Top States for the Highest Return on Real Estate Investment in 2024

Real estate investment has been one of the time-tested methods for creating wealth, and the right geographic location is critical to maximize it. Moving into 2024, the continuously changing landscape of real estate means that some states offer some of the best opportunities that exist for investors desiring superior returns. While past performance is not a guarantee of future results, this guide will explore what we believe will have the highest return on investment for real estate states in 2024, with consideration to the market trends, economic growth, and other influential elements.

Several states are in a position to rank among the best places in the U.S., where real estate investors will potentially fetch very attractive returns in 2024. These states depict a combination of vigorous economic fundamentals, increasing population, favorable tax environments, and strong housing markets.

Let's take a look at some of the more prominent contenders.

• Florida
• Texas
• North Carolina
• Arizona
• Tennessee
• Colorado
• Idaho
• Georgia
• South Carolina
• Indiana

Florida

The Sunshine State continues to shine brightly in the world of real estate investment, boasting a compelling combination of factors that contribute to its high ROI potential.

• Population Growth: Aterio estimates that Florida will see a 5.8% growth in population between 2025 and 2030. This is more people coming into Florida, adding influx on housing demand and, therefore, increasing property values and rental rates.
• Strong Economy: From the main industries of tourism, health, and technology, Florida has a broad and resistant economy. Low tax rates draw companies and job opportunities and, in turn, enhance the real estate market.
• Favorable Tax Environment: Florida does not levy any state income taxes and, as such, attracts many people and businesses to the state. This may translate into more disposable income and investment capital, and it should bode well in the real estate market.

Texas

The Lone Star State continues to attract investors with its robust economy, along with a business-friendly environment and fast population growth.

• Population Growth: Projections show that Texas is projected to have a population of 36 to 44 million people by 2060. Steady growth into the next few decades has kept demands for housing high, pushing property and rental values upward. 
• Strong Economy: Texas' main sectors of economy are diversified, including energy, technology, and health sciences, with manufacturing having turned a corner of late. Low taxes within the state and business-friendly regulations lure companies, thus creating jobs and fanning the real estate market.
• No State Income Tax: Like Florida, there isn't a state income tax in Texas. This translates into a larger disposable income and more investment capital, which is really good for the real estate market.

North Carolina

The Tar Heel State is gaining recognition as a real estate investment hotspot, not only because of its strong economy and expanding population but also because of its attractive quality of life.

• Population Growth: North Carolina's population is expected to increase by 9.5% from 2020 through 2030. This growing population continuously reinforces steady growth in the housing market, with property values resiliently increasing along with demand in rentals.
• Robust Economy: North Carolina has a diversified economy with critical sectors in technology, healthcare, finance, and manufacturing. The Research Triangle Park, with land-grant major universities and research entities, brings talent and innovation to the state economy.
• Recent Data: Zillow states that in August 2024, the median home value in North Carolina is $335,760, which has increased by 3.8% year-over-year. Average rent for one bedroom in North Carolina is approximately $1,400, which implies a balanced rental market with the increasing potential of growth.

Arizona

Real estate investors are also targeting the Grand Canyon State since it is a growing economy, its population is growing, and offers many enabling business environments.

• Population Growth: Arizona's population will increase by 11.9% from 2020 to 2030. These newcomers give way to demand for housing, improving property value and rental rates accordingly.
• Favorable Climate: The warm climate and plenty of sunshine make the state a haven for people who want to enjoy a comfortable life and be in the open air, having fun.
• Recent Data: According to Zillow, the median home value in Arizona as of August 2024 is $425,000, up 7.2% compared to last year. The average rent for a one-bedroom apartment goes for about $1,600, showing a very strong rental market with room for further growth.

Tennessee

Tennessee is one of the better contestants in the real estate investment arena, impelled by its robust economy complemented by increasing population and an appealing quality of life.

• Population Growth: Tennessee's population is projected to grow by nearly a million over the next couple of decades, reaching 7.87 million residents by 2040.
• No State Income Tax: Like Florida and Texas, Tennessee does not have a state income tax that may increase disposable income and investment capital and therefore may positively impact the real estate market.
• Attractive Lifestyle: The state offers nature, diverse culture, and urban and rural ways of life, which make the state a desirable place to stay. This adds as to why people want to move into or invest in real estate within the area.

Colorado

The Centennial State keeps development investors on its toes, with an expanding economic base, natural beauty, and outdoor-oriented lifestyle.

• Population Growth: Colorado's population is expected to surge from about 5.77 million in 2019 by 30%, reaching approximately 7.52 million by 2040. The significant addition of new residents drives the demand for housing, influencing appreciation in property value and increased rental rates.
• Strong Economy: Colorado boasts a diversified economy wherein technology, aerospace, renewable energy, health, and tourism form the major sectors. The educated workforce of this state and its focus on innovation are attracting businesses and thus creating jobs, further giving a boost to the real estate market.
• Growing Tech Hub: Denver happens to be the State capital and is soon turning into a major tech hub with its quality of attracting top firms and talent in the industry, which effectively fuels further economic growth and real estate demand.

Idaho

The Gem State has indeed become one of the hottest havens for investment, as it was being fired by a strong economy, population growth, and attractive lifestyle.

• Population Growth: The population in Idaho is expected to grow 7% between the periods of 2025 and 2030. The spurt in the inflow has increased the demand in the housing market of this county, resulting in an increase in property values and rents.
• Outdoor Lifestyle: The outstanding natural beauty of Idaho and abundant outdoor recreational options create a great allure to those searching for a high quality of life. This makes the state an alluring place to reside in, hence gaining the influx of new residents and helping the real estate market.
• Recent Data: The median home value in Idaho is $490,000 as of August 2024, according to Zillow, representing a 6.1% year-over-year increase. Median rent for a one-bedroom apartment in Idaho runs approximately $1,300 a month; this would indicate a relatively healthy rental market with an opportunity for growth.

Georgia

With a high economy, a growing population, plus numerous options for investment, real estate investors are finding the Peach State very attractive.

• Population Growth: According to Trading Economics global macro models and analysts' forecasts, Georgia is forecasted to reach 3.62 million people by the end of 2024. In the long view, Georgia's population is set to trend around 3.58 million in 2025.
• Robust Economy: The main sectors in Georgia include logistics, film and entertainment, healthcare, and technology-all of which combine to present a very diversified, growing economy. This business-friendly atmosphere alone, with its strategic location in place, draws companies and jobs to keep the local real estate market even better.
• Atlanta's Growth: The state capital, Atlanta, is an economic generator that lures businesses and young professionals alike with its cultural vibrancy, diverse job opportunities, and relatively inexpensive cost of living.

Read more: Best Rental Market in Georgia

South Carolina

With a strong economy and an appealing lifestyle along the coast, the Palmetto State is emerging fast as one of the shining stars on the real estate investment landscape.

• Population Growth: The latest numbers from the RFA show that South Carolina will add another 1 million residents by 2042. These new residents contribute to a healthy housing market in rising property values and rental demand.
• Coastal Appeal: The beautiful coastline of South Carolina, historic charming cities like Charleston, and mild climate make it a tourist and retirement destination, thus demanding vacation homes and rental properties.
• Recent Data: According to Zillow, the typical value of a South Carolina home is $300,000 as of August 2024, up 4.8% compared to last year. The average rent for a one-bedroom apartment in South Carolina runs at about $1,300, reflecting a very balanced rental market that holds promise of appreciation.

Indiana

A stable economy, affordable housing, and a general central location make The Hoosier State popular among real estate investors.

• Stable Economy: Indiana's diversified economy has positioned itself as robust and resilient with core competencies in manufacturing and logistics, health care, and farming. The state's business-friendly environment and skilled workforce attract companies and create jobs, contributing to a stable real estate market.
• Central Location: The central location of Indiana in the U.S. has made it a strategic hub for logistics and transportation, thus supporting economic growth and a strong real estate market.
• Recent Data: According to Zillow, the median home value in Indiana as of August 2024 stands at $240,000, up 3.5% year-over-year. For a one-bedroom apartment, the average rent in Indiana has an average of about $1,100; this represents a somewhat low and developing rental market.

Factors Influencing ROI in These States

Several factors combine to create the favorable investment climates that are found in these states. Understanding such dynamics is paramount as investors seek to maximize their returns.

Economic Factors

States that are experiencing solid job growth and diversified economies generally continue to gain more residents and businesses, which in turn raises the demand for housing and tends to drive property values higher,. These contribute to the highest return on investment for real estate in these states. Development related to infrastructure, such as transportation systems, utilities, and other public amenities, also contributes to a state's desirability and increases appreciation in property.

Demographic Factors

With factors such as migration and natural increase contributing to rapid population growth, states create a strong demand for housing. This factor drives up property values and rental rates within the state. States with a much larger share of retirees may also have higher demand for retirement communities.

Supply and Demand Dynamics

Supply and demand drive property valuations and rental rates. When housing supply levels remain low and demand is high, rates of appreciation tend to be stronger in such states. New construction also adds to the supply of housing inventory. Strong rental demand, thanks to factors such as population growth, new jobs, and tourism, can drive up rental rates and improve investor returns.

Regulatory Environment

Local zoning and land use laws will influence property development and availability; hence, property values and investment opportunities. In this regard, the property taxes to be levied will also influence the investment net return. States that have low tax jurisdictions are more attractive to investors. A state that is friendly to landlords also matters.

Risks and Considerations

While the states listed above are great real estate investment spots for the year 2024, there are some risk factors and concerns to be considered and weighed about these markets.

Market Volatility

Real estate investment is prone to the effect of the economy. A reduction in the national or local economy can have effects on both property values and rental demand. This means that an investor may realize negative returns or losses. Some of the states involved are prone to disasters like hurricanes and flooding; this includes Florida and Texas. 

Interest Rate Sensitivity

Risks that increased interest rates pose to real estate investors are increased costs to borrow, which reduce their ability to finance acquisitions and, in turn, their total return. If the increase rate is huge, refinancing an existing mortgage will become a burden for any investor, which may increase the monthly mortgage payments and decrease the cash flow.

Local Market Nuances

While state economies as a whole may be very stable, local markets can be much more volatile. Investors must study the specific cities where they want to place cash into properties to understand what local economic drivers are at play. Zoning laws, property taxes, and other local regulations can also impact the investment portfolio.

The Bottom Line

The year 2024 is about creating opportunities for real estate investors, particularly those seeking the highest return on investment for real estate states. The locations pinpointed in this article are outstanding options that one can consider for building wealth from their real estate investments.

Overall, while the states highlighted offer promising opportunities for real estate investment in 2024, it's crucial for investors to conduct thorough due diligence, assess the potential risks, and develop a sound investment strategy tailored to their individual goals and risk tolerance.