Real estate investors have always valued real estate in the South. The appeal is obvious when you consider the vast expanses of open space, warm weather, and beautiful scenery of many Southern cities. But when it comes to making the most investments, not all cities are created equal. In fact, some places should simply be avoided.
GOBankingRates asked real estate investors where they avoid investing in the South. Here’s what they said.
Here is also 34 cities in the South where property prices are expected to increase in 2025.
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New Orleans hurricane risks outweigh rewards
The charm of New Orleans’ rich culture and history is undeniable. But if you invest in real estate here, you can’t afford to ignore the risk of hurricanes.
“New Orleans’ vulnerability to natural disasters and economic volatility dampens its appeal for multifamily investments,” said Graham Sowden, chief investment officer (CIO) at RREAF Securities in portfolioa company that has overseen more than $4 billion in multifamily transactions across the South.
Stephen Kovach, CEO of Global Advisorssaid New Orleans can be difficult because “the post-pandemic recovery has been slower than other southern cities, which has impacted economic stability.”
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Shreveport’s population decline is a concern
“Economic stagnation and population decline pose challenges for multifamily investments in Shreveport,” Sowden said.
If you’re considering investing in real estate, few factors are as critical as the city’s population growth. If the population decreases, it means a decrease in demand for housing and commercial properties.
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Low migration in Louisiana and Oklahoma
Arvind Cheruku, partner and CIO at Fulshear Center, warns against total investment in Louisiana and Oklahoma. “There aren’t a lot of people coming from California or Illinois or New York to these states,” he said.
Cheruku also said the business environment in these states “may not be conducive to investment growth.” Due to difficult operating conditions, some investors remain cautious at this time.
Austin’s overheated market
Even the booming capital of Texas is giving Cheruku a break these days. “I would be very cautious and opportunistic right now when investing in Austin,” he said.
Cheruku believes that “some of the price appreciations have been unrealistic and out of touch with the market.” This is a sign that the value is likely artificially inflated, making it cautious.
Economic headwinds from Mobile and Montgomery
“Despite its strategic location, Mobile faces economic headwinds and demographic challenges that impact multifamily investment potential,” Swoden said.
Likewise, “economic challenges and demographic trends are impacting the multifamily investment outlook in Montgomery compared to other Southern markets,” he said.
For these reasons, the expert investors we spoke with are mostly avoiding these markets right now.
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Jackson and Meridian’s struggles
Sowden cited Jackson and Meridian, Mississippi, as two cities with challenges in multifamily investment.
“With economic woes and population decline, Jackson presents challenges for multifamily investments in the South region,” he said.
Kovach said Jackson is also a problem because of its inadequate infrastructure and reliance on the public sector: “The city’s economy relies heavily on public sector jobs, which limits growth opportunities in other sectors. »
Likewise, “economic challenges and demographic trends are hampering multifamily investment potential in Meridian,” he said.
Monroe’s demographic obstacles
Monroe, Louisiana is located between Shreveport and Jackson, Mississippi, in what seems like the perfect location. But Sowden said that still makes him hesitant.
“Despite its strategic location,” he said, “Monroe faces economic headwinds and demographic challenges that impact multifamily investment potential.”
Gulfport’s stagnant growth
Rounding out the list of cities to avoid, Sowden said “economic hardship and limited population growth pose challenges for multifamily investments in Gulfport, Mississippi.”
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Birmingham’s slowdown
Kovach said Birmingham is “experiencing slower economic growth than other cities in the region.” Challenges include a less diversified economy and lower levels of new business investment.
He said that while efforts have been made to improve economic inclusion, “the pace of change may not be sufficient to generate significant returns on investment in the short term.”
Avoid potential pitfalls
By following the advice of Sowden, Kovach and Cheruku, investors can avoid the pitfalls of an already difficult market. Remember, you should always do your own research before making any significant investments.
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This article was originally published on GOBankingRates.com: I’m a Real Estate Investor: 11 Southern Cities Where You Should Avoid Buying Property
