Investing in real estate can have big rewards, but also big risks. When calculating the next place to look for an investment property or aiding a client in the hunt, it’s important to consider local economic conditions like business growth, new building permits and gross domestic product (GDP) growth.
SmartAsset recently released its second annual list of the top counties for real estate investment based on the investment in the local community, measuring growth conditions for four specific components, all of which were measured equally and combined to find the final ranking of cities. The final ranking is the Incoming Investment Index, and the county with the largest gain of investment received a 100. The county with the lowest amount of incoming investment had an index of 0.
For the second year in a row, Williams in North Dakota ranked as the top county in the country for investment. The community saw a 37.7 percent growth in businesses since 2015, $664 million in GDP growth and a perfect 100 for its Incoming Investment Index. Williams also had 61.5 new building permits per 1,000 homes.
Texas was a big state on the list with five of its cities ranking in the top 10. Harris ranked no. 2, followed by Collin at no. 4, Travis at no. 7, Fort Bend at no. 8 and Dallas at no. 10.
Ranking no. 5, Los Angeles County held the biggest city to make the list. The county saw 5.6 percent growth in business and $44.614 billion in GDP growth.
Business establishment growth was measured over a three-year period, during which county-wide new businesses were considered. GPD growth was adjusted with inflation. Local residential real estate building and new permits were calculated per 1,000 homes. Municipal bond debt that was raised in the last five years was divided by the population number.
Real estate investment in California
Other than Los Angeles County, the no. 2 and no. 3 best places in California to invest were in the south end of the state. Orange County and San Diego County took the respective spots, with 5.2 percent and 5.4 percent GDP growth. These counties, however, ranked far below L.A. overall. The Incoming Investment Index for L.A. was 84.84, with second-place Orange County coming in at 53.52.
Rounding out the top five was Sacramento County and San Francisco County. San Francisco had a strong reported business growth of 7.3 percent, which was the highest reported in the state’s top 10.
The majority of the best places for investment in California were either located in the southern or Bay Area parts of the state. Santa Clara, Alameda, Placer and Contra Costa counties were all on the top 10 list. Placer County saw the most new building permits in the state, with 14.4 per 1,000 homes. The second-place county in this category was Orange County, which saw 10.2 new building permits per 1,000 homes.
