 2.7% rise from 2022 to 2023, indicating a strong economy that can support property investments.
| State #2 – South Carolina | |
| Typical home value December 2023 | $284k |
| Median yearly household income 2022 | $62k |
| Cost of living index 2024 | 96.50 |
| Annual home price appreciation Q2 - 2023 | 6.6% |
| Population growth July 2022-23 | 1.7% |
| Job growth December 2022-23 | 2.7% |
| Average property tax rate 2023 | 0.58% |
| Rental vacancy rate Q4 - 2023 | 12.4% |
| Gross domestic product 2022 | $282 billion |
| Score | 276 points |
| Sources: Federal Reserve Economic Data (FRED), Seidman Research Institute , Statista, U.S. Census Bureau , Wisevoter, World Population Review, and Zillow Home Values Index | |
Indiana
Third on our list is Indiana. The state's economic robustness is clear, with a gross domestic product of $438 billion in 2022.
With a median household income of $70,000 and a typical home value of $228,000 in December 2023, the state is a great place for prospective homebuyers and real estate investors to look into. The equilibrium between income and home prices is key to ensuring accessibility to a broad range of residents.
Indiana's low cost of living, which scored at 91.50 in 2024, further enhances its appeal for investments. This favorable metric positions the state as an attractive destination, aligning housing costs with the economic well-being of its residents. In addition, Indiana's tax-friendly environment adds another layer of appeal, boasting an average property tax rate of 0.83% in 2023.
Investors can find reassurance in the state's robust real estate market, exemplified by an annual home price appreciation of 6.08% in the second quarter of 2023. Despite a rental vacancy rate of 10%, the potential for capital appreciation and long-term gains is evident, especially with a population growth of 0.4% and a job growth rate of 1.9% from December 2022 to 2023.
In summary, Indiana's harmonious combination of affordability, growth potential, and economic stability makes it a standout choice for real estate investors in 2024.
| State #3 – Indiana | |
| Typical home value December 2023 | $228k |
| Median yearly household income 2022 | $70k |
| Cost of living index 2024 | 91.50 |
| Annual home price appreciation Q2 - 2023 | 6.08% |
| Population growth July 2022-23 | 0.4% |
| Job growth December 2022-23 | 1.9% |
| Average property tax rate 2023 | 0.83% |
| Rental vacancy rate Q4 - 2023 | 10.0% |
| Gross domestic product 2022 | $438 billion |
| Score | 273 points |
| Sources: Federal Reserve Economic Data (FRED), Seidman Research Institute , Statista, U.S. Census Bureau , Wisevoter, World Population Review, and Zillow Home Values Index | |
Georgia
Georgia may be a prime destination for real estate investment in 2024, combining a strong economy with a real estate market that holds promise for investors. With a typical home value of $316,000 in December 2023, Georgia may have a slightly higher entry point, but its other economic indicators make it a compelling choice. The median yearly household income of $68,000 ensures a healthy balance between affordability and income.
Georgia's cost of living score, at 91.00 in 2024, is notably 9% below the national average, contributing to its allure for residents and investors alike. A population growth of 1.1% from July 2022 to July 2023 signals a state in demand, while a job growth rate of 2.2% underscores a dynamic and expanding economy.
Another positive indicator is Georgia's annual home price appreciation of 4.6% in the second quarter of 2023. Also, the relatively low average property tax rate of 0.95% further enhances the overall attractiveness for investors.
Despite a rental vacancy rate of 8.2% in late 2023, the state's economic vigor, reflected in a gross domestic product of $714 billion in 2022, points towards a resilient market with potential for long-term gains. Georgia, with its balanced economic metrics, affordability, and growth potential, emerges as a strong contender for real estate investors in 2024.
| State #4 – Georgia | |
| Typical home value December 2023 | $316k |
| Median yearly household income 2022 | $68k |
| Cost of living index 2024 | 91.00 |
| Annual home price appreciation Q2 - 2023 | 4.6% |
| Population growth July 2022-23 | 1.1% |
| Job growth December 2022-23 | 2.2% |
| Average property tax rate 2023 | 0.95% |
| Rental vacancy rate Q4 - 2023 | 8.2% |
| Gross domestic product 2022 | $714 billion |
| Score | 272 points |
| Sources: Federal Reserve Economic Data (FRED), Seidman Research Institute , Statista, U.S. Census Bureau , Wisevoter, World Population Review, and Zillow Home Values Index | |
Delaware
Last on our list is another East Coast state — Delaware. With a GDP of $84 billion, it may not be as flashy as some of its nearby states, such as New Jersey and New York. However, Delaware has a lot to offer for real estate investors.
One of the biggest reasons why Delaware is a good state to invest in real estate is its steady population growth. From July 2021 to July 2022, Delaware’s resident population grew by 1.2%.
Additionally, Delaware's job market has been growing steadily. From 2022 to 2023, there was a 2% increase in job growth, which is a promising indicator for the state economy. Also, the average income is quite high, at $81,000 per year.
Delaware also has a relatively low property tax rate compared to other states. In 2023, the average rate was 0.62%, which is lower than the national average of 1.1%. This can help investors keep their expenses down, ultimately increasing their return on investment. In addition, the cost of living is only slightly higher than the U.S. average.
Another reason why Delaware is a great state to invest in real estate is its low rental vacancy rate. In the third quarter of 2022, Delaware’s rental vacancy rate was 3.1%, indicating a high demand for rental properties.
Finally, the typical home value in Delaware was $373,000 in 2023. Although much more than places like Kentucky, this is a reasonable price point for real estate investors, especially when you consider the economic growth and low property tax rate.
| State #5 – Delaware | |
| Typical home value December 2023 | $373k |
| Median yearly household income 2022 | $81k |
| Cost of living index 2024 | 102.60 |
| Annual home price appreciation Q2 - 2023 | 2.7% |
| Population growth July 2022-23 | 1.2% |
| Job growth December 2022-23 | 2.0% |
| Average property tax rate 2023 | 0.62% |
| Rental vacancy rate Q4 - 2023 | 3.1% |
| Gross domestic product 2022 | $84 billion |
| Score | 269 points |
| Sources: Federal Reserve Economic Data (FRED), Seidman Research Institute , Statista , U.S. Census Bureau , Wisevoter, World Population Review, and Zillow Home Values Index | |
Final scores and ranking of all states
| Rank | State | Score |
| 1 | Kentucky | 278 |
| 2 | South Carolina | 276 |
| 3 | Indiana | 273 |
| 4 | Georgia | 272 |
| 5 | Delaware | 269 |
| 6 | Missouri | 265 |
| 7 | Ohio | 259 |
| 8 | South Dakota | 258 |
| 9 | Oklahoma | 257 |
| 10 | Texas | 256 |
| 11 | Minnesota | 255 |
| 12 | Virginia | 254 |
| 13 | Alabama | 254 |
| 14 | North Carolina | 253 |
| 15 | Wyoming | 249 |
| 16 | Nebraska | 247 |
| 17 | Arkansas | 243 |
| 18 | Connecticut | 241 |
| 19 | Utah | 241 |
| 20 | North Dakota | 241 |
| 21 | Florida | 240 |
| 22 | Maine | 238 |
| 23 | New Jersey | 237 |
| 24 | Massachusetts | 237 |
| 25 | Arizona | 236 |
| 26 | Pennsylvania | 230 |
| 27 | Colorado | 228 |
| 28 | Tennessee | 228 |
| 29 | Wisconsin | 228 |
| 30 | Idaho | 228 |
| 31 | Kansas | 221 |
| 32 | Washington | 220 |
| 33 | Nevada | 220 |
| 34 | Illinois | 218 |
| 35 | Mississippi | 217 |
| 36 | New Hampshire | 217 |
| 37 | Maryland | 213 |
| 38 | West Virginia | 213 |
| 39 | California | 210 |
| 40 | Montana | 210 |
| 41 | Iowa | 209 |
| 42 | Michigan | 205 |
| 43 | Louisiana | 205 |
| 44 | New Mexico | 205 |
| 45 | Alaska | 203 |
| 46 | Hawaii | 170 |
| 47 | Vermont | 165 |
| 48 | New York | 163 |
| 49 | Rhode Island | 163 |
| 50 | Oregon | 157 |
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