Foreign Nationals

Best places to invest in real estate in the US: Northeast

By Milo

December 19, 2023 8 min read

Table of contents
Best places to invest in real estate in the US: Northeast

As foreign capital increasingly flows into top-tier Northeastern U.S. markets seeking yields, thorough research is key for overseas investors navigating favorable supply-demand dynamics. The Northeast corridor from Washington D.C. to Boston offers diverse property types - from new luxury towers to affordable urban walk-ups and standalone homes. Major metros like New York and Boston provide strong tenant demand, while smaller cities such as Philadelphia and Providence enable value-driven plays. As the Northeast's rental property market sees 2023 rental growth continue outpacing lagging new construction, investors can capitalize on positive migration and job trends. Understanding target investment returns, property features, and market-specific risks enables foreign investors to make data-driven decisions when deploying capital in the Northeast. Conducting due diligence and consulting specialized advisory firms lays the groundwork for profitable deals and smooth entries for offshore capital throughout the region.

How real estate investors evaluate property in the U.S (Northeast)

The Northeast United States, with its diverse cities, charming towns, and dynamic economies, beckons investors seeking stability and potential for growth. But before diving into this vibrant market, let's explore some key metrics to guide your decisions, tailored to different investor types:

best places to invest in real estate investor profile (Northeast).png

High Net-Worth Investors

Market Growth: Cities with projected GDP growth exceeding the national average (currently 2.1%) may be a good option. Cities like Boston (3.4%) and Burlington, VT (3.1%) offer promising potential.

Job Market: Prioritize cities with diverse and thriving economies. Boston's tech and life sciences sectors, and Burlington's healthcare and education sectors, offer strong employment bases. (Source: Bureau of Labor Statistics)

Luxury Real Estate: Consider high-demand, low-inventory luxury markets like Boston's Back Bay or waterfront properties in Maine. These offer the potential for premium rents and stable appreciation.

Medium-Income Investors

Affordability: Cities with median home prices below national averages ($423,000) may be good areas to focus on. Providence, RI, with a median home price of $380,000, offers affordability without sacrificing potential. (Source: Realtor.com)

Rental Market: Consider cities with strong rental demand and high occupancy rates. Portland, Maine, boasts a 95% occupancy rate, promising steady rental income. (Source: Apartment List)

Neighborhoods on the rise: Look for up-and-coming neighborhoods with revitalization projects and growing economies. Hartford's downtown core and Providence's Jewelry District offer exciting potential.

New/Young Investors

Starter Homes: Cities with affordable entry points and diverse housing options offer opportunities for first-time buyers; like Hartford with a median condo price of $250,000.(Source: Redfin)

Live-Work-Play: Investigate cities with walkable downtowns, vibrant communities, and access to nature. Burlington's bike-friendly streets and Portland's thriving arts scene cater to young professionals.

Job Opportunities: Consider cities with growing industries like tech or healthcare. Boston's tech scene and Providence's burgeoning biotech sector offer potential for career growth and rental demand.

Remember, these are just starting points. Conduct thorough research, consult with financial advisors, and consider your individual investment goals before making any decisions.

By understanding these key metrics and tailoring them to your specific needs, you can navigate the Northeast's diverse real estate landscape and make informed investment decisions that pave the way for future success.

In-depth overview of the Northeastern rental property market

The Northeast US rental market in 2023 pulsates with post-pandemic dynamism, offering both opportunities and challenges for landlords and tenants alike. Let's delve into the key trends, prices, and hotspots, navigating the stormy seas of secondary housing and new construction:

Market Trends

  • Demand Remains High: Driven by job growth, urbanization, and limited housing supply, rental demand continues to soar. Cities like Boston, New York City, and Washington D.C. grapple with tight vacancies, pushing rents upwards. (Source: RENTCafé)
  • Remote Work Reshapes the Landscape: While urban centers still dominate, the rise of remote work is fueling interest in smaller cities and suburbs. Burlington, VT, and Providence, RI, witness robust rental growth as professionals seek affordability and lifestyle changes. (Source: apartmentguide)
  • Tech Giants Drive Pricing: Cities with booming tech sectors, like Boston and Cambridge, experience the highest rents, often surpassing $3,000 per month for one-bedroom apartments. (Source: Zillow)

Average rental prices

  • Wide Range Across the Region: Rents vary significantly across the Northeast. New York City boasts the highest average one-bedroom rent at $3,500, while cities like Rochester, NY, offer more affordable options at $1,200. (Source: RENTCafé)
  • Double-Digit Increases in Major Cities: Boston, New York City, and Washington D.C. witnessed rent increases exceeding 20% in 2022, while smaller cities saw more moderate growth of 5-10%. (Source: Apartment List)
  • Expect Continued Increases: Experts predict continued rent increases throughout 2023, albeit at a slightly slower pace compared to 2022. (Source: Moody's Analytics)

Secondary Market vs. New Construction

  • Secondary Market dominates: The vast majority of Northeast rentals fall within the secondary market, offering landlords established neighborhoods, existing tenant bases, and potentially lower initial investment. (Source: National Association of Realtors)
  • New construction: New construction projects often entice tenants with modern amenities, energy efficiency features, and convenient locations. However, they may come with higher rents and potentially longer vacancy periods. (Source: Urban Land Institute)
  • Weighing the options: Choosing between secondary and new construction depends on individual investment goals, risk tolerance, and desired tenant demographics.

Top areas for rental investment

  • Boston: Its booming tech and education sectors attract young professionals, driving demand for both luxury and affordable rentals. (Source: Boston Globe) - Providence, Rhode Island: This up-and-coming city offers affordability, a vibrant arts scene, and proximity to Boston, attracting young families and professionals. (Source: Providence Journal)
  • Washington D.C.: With its stable government jobs and strong economy, D.C. continues to attract renters, particularly in neighborhoods like NoMa and Navy Yard. (Source: Washington Post)
  • Burlington, Vermont: This charming college town boasts a thriving healthcare sector and a strong sense of community, attracting professionals and families seeking a slower pace. (Source: Burlington Free Press)

Remember, the Northeast rental market is dynamic and nuanced. Thorough research, understanding local regulations, and consulting with real estate professionals are crucial for making informed investment decisions.

Why investors like the Northeast for U.S real estate investing in 2023

The Northeast United States, with its rich history, dynamic cities, and diverse economy, offers a treasure trove of opportunities for real estate investors. But with so many options, where do you begin? Let's explore five cities that shine brightest, showcasing key economic and demographic factors, and highlighting their appeal to foreign investors from Canada and Latin America:

Boston, Massachusetts

  • Innovation Hub: Home to Harvard, MIT, BU, Boston College, and a booming tech scene, Boston boasts a robust economy with projected GDP growth of 3.4% in 2023. This stability attracts investors seeking long-term returns.
  • Global Magnet: Boston's world-renowned universities and cultural institutions draw international talent, contributing to a diverse and growing population (projected 0.5% annual growth).
  • Canadian Connection: Canada's proximity and strong cultural ties make Boston a prime target for Canadian investors. They accounted for 20% of foreign buyers in the Northeast in 2023.

Burlington, Vermont

  • Serene Oasis: This college town offers a tranquil escape with stunning natural beauty. Its stable economy, fueled by healthcare and education sectors, is projected to grow by 3.1% in 2023, attracting investors seeking security.
  • Young and Growing: Burlington's vibrant arts scene and outdoor activities appeal to young professionals and families, driving population growth (projected 1.2% annually).
  • Latin American Interest: Latin American investors seeking a slower pace and lower cost of living compared to major cities find Burlington appealing. They accounted for 10% of foreign buyers in Vermont in 2022.

Providence, Rhode Island

  • Affordability Gem: Compared to its Boston neighbor, Providence offers a more accessible entry point into the Northeast market, with a median home price of $380,000. This attracts first-time investors and young professionals.
  • Rising Star: Providence's revitalized downtown, growing tech scene, and historic charm are drawing attention, leading to a projected population growth of 0.8% annually.
  • Latin American Buzz: Latin American investors, particularly Brazilians, are increasingly drawn to Providence's affordability and proximity to Boston. They accounted for 8% of foreign buyers in Rhode Island in 2022.

Hartford, Connecticut

  • Tech Haven on the Rise: Hartford's revitalized downtown and growing tech sector, anchored by insurance giants, offer a stable and promising economy with projected GDP growth of 3.2% in 2023.
  • Lower Cost, Higher Potential: Compared to Boston and New York City, Hartford's lower cost of living and potential for future growth attract investors seeking value.
  • Canadian and Latin American Interest: Both Canadian and Latin American investors see value in Hartford's affordability and potential for future appreciation. They accounted for 12% of foreign buyers in Connecticut in 2022.

Portland, Maine

  • Coastal Charm with Economic Muscle: Portland's thriving tourism, healthcare, and culinary scene contribute to a robust economy with projected GDP growth of 3.0% in 2023. This stability attracts investors seeking reliable returns.
  • Quality of Life Magnet: Portland's picturesque harbor, vibrant arts scene, and friendly community attract young professionals and families, contributing to a growing population (projected 0.7% annually).
  • Canadian Haven: Canadians, drawn to Portland's proximity, affordability, and relaxed lifestyle, accounted for 15% of foreign buyers in Maine in 2022.

Best cities in the US (Northeast) for real estate investment in 2023

For investors seeking stability and growth in the vibrant Northeast, several cities shine in 2023. These urban gems boast a dynamic blend of economic strength, attractive demographics, and promising investment potential, making them ideal for diversifying your portfolio.

best places to invest in US real estate (Northeast).png

Boston, Massachusetts

  • Home Value Index: $1,050,000 (Approximate)
  • Rent Index: $2,800 (Approximate)
  • Job Growth Rate: High, with hourly wages exceeding the national average
  • Population Growth (2013-2023): Steady increase
  • Attractions: Major education hub, historic landmarks, vibrant cultural scene
  • Notable: Boston's real estate market presents a dynamic landscape, offering potential for both steady rental income and capital appreciation. The city's strong job market, particularly in the tech and biotech sectors, supports consistent demand for housing.

New York City, New York

  • Home Value Index: $1,200,000 (Approximate)
  • Rent Index: $3,500 (Approximate)
  • Job Growth Rate: Robust, diverse industries including finance, technology, and entertainment
  • Population Growth (2013-2023): Continuous influx of residents
  • Attractions: Global financial hub, iconic landmarks, cultural diversity
  • Notable: Despite premium property prices, New York City's real estate market remains a prime destination for investors. The city's economic diversity and constant population growth contribute to sustained demand for both rental and investment properties.

Washington D.C.

  • Home Value Index: $850,000 (Approximate)
  • Rent Index: $2,800 (Approximate)
  • Job Growth Rate: Stable, driven by government institutions and tech sector
  • Population Growth (2013-2023): Steady increase
  • Attractions: Political hub, historic sites, vibrant cultural scene
  • Notable: Washington D.C.'s real estate market offers stability and growth potential. The city's job market, influenced by government and tech sectors, supports a consistent demand for housing. D.C.'s unique blend of history and innovation attracts a diverse population.

Providence, Rhode Island

  • Home Value Index: $400,000 (Approximate)
  • Rent Index: $1,800 (Approximate)
  • Job Growth Rate: Emerging, with a focus on education and arts
  • Population Growth (2013-2023): Steady increase
  • Attractions: Historic charm, vibrant arts scene, educational institutions
  • Notable: Providence's real estate market, marked by affordability, presents opportunities for investors seeking growth. The city's economic revitalization and lower entry barriers make it an appealing option for both rental income and potential appreciation.

Philadelphia, Pennsylvania

  • Population Growth Rate (2013-2023): Steady increase (exact percentage not specified)
  • Home Value Index: Varies by neighborhood but averages around $250,000 to $300,000.
  • Rent Index: Approximately $1,600 to $1,800 on average.
  • Job Growth Rate: Diverse economy with growth in healthcare, education, and technology sectors.
  • Attractions: Historical landmarks, cultural institutions, and a thriving arts scene.
  • Notable: Philadelphia's diverse and growing economy, coupled with a rich cultural scene, makes it an attractive real estate market. The city's historical significance and vibrant neighborhoods contribute to a diverse range of housing opportunities.

Investing in U.S. Real Estate in 2023 (Northeast)

The Northeast U.S. rental property market provides robust opportunities for foreign capital in 2023 amid record-low vacancy rates and rising rents that lift cash flows. Top-tier markets New York City, Boston, and Washington D.C. offer global cachet and inventory diversity, though remain costly. Smaller cities such as Buffalo, Hartford, Providence, and Portland, Maine bring affordability while still projecting rent growth upwards of 5% annually over the next five years. Overall, overseas investor appetite persists for Northeast assets; conducting in-depth due diligence and consulting expert advisory teams is essential to navigate favorable supply-demand conditions and mitigate risks. Vetting property management capabilities, tenant protection policies, and local tax burdens help foreign players aptly position capital across the range of Northeast markets.

FAQs Frequently asked questions about Real Estate Investment in the US for Foreign Investors (Northeastern US)

Q: Why invest in Northeast U.S. real estate? A: Northeast cities like Boston and New York offer high rental yields, averaging 4-6%, despite premium property prices.

Q: Are there opportunities for foreign investors? A: Absolutely, with Latin American and Canadian investors capitalizing on proximity, business ties, and robust sectors like biotech in Boston.

Q: What tips should Canadian investors keep in mind when exploring Northeast real estate? A: Canadian investors should leverage favorable exchange rates, explore leverage options, and conduct thorough due diligence for informed decisions.

Q: Are there specific cities or sectors within the Northeast that interest Latin American investors? A: Smaller cities like Buffalo and Providence, with lower entry barriers and growth potential, attract Latin American investors seeking profitable opportunities.

Q: What are profitable alternatives to marquee cities? A: Smaller metros like Buffalo and Providence present affordable buy-and-hold options, boasting profitable markets with lower barriers to entry.

Q: How do smaller markets compare in terms of rental growth? A: Cities like Hartford and Portland offer promising projections, with lower average home prices and healthy income and employment fundamentals supporting rental growth.

Q: Any tips for overseas investors considering Northeast real estate? A: Vet local dynamics, leverage, and understand key metrics to make informed decisions and maximize returns in this thriving region.

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

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