Low inventory and frenzied buyer demand have made late March the best time to sell a home in many markets. According to Realtor.com, the week of March 23–30 offers sellers a sweet spot of high prices, quick sales, and intense buyer interest in 17 major metros . For developers and investors, this seller-side momentum signals opportunity on the buy side – specifically, in developing build-to-rent (BTR) townhome communities and acquiring multifamily assets. A shortage of for-sale homes means many would-be buyers will remain renters, boosting rental demand. Meanwhile, property valuations and cap rates are adjusting to higher interest rates, creating entry points for acquisitions. Nationally, average multifamily cap rates have risen to about 5.8% (up 110 bps from 2022’s record lows) , the highest since 2014, even as vacancy rates hold near pre-pandemic norms (vacancy climbed ~0.9% last year then flattened in early 2024) . At the same time, built-to-rent housing is booming – 2023 saw a record 27,500 new single-family rentals built (75% more than the prior year) – reflecting strong tenant demand from millennials and others who find homeownership challenging . In this context, each of the following 17 metros – identified as having March 23–30 as a prime selling week – present unique but promising conditions for BTR development and multifamily investment. We outline the investment narrative, cap rate and vacancy trends, and regional factors for each market:

Los Angeles, CA

• Investment Opportunity: Los Angeles’ tight for-sale housing (median list ~$1.1M in late March, +6% vs. January) and severe housing shortage underscore strong rental demand . Developers can capitalize by building BTR townhomes in suburban submarkets where families priced out of buying seek space. Investors in existing apartments can find opportunity as LA’s market adjusts – seller competition is low and well-priced assets still attract plenty of tenant demand. Recent policy changes (e.g. California’s SB-9) also allow more infill development on single-family lots, supporting new rental construction .

• Cap Rate Trends: Cap rates in LA have ticked up from their historic lows. Prime Class A multifamily in urban cores still trade around the low-4% range, but suburban LA cap rates expanded to roughly 4.25–4.5% for stabilized Class A assets (up from ~3.5–4.25% in late 2022) . This upward movement reflects pricing discounts due to higher financing costs, potentially improving yield prospects for new acquisitions.

• Vacancy Trends: After an extremely tight 2021, LA vacancies have normalized. Metro occupancy fell from 96.3% in mid-2022 to about 95% in mid-2023 , and vacancy is projected around 5.0% – the highest year-end level since 2010 . A wave of new deliveries (18,000 units slated in 2023 vs. ~9,500 in 2021) is elevating vacancies . Still, a ~5% vacancy is balanced and suggests continued landlord leverage on rents, given LA’s chronic housing undersupply.

• Regional Dynamics: Supportive: Policy shifts are unlocking development (e.g. upzoning in Downtown L.A. could add 100k units over 20 years) , and the region’s huge population of renters ensures deep demand. Challenges: High construction costs, lengthy permitting, and strict tenant protections require strategic planning. Population growth in LA has been sluggish, and affordability is a major concern – investors should focus on projects that address the affordable end of the spectrum or offer distinctive value to justify rents.

New York City, NY

• Investment Opportunity: In the New York metro, March’s seller’s market (homes selling faster and for a premium) is a flip side of the strong rental market. Many buyers unable to find or afford a home remain renters, fueling demand for both new rentals and well-located multifamily acquisitions. BTR townhome communities in the outer boroughs or suburban NJ/NY could cater to families seeking more space while staying priced out of ownership. On the acquisition front, New York’s multifamily fundamentals are historically resilient – even when owners list properties to capitalize on high prices, investor demand remains robust due to limited supply and high rents.

• Cap Rate Trends: NYC cap rates remain compressed relative to other markets, reflecting its status as a gateway city. Core Manhattan assets often see cap rates in the low-4% (or even 3s for prime) range, whereas outer-borough and workforce housing assets can trade in the mid-4% to 5% range. Rising interest rates have introduced some upward pressure – 2023 saw slight cap rate decompression from 2022’s trough – but New York’s consistently strong fundamentals and investor appetite have kept cap rates near the low end . Investors should expect lower yields here, offset by high rent growth potential and stability.

• Vacancy Trends: New York’s rental vacancy is remarkably low. The metro’s vacancy rate hovered around 2% through 2022 and early 2023 , after a brief pandemic spike in 2020. While luxury Manhattan rentals had higher vacancy during COVID, the recovery has brought demand back. Overall vacancy in 2023 is roughly 2.3%, up slightly as new inventory was absorbed . Continued economic recovery (NYC was slower to bounce back post-pandemic) is improving rents and occupancy . Investors can count on a very tight market, though rent-regulated units have their own dynamics.

• Regional Dynamics: Supportive: NYC’s massive, diversified economy and pent-up housing demand (the region faces a structural housing shortage) underpin rent growth and occupancy. The sheer scale of the renter pool – from young professionals to downsizing empty-nesters – means almost any new rental product in a commutable location finds demand. Challenges: Strict regulations (e.g. rent stabilization on older units) and high operational costs can limit returns on certain assets. New development is constrained by high land/construction costs and zoning, so BTR developers often look just outside city limits for feasible projects. Nonetheless, New York’s renter base and cultural draw make it a perennial target for long-term investors.

Chicago, IL

• Investment Opportunity: Chicago’s spring seller’s market indicates buyers are active, but the metro’s relatively affordable prices (compared to coasts) mean many still can’t find ideal homes, sustaining rental demand. Investors can target close-in neighborhoods and suburbs for BTR townhome developments, offering a single-family feel to those delaying homeownership. For multifamily buyers, Chicago offers higher cap rates than coastal cities and a large inventory of properties. The city’s urban core is seeing renters return post-pandemic as offices and entertainment reopen , so acquiring assets in rejuvenated neighborhoods (West Loop, etc.) or value-add garden apartments in suburbs can be strategic.

• Cap Rate Trends: Cap rates in Chicago have expanded modestly in the past year, providing better entry yields. Class B/C apartment assets often trade in the mid-5% to 6% range, higher than similar assets in NYC or LA. Even Class A downtown deals can be in the low-5% range now, given recent softening. Investors are focusing on well-located properties in neighborhoods rather than the Loop high-rises, seeking that yield premium. Chicago’s cap rates reflect a bit more risk pricing (due to local taxes and governance concerns), but also the upside of improving urban rent trends.

• Vacancy Trends: Chicago’s rental vacancy fell to extremely low levels in 2021–22 and has since risen back toward historical norms. After dipping under 3.5%, vacancy climbed to ~4.5% in 2022 and is forecast around 5.3% in 2023 as new supply comes online. Indeed, a surge of deliveries downtown is pushing vacancy up to ~5% . Even so, 5% is a healthy level, and demand has kept pace in many areas – evidence being the quick leasing of new buildings and the return of renters to city life. Outer suburban vacancies remain lower, as many households that left downtown during COVID have stayed in suburban rentals. Going forward, Chicago’s vacancy is expected to stabilize in the mid-single digits, supported by its steady (if slow-growing) population.

• Regional Dynamics: Supportive: Chicago boasts a diverse economy (finance, healthcare, tech, education) and world-class urban amenities that attract renters. It remains a Midwest hub for young professionals, and as companies call workers back to offices, downtown rental demand is improving . The relative affordability – Chicago rents are lower than NYC or SF – gives room for growth. Challenges: Illinois’ high property taxes and proposals for rent control in the city add caution for investors. Population and job growth are modest, so developers should be careful not to oversupply any one submarket. That said, targeted BTR projects in growth pockets (e.g. along commuter rail lines) and well-managed value-add acquisitions can thrive in Chicago’s balanced market.

Las Vegas, NV

• Investment Opportunity: Las Vegas’ housing market is hot this spring, with homes selling quickly – a sign of rapid in-migration and household formation. This trend spells opportunity for build-to-rent single-family and townhome communities: many new residents (often from higher-cost states) prefer renting a home before buying. Indeed, Las Vegas has been a poster child for the BTR surge, given abundant land and population growth. On the multifamily side, developers delivered a lot of new units recently, and some owners may look to sell; investors who buy now can benefit from discounted prices and position for long-term growth. Las Vegas’ “discount” pricing and yields relative to coastal California continue to attract out-of-state investors .

• Cap Rate Trends: Cap rates in Vegas have risen alongside the national trend, now often in the 5%–6% range for stabilized assets (higher for older Class C). This is up from sub-5% levels a couple years ago. The market’s long-term growth prospects and lower entry prices (compared to Los Angeles or Phoenix) keep investment interest high . We’re seeing a two-tier market: large, institutional-quality suburban complexes trading at lower cap rates (low-5% range) due to competition, while smaller or older properties can command higher first-year yields (mid-5 to 6+%). Overall, the pricing is attractive relative to rent levels, which draws investors willing to ride out short-term volatility.

• Vacancy Trends: After an extraordinarily tight 2021, Las Vegas has experienced a vacancy spike due to a wave of new supply. Vacancy jumped from just 2.6% in 2021 to about 6.0% in 2022, and is around 7.7% in 2023 – one of the highest increases nationwide. This rapid rise reflects the elevated delivery volume of new apartments coupled with a normalization of demand post-pandemic. Importantly, much of the vacancy pressure is in the Class A luxury segment. There remains strong demand for affordable rentals, as evidenced by rising absorption of Class B/C units . With Las Vegas leading the nation in household formation (driven by in-migration) , these vacant new units are expected to lease up over time. Investors should underwrite conservatively for near-term vacancy but anticipate improvement as the local economy and population keep expanding.

• Regional Dynamics: Supportive: Las Vegas continues to benefit from robust population growth, business relocations, and a recovering tourism economy. The metro added tens of thousands of new residents in recent years, and even a potential economic wobble hasn’t deterred people from moving in . Additionally, Nevada’s pro-business, landlord-friendly environment and lack of state income tax are attractive for development. Challenges: The hospitality-focused economy can be volatile – any hit to tourism or employment can soften rental demand. The recent surge in construction means competition for tenants in the short run. However, Las Vegas’ long-term growth trajectory (diversifying economy, retirees, remote workers moving in) makes a compelling case for investing now while cap rates are higher and holding for the upswing.

Washington, D.C. (Metro)

• Investment Opportunity: The D.C. area’s best-week-to-sell metrics reflect a market with high buyer demand and limited listings, which in turn bodes well for rentals. Many government and tech workers are sticking with renting as interest rates make buying less feasible. This creates a ripe environment for BTR developments in suburban Maryland and Northern Virginia – those who can’t find a home to purchase will jump at new townhomes for rent that offer space and good school districts. On the multifamily acquisition side, the D.C. metro has a track record of stability that keeps investors interested even as a lot of new units come online . Buyers can target newer Class A properties from the recent construction wave or older Class B assets in prime suburbs that can be upgraded. The key narrative: despite big development, D.C.’s job growth and affluent renter base sustain long-term confidence .

• Cap Rate Trends: D.C.’s cap rates remain relatively low but have inched up with interest rates. Core assets in the District might trade around 4.5%–5% caps, while suburban garden apartments can be mid-5%. The influx of new construction and rising operating costs put slight upward pressure on yields. Notably, investors still accept tighter cap rates here due to lower risk – the region’s economy (federal government, contractors, universities) provides a safety net of demand. With plenty of capital eyeing D.C., competition for quality assets keeps cap rates from rising too far. Overall, expect cap rates that are modestly higher than 2021’s ultra-lows, but still on the tighter side (reflecting D.C.’s status as a stable, liquid market).

• Vacancy Trends: The Washington D.C. metro’s vacancy has crept up after hitting record lows. Vacancy dropped to ~3.0% in 2021 but rose to 4.6% in 2022, and is around 5.1% in 2023 . This modest rise in vacancy is actually impressive given the substantial new supply – over 12,000 units were delivered in 2022 and another 14,000 in 2023 . Essentially, demand has been just about keeping pace with supply. Downtown D.C. rentals have been slower to refill (due to remote work), but suburban Virginia and Maryland communities are absorbing well. With D.C. boasting one of the highest job growth rates among major metros in 2023 (the region added tens of thousands of jobs), new households are forming to fill these units. We anticipate vacancy hovering in the 5% range as the market digests new projects, a relatively healthy level that gives renters options but still allows landlords steady leasing.

• Regional Dynamics: Supportive: The D.C. region’s economy is exceptionally resilient – federal employment, a growing tech sector (e.g. Northern Virginia’s data centers and cybersecurity firms), and a steady influx of young professionals and students provide a constant pool of renters. High incomes in the area support robust rent levels. Additionally, transient demographics (military families, diplomats, consultants) often prefer renting. Challenges: The flip side of heavy development is the risk of short-term oversupply, especially in luxury high-rises. Certain submarkets (like Navy Yard or Tysons) have thousands of new units competing for tenants simultaneously. Also, D.C. proper has stringent tenant protections and some rent control (for older buildings), and political shifts can impact government spending and hiring. Still, as evidenced by only a small uptick in vacancy amidst a construction boom, the region’s demand drivers largely outweigh these challenges .

Philadelphia, PA

• Investment Opportunity: Philadelphia’s spring market has low inventory (active listings 60% below pre-pandemic levels) , meaning frustrated buyers – and that spells opportunity for rental investors. The Philly metro has a large population of would-be first-time buyers who may continue renting longer, creating demand for BTR communities in suburban counties and new rental townhomes even within the city. Developers can fill the gap by providing single-family-style rentals in areas with good transit into the city. Meanwhile, multifamily investors can capitalize on strong renter demand and relatively affordable prices: Philly’s multifamily prices are lower than most East Coast metros, yet rent growth has been steady. With homes selling at a premium this season (sellers are getting ~$18k more than in January, with 23% higher listing views) , some smaller landlords may be tempted to sell their properties – opening acquisitions for larger investors to consolidate and upgrade these assets.

• Cap Rate Trends: Philadelphia generally offers higher cap rates than NYC or DC, reflecting its secondary market status. Recent cap rates for stabilized multifamily are often in the mid-5% range, and value-add or Class C deals can be in the 6%+ territory. These yields have attracted increased interest from national investors seeking better cash-on-cash returns. Over the last year, cap rates edged up roughly 50–75 bps in Philly, tracking the national trend. Still, buyer competition for quality assets (especially in strong suburbs or core neighborhoods like Center City and University City) keeps cap rate expansion in check. Expect cap rates to remain in the mid-5s for good assets – an appealing level given Philadelphia’s improving fundamentals and lower volatility.

• Vacancy Trends: Philadelphia’s rental market is tight. Vacancy hit about 1.9% in 2021 and, after some new supply, is around 4.6% in 2023 . That rise in vacancy comes from a wave of new apartment buildings in the last couple of years, but even so, 4–5% vacancy is healthy. Many Philly neighborhoods have even lower vacancy; the metro average is pulled up slightly by a few big downtown high-rises leasing up. Importantly, buyer demand for homes is spilling into the rental market – with so few homes for sale, households are renting by necessity. Philadelphia also benefits from a large student and medical resident population that rent. Forecasts call for vacancy to stay in the mid-4% range, as a modest pipeline in 2024 will be met by steady job growth (eds-and-meds and life sciences are expanding locally).

• Regional Dynamics: Supportive: The Philadelphia area offers relative affordability while still having a diversified economy (eds, meds, finance, pharma). This attracts both residents (including some moving from pricier NY/NJ) and investors. The metro’s slower housing construction post-2008 means there’s a cumulative housing shortage now, supporting both home prices and rents. Additionally, Philly’s suburbs are seeing growth as remote/hybrid work allows more dispersion – a positive for BTR development on city outskirts. Challenges: Philadelphia’s city wage tax and older housing stock can be deterrents – some families eventually leave for lower-tax suburbs or newer homes elsewhere. Growth is moderate; the metro isn’t booming like Sunbelt cities. Also, Pennsylvania is landlord-friendly overall, but Philadelphia city has been discussing rent control (not enacted, but a point to monitor). In summary, Philly provides solid, if unspectacular, growth – which combined with higher initial yields can be quite attractive for long-term investors focusing on cash flow and incremental appreciation.

San Francisco, CA

• Investment Opportunity: San Francisco’s housing market remains one of limited supply, and even with recent softness, the late-March listing window gives sellers an edge. For investors, SF’s challenges (tech layoffs, remote work) are actually presenting a window to invest in rentals at a relative value. Build-to-rent in the city itself is tough (due to costs and zoning), but the concept can thrive in the broader Bay Area – for example, developing townhome rentals in peripheral Bay communities to serve families who can’t afford SF home prices. Within the city and inner Bay, multifamily acquisitions are the play: some owners are offloading properties after the tumult of the pandemic, and buyers with patience can acquire at cap rates a bit higher than the ultra-low pre-pandemic levels. In essence, San Francisco is rebounding from a downturn, so investing now (while rents and occupancy are still below peak) can yield significant upside as the city recovers.

• Cap Rate Trends: San Francisco historically has ultra-low cap rates – high-3% to low-4% for many deals – due to rent control and investors banking on appreciation. Lately, there’s been slight cap rate expansion. It’s not uncommon to see well-leased assets trade in the mid-4% range now, especially outside the absolute prime locations. Cap rates in SF are also a tale of two markets: older rent-controlled buildings (with below-market in-place rents) might show very low cap rates on current NOI, whereas newer luxury buildings (which aren’t rent-controlled) trade at more normal cap rates but with possibly more vacancy. On average, San Francisco’s cap rates have moved up perhaps 50 bps from 2021 levels. Investors should underwrite carefully given local rent control limits on upside, but the expectation is that as offices refill and urban living resumes, SF rent growth will return, compressing cap rates again.

• Vacancy Trends: Among these metros, San Francisco had one of the wildest vacancy swings in recent years. Downtown vacancies spiked in 2020 with the pandemic exodus. By 2022, metro vacancy was ~6.4%, improving into 2023 at 6.3% . That’s down from double digits at the worst of 2020, but still above the ~3–4% pre-2020 norm. Essentially, SF has higher-than-normal vacancy as it struggles with some out-migration and remote work effects . Notably, the new supply in San Francisco has been minimal (only ~1,600 units in 2022, 2,600 in 2023) , so this isn’t a supply-driven vacancy issue – it’s demand that needs to bounce back. There are signs of stabilization: 2023 vacancy held steady and didn’t rise further, and some renters are coming back to enjoy rent discounts. We anticipate vacancy will edge down over the next couple of years as tech hiring resumes and the city’s vibrancy attracts returnees.

• Regional Dynamics: Supportive: The Bay Area is still an economic powerhouse. San Francisco is at the heart of it, with world-class employers (tech, finance) and enduring appeal for talent. The housing supply is tightly constrained by geography and regulation, which long-term creates value for existing assets. State and regional initiatives (like California’s density-friendly laws) are slowly chipping away at development barriers, potentially enabling more housing construction in the Bay Area where it’s desperately needed. Challenges: Out-migration is a real concern – the combo of high costs, remote work options, and quality-of-life issues (e.g. public safety, homelessness) has led some residents to leave. Rent growth was negative in 2020 and only modest since, making investors cautious. Additionally, stringent rent control (for buildings pre-1979) and tenant protections in SF require careful navigation; many investors prefer nearby cities (Oakland, etc.) for fewer restrictions . In summary, San Francisco’s rental market is on the mend but still in flux – a higher-risk, higher-reward play tied to the region’s eventual normalization.

Portland, OR

• Investment Opportunity: Portland’s housing market this spring shows relatively few sellers and plenty of eager buyers, implying underlying demand. However, Portland has faced some headwinds (population growth slowed in recent years). For investors, this means less froth and more opportunity to pick up assets at reasonable prices. Build-to-rent development can find a niche in Portland’s suburbs, where many young families seek yards and good schools but can’t afford to buy – new rental homes or townhomes could be very attractive. In the multifamily arena, Portland presents a chance to obtain higher yields than West Coast peers while still benefiting from West Coast dynamics. Private investors continue to target Portland, especially its ample stock of older Class C apartments that can be renovated . With the state’s new middle housing laws and a growing tech manufacturing presence (Intel’s expansions, etc.), the rental market outlook is positive, making now a good time to invest before growth re-accelerates.

• Cap Rate Trends: Portland’s cap rates are moderate – higher than Seattle or SF, lower than many Midwest markets. Recent transactions suggest cap rates often in the 5%–5.5% range for standard multifamily assets, and potentially higher for tertiary submarkets or value-add deals. Oregon’s statewide rent control (which limits rent hikes to ~10% annually in most cases) has made some institutional investors require a bit more return, nudging cap rates up. In fact, investors are adopting divergent strategies due to the rent cap: some focus on newer buildings exempt from rent control, while others demand higher cap rates on older buildings to offset the limit on rent growth . Overall, cap rates in Portland have risen perhaps half a point since 2021. The spread between Portland and primary markets’ cap rates is luring yield-driven buyers who still want a coastal market flavor.

• Vacancy Trends: Portland’s vacancy has fluctuated with new supply. In 2021, vacancy hit a low around 2.7%, then increased to 4.0% in 2022 and about 4.5% in 2023 . This uptick was expected as several thousand units delivered in 2021-2022. Despite some negative press during 2020 (protests, etc.), renter demand held up – evidenced by rents that are ~25% higher now than 2019. The current ~4–5% vacancy is still fairly tight and in line with Portland’s historical average. Notably, older, more affordable units stay nearly full, while some newer luxury projects lease up more slowly (a common theme). With a lighter pipeline in 2024, vacancies may level off. Additionally, big employers (like chip manufacturers) expanding in the region will help soak up units. All said, Portland’s vacancy trend is stable now, with the city’s improved affordability (relative to Seattle or SF) helping retain renters.

• Regional Dynamics: Supportive: Portland offers a high quality of life and comparatively affordable rents/home prices for the West Coast, which should support long-term rental demand. The metro is attracting investments in high-tech manufacturing (e.g. semiconductors) , which could boost job and population growth ahead. Oregon’s land use policies (urban growth boundary) restrict sprawl, often keeping housing supply from overshooting too much. The state also legalized duplexes and ADUs broadly, encouraging small-scale infill housing that could benefit BTR builders. Challenges: The state’s rent cap and Portland’s tenant-friendly regulations can squeeze profitability – investors must carefully underwrite rent increases and expense growth. Portland also experienced some population stagnation recently, partly due to out-migration during the pandemic; it’s not growing as fast as some Sunbelt markets. Public perception issues (downtown unrest, homelessness) have been a concern, though efforts are underway to address these. For developers, permitting can be slow, and inclusionary zoning requirements in the city add costs. Despite these issues, many of which are cyclical, Portland remains a fundamentally undersupplied housing market with solid long-term prospects, especially for those willing to navigate its regulatory landscape.

San Diego, CA

• Investment Opportunity: San Diego’s market fundamentals are among the strongest in the nation – homes are scarce and selling briskly, indicating many families will turn to rentals. San Diego’s high home prices and limited new home construction make renting the only viable option for a large share of residents, which is ideal for rental investors. There is burgeoning interest in BTR communities in pockets of San Diego County (South County, North County inland) where land is available – these can cater to military families, biotech and telecom professionals, and others who want a single-family lifestyle without buying. On the multifamily side, San Diego is traditionally a tightly held market, but current conditions (rising interest rates) might motivate some owners to sell. Acquiring assets here means tapping into a market with reliably low vacancies and strong income demographics. A strategic recommendation is to target the underserved middle-market rentals – San Diego has plenty of luxury apartments and older units, but not enough new workforce housing, a gap BTR and value-add rehabs can fill.

• Cap Rate Trends: San Diego’s cap rates have remained low due to high investor demand and limited inventory, but they have drifted upward slightly. Prime multifamily assets often trade in the low-to-mid 4% cap range. Secondary locations or older properties might see high-4% to 5%. Relative to LA or Orange County, San Diego sometimes offers a tiny premium on cap rate, but not much – investors prize San Diego for its stability. The past year saw perhaps a 50 bps increase in cap rates (e.g. a deal that was 4% might be 4.5% today) as buyers factor in higher debt costs. Even so, San Diego cap rates are below national averages, reflecting its coastal market cachet. For developers, the rent levels in San Diego are high enough to pencil new construction, but yields on cost will be slim; partnerships or long-term hold outlooks are common, banking on appreciation more than high initial yield.

• Vacancy Trends: Vacancy in San Diego is persistently low. The metro vacancy was just 2.6% in 2022 and roughly 3.5% in 2023 – even with new apartments coming online, demand has kept units filled. San Diego benefits from steady inflows of residents (including military personnel and veterans, as well as migrants from pricier California markets) and limited building due to land constraints. During the pandemic, vacancies barely rose at all, and currently, many submarkets (especially suburban areas like Chula Vista or Poway) have vacancies under 3%. Looking ahead, there is some new supply concentrated downtown and in Mission Valley, which could tick up vacancy locally, but countywide vacancy is expected to remain in the low-to-mid 3% range. Essentially, San Diego’s issue is too much demand relative to supply – a positive for landlords. Quick turnover of for-sale homes (best-week-to-sell conditions) further implies people will keep renting if they can’t buy quickly.

• Regional Dynamics: Supportive: San Diego’s economy is diverse and high-income – anchored by the U.S. Navy and Marines, a huge healthcare and biotech sector, universities, and tourism. This provides a stable tenant base with ability to pay relatively high rents. The climate and lifestyle are a natural draw, supporting population growth from in-migration. Importantly, geographic and regulatory barriers limit new housing: the ocean, mountains, and strict growth controls constrain sprawl. This means housing supply grows slowly, bolstering landlords’ position. Challenges: Development in San Diego can be slow and costly – there are strong community resistance (“Not In My Backyard”) in some areas. California regulations (like sustainability requirements) and fees can be burdensome. Additionally, San Diego’s job growth, while solid, is not as heady as some Sunbelt cities, so rent growth is steady but not explosive. Another factor is the large military population, which can fluctuate with deployments and federal budgets (though the military also provides housing allowances that effectively support rental payments). Overall, San Diego is a high-barrier, high-demand market – a profile that new BTR projects and acquisitions can leverage for reliable long-term performance.

Baltimore, MD

• Investment Opportunity: Baltimore’s inclusion in the best-to-sell list underscores that even this historically buyer-friendly market is tight on inventory. For investors, Baltimore presents a value play: lower entry prices and higher cap rates than nearby Washington, D.C. or Philadelphia, yet with a substantial renter pool. Build-to-rent townhomes could do well in the suburbs of Baltimore (and even within the city’s rejuvenating neighborhoods) by offering new housing options where for-sale supply is scant. On the multifamily acquisition front, Baltimore is attracting increased interest from out-of-state buyers who are chasing yield – the metro’s prices per unit are relatively low, and there’s room for improvement in many older properties. The city’s economic initiatives (like the growth of Johns Hopkins’ institutions and the Port of Baltimore) are gradually strengthening renter demand . Investors can acquire Class B/C assets for value-add or even consider ground-up development in underserved submarkets, riding the wave of a market that’s on an upswing from a rough patch.

• Cap Rate Trends: Cap rates in Baltimore are higher than the national average, making it appealing for yield-focused investors. It’s not uncommon to see 5.5%–6%+ cap rates on stabilized assets, especially for Class B/C properties. In Downtown Baltimore, older small apartment buildings have traded at cap rates above 5%, sometimes into the 6% range , reflecting their higher perceived risk. By contrast, newer suburban multifamily might be in the low-5% range. Over the last year, cap rates edged up slightly in Baltimore as elsewhere, but demand from private capital has kept them relatively stable at these higher levels. First-year returns in Baltimore often outshine those in bigger East Coast cities, and indeed non-local buyers have been targeting Baltimore for that reason . This trend of outside investment is compressing cap rates a bit from where they were a few years ago (when 7% caps on older assets were sometimes seen). Expect Baltimore to continue offering a notable cap rate premium, although perhaps a bit reduced as more competition comes to town.

• Vacancy Trends: Baltimore’s rental vacancy has been rising slightly after a long period of tightness. The metro’s vacancy was about 2.7% in 2021 but increased to 4.7% in 2022 and is around 5.2% in 2023 . This is the second consecutive year of rising vacancy as new deliveries outpace absorption . However, Baltimore’s vacancy is still moderate – comparable to the U.S. average. Some city submarkets (downtown/Inner Harbor) have seen higher vacancy due to new luxury buildings and some pandemic-era outmigration, whereas popular suburban areas (Columbia, Towson, etc.) remain very tight. Rent growth has been modest in Baltimore, which helps keep occupancy decent (landlords aren’t pushing rents too fast). Looking forward, vacancy might tick a bit higher if more supply opens, but major regional employers (government agencies, hospitals) provide a steady stream of renters to fill units. The key for investors is to underwrite conservatively in downtown areas where competition is up, but overall Baltimore’s vacancy trend should remain in the mid-single digits.

• Regional Dynamics: Supportive: Baltimore’s metro economy includes stable sectors like healthcare (Johns Hopkins, University of Maryland Medical), government (Fort Meade, Social Security Admin), and logistics (the Port). These generate steady rental demand, and importantly, Baltimore’s rents are much cheaper than D.C.’s – attracting some renters who commute to D.C. or work remotely. The city is also investing in revitalization projects (e.g. Port Covington development) which could boost housing demand. Challenges: Baltimore’s population growth has been sluggish; the city proper has even lost population in recent decades. Crime and public school quality issues in parts of the city can dampen demand and are factors for BTR developers to weigh when choosing locations. Additionally, Baltimore’s older housing stock and relatively slow income growth cap how much rents can rise; luxury new developments have to compete hard for tenants. On the flip side, these challenges are precisely why Baltimore offers higher yields – investors are compensated for taking on the perception of higher risk. Many are finding that with careful asset selection and management, Baltimore’s rewards outweigh the risks in the current climate of housing scarcity.

Riverside–San Bernardino (Inland Empire), CA

• Investment Opportunity: The Inland Empire (Riverside and San Bernardino counties) has been a housing pressure valve for Southern California – and this spring it’s clearly boiling, with the last week of March seeing peak seller advantages. For investors, the Inland Empire is a prime region for build-to-rent development: it combines relatively available land with enormous demand from families and workers priced out of coastal counties. New rental home communities in the I.E. can tap into a large pool of renters who crave more space. Meanwhile, existing multifamily assets offer strong cash flow as the region’s occupancy remains solid. Despite a wave of new apartments, core demand pillars (logistics jobs, population influx) remain firm, keeping leasing momentum . The Inland Empire’s lower purchase prices (vs. LA/OC) and growing population of renters (50k new residents in 2023 alone) make acquisition and aggregation strategies attractive – investors can build scale here more easily. Timing is favorable: some big developments are nearing completion, so buying now could allow an investor to benefit from motivated sellers and then enjoy the region’s continued growth.

• Cap Rate Trends: Cap rates in the Inland Empire typically run a bit higher than coastal Southern California – often in the 4.5%–5% range for institutional-quality assets, and higher for older or tertiary ones. Over the past year, cap rates have risen modestly as interest rates climbed, but demand for Inland Empire multifamily remains robust due to its superior rent growth history. Investors view the I.E. as a higher-yield alternative to L.A. – you might get an extra 50–100 bps on cap rate compared to a similar LA asset. With the market adjusting to new supply and economic uncertainty, some sellers are pricing deals a tad more generously, leading to cap rates pushing toward 5%+ on select deals. For BTR projects, yield-on-cost in the Inland Empire can be compelling because rents for single-family rentals are quite high (given the shortage), so we see developers targeting stabilized yields in the mid-5% range on new BTR communities. Overall, expect cap rates here to remain higher than Orange County/LA, but the gap may tighten as more capital flows inland seeking returns.

• Vacancy Trends: The Inland Empire had extremely low vacancy during 2021’s boom (often under 2% in many submarkets). As of 2023, vacancy has risen but is still reasonable – around 3.5% in 2022 and 4.7% in 2023 . This increase is largely due to a burst of new apartment construction finally hitting the market (the I.E. is adding units at a rate not seen in a decade). For example, thousands of units delivered in southwest Riverside County and around San Bernardino. Class A vacancy in some areas might exceed 5% temporarily for the first time in years . Despite this, the pillars of demand are strong – the region gained tens of thousands of new residents recently , and it continues to add jobs in transportation, warehousing, healthcare, and more. Many of those new units are being absorbed; it’s just taking a bit longer. We anticipate vacancy will stabilize in the mid-4% range and then trend back down as the construction pipeline cools. Additionally, with the I.E. being the lowest-cost rental market in SoCal , it attracts renters from LA/OC, supporting occupancy. In summary, a slight vacancy uptick now doesn’t diminish the long-term undersupply – it’s a short-term balancing.

• Regional Dynamics: Supportive: The Inland Empire consistently ranks as one of the fastest-growing large metros in the U.S. Population growth is fueled by affordable housing (relative to coastal CA), and now even rentals are relatively affordable for Southern California standards. Massive logistics and e-commerce investments (distribution centers, etc.) have brought jobs, and the region’s economy has diversified beyond just being a bedroom community. Commute patterns are changing too: more companies allow remote work, enabling people to live in Riverside/SB and work for employers in LA/OC or anywhere – another boost to housing demand. Challenges: The I.E. can be cyclical – being on the fringe, it’s sensitive to economic downturns (e.g. construction slowdowns, goods movement declines). Currently, a lot of new supply is clustered in certain pockets (e.g. around Ontario and Moreno Valley); those submarkets could see rent concessions until units lease up . Additionally, long-term water availability and infrastructure are considerations as the region expands. For developers, rising land and construction costs are closing the once-large gap between inland and coastal costs. Nonetheless, given Southern California’s overall housing deficit, the I.E. remains a critical growth market and a comparatively high-yield bet within the region.

Sacramento, CA

• Investment Opportunity: Sacramento’s optimal late-March selling week reflects a market still riding the wave of pandemic-era migration – buyers from the Bay Area have tightened inventory. For rental investors, Sacramento offers a unique blend: it’s a California market with strong housing demand but without the extreme prices of coastal cities. Build-to-rent projects in the Sacramento suburbs (or even in infill neighborhoods via small lot developments) can cater to families and remote workers who moved inland for affordability. The metro’s relatively low rents (Sacramento has the lowest average rent among major California markets) make it an attractive place for renters and thus a stable target for development . On the acquisition side, Sacramento has seen record new supply recently, which may allow investors to negotiate good deals as some owners feel pressure. But the long-term outlook is positive: Sacramento’s rents are supported by its regional affordability advantage and an influx of jobs (state government plus new private employers). Acquiring assets or land now, during a slight market softening, could pay off as the region’s growth resumes.

• Cap Rate Trends: Cap rates in Sacramento have been trending upward with interest rates. Where a Class B apartment might have sold at ~4.5% cap in 2021, today it could be closer to 5.0–5.5%. Sacramento still commands lower cap rates than many Midwest/Southern markets (because investors view its growth prospects favorably), but it offers a noticeable premium over the Bay Area or LA. This has drawn more institutional investors into the market. Notably, Sacramento’s “regionally low rents and entry costs” sustain investor interest despite the recent rent cap law in California (max ~10% annual increase) . Some divergence exists: newer luxury assets (especially those delivered in the current record pipeline) might trade at higher cap rates if lease-up is slow, whereas older stable assets in suburbs remain highly prized and low cap. Overall, cap rates will likely plateau in the low-5% range as the market stabilizes post-delivery of this big batch of new units.

• Vacancy Trends: Sacramento’s vacancy has increased after an incredibly tight period. The metro vacancy was around 1.9% in 2021, rose to 4.5% in 2022, and is about 5.4% in 2023 . This jump is directly tied to a record number of units hitting the market – 2023 saw a 2.2% increase in inventory, the highest in decades . Despite the new supply, Sacramento’s lower rents (compared to coastal CA) are helping limit the vacancy surge; affordability is keeping demand solid for Class B/C units . In fact, the lowest-tier rentals (Class C) remain very tight, as many renters “filter down” when new Class A units open at higher rents . The brunt of the vacancy upswing is expected in downtown Sacramento, where ~1,300 units are completing and competing for renters . Suburban submarkets are faring better. Looking forward, job market softness (a mild shrinkage in 2023) and this supply wave mean vacancy might stay around 5% near-term. But Sacramento’s population and household growth prospects (it’s still one of the faster-growing California regions) should gradually trim vacancy beyond 2024.

• Regional Dynamics: Supportive: Sacramento benefits from being the affordable alternative for Californians. It consistently gains population from the Bay Area migration. It’s also the state capital – government employment provides stability (state jobs grew in recent years). There’s a burgeoning tech and manufacturing presence too, which could be a tailwind (e.g. a large new plant in the region could draw more workers) . The metro’s housing costs, while rising, are still far below Bay Area, ensuring it will continue to attract families and businesses looking for lower costs. Challenges: Sacramento’s economy can be a bit one-note (government) and is currently seeing a mild job dip , which could slow rent growth. A glut of new high-end apartments downtown might take time to be absorbed – investors should be cautious with luxury downtown projects in the short term. Also, being in California, Sacramento is subject to statewide landlord regulations (just cause eviction rules, rent caps) which, while more moderate than strict rent control, do require compliance and can limit sudden rent hikes. On the whole, Sacramento’s long-run supply-demand equation looks favorable; once this current supply wave is absorbed, there may be a dearth of new housing, setting the stage for tightening vacancies and rent increases – good news for those investing now.

St. Louis, MO

• Investment Opportunity: St. Louis may not have the explosive housing market of some coastal cities, but this spring it’s favoring sellers more than usual, indicating a seller’s market momentum that’s somewhat new for the region. That momentum signals solid underlying demand – an encouraging sign for rental investments. Build-to-rent is still a relatively novel concept in St. Louis, but there is potential in the suburbs where homebuilders have cut back: developing rental single-family homes or townhomes could capture tenants seeking suburban living without the mortgage. For multifamily investors, St. Louis offers one of the best cap rate spreads among the 17 metros listed – entry prices are low and yields high. The metro’s slow and steady nature, plus recent economic development wins (like the new National Geospatial-Intelligence Agency headquarters and other corporate expansions), provide a stable backdrop . Investors with a higher risk tolerance and a value-add strategy can assemble a sizable portfolio in St. Louis at a fraction of the cost of other markets, positioning themselves for steady cash flows and any future uptick in growth.

• Cap Rate Trends: St. Louis cap rates are high relative to most markets, reflecting its slower growth profile. It’s common to see cap rates in the 6% range for decent assets, and value-add deals can pencil even higher. Over the past year, cap rates may have increased slightly, but St. Louis was already pricing in a lot of caution (so the change hasn’t been as drastic as in expensive markets). With lower entry costs and higher yields on offer, active investors from outside Missouri have started to explore St. Louis more . This interest could gradually compress cap rates, but likely only marginally – the market still has plenty of local ownership content with 7–8% yield targets. For now, investors can enjoy some of the highest first-year returns among large metros. It’s a classic high-yield play: exchange a bit of growth potential for immediate cash flow. Strategic recommendation: lock in low interest financing now if possible, to arbitrage the spread between cap rates (~6%) and debt costs before any future changes.

• Vacancy Trends: St. Louis has seen an uptick in vacancy due to a surge of new construction. Vacancy fell to ~2.9% in 2021, but with the highest number of apartment completions in decades hitting the market, vacancy rose to 4.4% in 2022 and is around 5.2% in 2023 . This is still within a normal range, but it’s notable for St. Louis, which hadn’t delivered this many units since at least 2000 . The new supply is concentrated in the urban core and trendy suburbs like St. Louis Park (note: St. Louis Park is actually in Minneapolis; possibly the source meant St. Louis city neighborhoods or St. Louis County suburbs – but given our data, likely it refers to popular areas within the metro seeing development). As a result, availability is up and rent growth has moderated . However, St. Louis historically has low household formation, so even a moderate job growth can fill units gradually. It’s expected that vacancy might hover around 5% for a bit, then settle as construction slows. Importantly, many St. Louis submarkets (especially affordable suburban areas) still have low vacancy – the metro average is elevated by those new units leasing up. Investors should plan for slightly higher vacancy in the near term (and perhaps offer concessions in downtown properties), but not be deterred – St. Louis’ vacancy has rarely exceeded 6% even in tougher times.

• Regional Dynamics: Supportive: St. Louis has a diverse economy (healthcare, education, manufacturing, defense) and is not overly expensive, which helps maintain a base level of housing demand. There are pockets of growth – for instance, the new NGA HQ and expansions by companies like Boeing and Pfizer bring jobs . The metro’s central U.S. location and transportation infrastructure remain assets. For investors, the low cost of properties means upside can be achieved via renovations and better management. Additionally, no rent control and generally landlord-friendly laws make operating rentals straightforward. Challenges: St. Louis’ population growth is flat to negative; attracting new residents is a challenge, so rental demand increases come mostly from shifting current residents around. Out-migration of some residents to Sunbelt states or exurbs can be an issue. The city of St. Louis has some well-known challenges (crime in certain areas, struggling public schools) which confine the most desirable rental demand to specific neighborhoods and suburbs. Thus, site selection is key – BTR developers will likely focus in St. Louis County or St. Charles County rather than the city, for example. Lastly, the recent supply surge is something to monitor – if job growth doesn’t keep up, higher vacancies could persist. In summary, St. Louis is a yield play with manageable risk: it won’t experience a population boom, but with prudent investments in the right locations, it can deliver steady returns bolstered by the current seller’s market dynamics.

Columbus, OH

• Investment Opportunity: Columbus stands out as a growth market in the Midwest, and its housing market’s best-week-to-sell indicators (fast sales, higher prices) highlight its momentum. The metro has been attracting major investment (Intel’s massive chip plant project nearby, for example) and has one of the fastest population growth rates in the Midwest . For developers, this means a ripe environment for build-to-rent: new workers and families moving in may prefer to rent single-family homes or townhouses initially. Suburbs of Columbus, and even new subdivisions around the Intel site and other job hubs, are prime territory for BTR communities. For multifamily investors, Columbus offers an excellent balance of solid growth and reasonable pricing. Prior to 2023, investors were expanding their footprints in Columbus at an above-average rate , drawn by high volume of transactions and a pro-business climate. Now, with interest rates up, there may be slightly less competition – a good window to acquire properties. Columbus’ rising status as a tech and logistics hub, combined with its large student population (Ohio State University), provides diverse rental demand that can underpin new developments and value-add acquisitions alike.

• Cap Rate Trends: Cap rates in Columbus are middle-of-the-road, reflecting its steady growth. Typically, cap rates for multifamily range around 5%–5.5% for stabilized assets, higher for older or tertiary ones. In the last year, as in other markets, cap rates have moved up a bit. Columbus had seen cap rate compression in prior years due to heavy investor interest, but now buyers are underwriting a bit more conservatively. Still, Columbus hasn’t seen a sharp exodus of capital – in fact, many investors remain bullish due to the Intel project and others, so any cap rate expansion has been moderate. Notably, prior to 2023, Columbus saw a historically high number of large ($15M+) multifamily transactions , indicating significant institutional interest. That likely put some downward pressure on cap rates (into low-5% or even high-4% territory for premium deals). Going forward, with the positive economic story, Columbus cap rates might compress again as financing costs stabilize. For now, investors can obtain slightly better yields here than in coastal markets, with the comfort that Columbus’ trajectory is upward (meaning potential cap rate compression and value gain in the future).

• Vacancy Trends: Columbus experienced a tight rental market through 2021, but new construction has elevated vacancies recently. Vacancy was about 2.5% in 2021, rose to 4.2% in 2022, and is roughly 5.5% in 2023 . The metro added a lot of apartments – over 5,000 units in 2021 and another 5,000 in 2023 – which is a sizable increase in inventory. This pushed vacancy up, particularly in areas near Ohio State and in fast-growing suburbs where many projects delivered. However, Columbus is expected to have the second-fastest population growth in the Midwest, which should help fill these units in short order . Already, the first half of 2023 saw continued strong absorption. One trend: new high-end suburban projects have leased well (families and professionals moving in), whereas some urban-core student-oriented projects saw slower absorption during the pandemic but are recovering now. We anticipate vacancy will peak around the current level and then decline as the labor market expansion (Intel, Honda/LG battery plant, etc.) brings new renters. A fall 2024 opening of the Intel plant, for example, could tighten rental markets in the northeast suburbs. In sum, a current ~5% vacancy is a temporary equilibrium; Columbus could easily tighten to 4% or lower once the next wave of job growth hits.

• Regional Dynamics: Supportive: Columbus has a young, educated population and is the capital of Ohio, giving it a steady government and university employment base. It’s also become a Midwest tech and finance hub, with companies like JPMorgan, Nationwide, and Google (data centers) present. The big headline is the Intel semiconductor plant under construction just outside the metro – a tailwind that is already spurring housing demand and will continue to do so . Additionally, Columbus benefits from being centrally located with good logistics infrastructure, attracting distribution centers and manufacturing (which means more blue-collar rental demand as well). The city has been proactive in development, generally welcoming to new housing which bodes well for BTR builders. Challenges: With a lot of new supply, there is always execution risk – if the anticipated jobs take longer to materialize, some high-end rentals might offer concessions. Columbus is also subject to broader economic swings; if a recession hits, some of the migration could slow. However, given its diverse economy and status as an emerging growth market, Columbus is better positioned than many peers. For investors, the key is to differentiate submarkets: downtown and campus-adjacent areas behave differently than suburban Powell or New Albany, for instance. But overall, Columbus’s alignment of housing demand, population growth, and investor-friendly climate makes it a standout in the Midwest.

San Jose (Silicon Valley), CA

• Investment Opportunity: The Silicon Valley (San Jose metro) housing market’s spring bustle is a reminder that despite tech sector gyrations, demand remains intense and supply scarce. For investors, build-to-rent opportunities in Silicon Valley proper are limited by land and cost, but there is opportunity in the broader South Bay Area – for example, developing townhome rentals in fringe communities that serve the Silicon Valley workforce. Tech employees often delay homeownership due to sky-high prices, so offering them high-quality rentals (single-family or townhome) in commutable distances (Gilroy, Morgan Hill, etc.) can fill a niche. In the multifamily realm, San Jose has seen rents come back and occupancies remain strong post-pandemic, yet some owners may divest non-core assets in this higher interest rate environment. Investors who can navigate California’s regulations will find Silicon Valley properties tend to have low vacancy and high incomes, making for reliable cash flow. One strategic angle: focus on East Bay or Peninsula assets that serve Silicon Valley commuters – these often have slightly higher cap rates but ultimately benefit from the same demand drivers. Overall, connecting the dots between the seller’s market (low home inventory) and investor opportunity is straightforward here: many tech workers who can’t buy now will remain renters, so owning or developing rental housing in this region is a play on that huge income-rich renter pool.

• Cap Rate Trends: San Jose (and the greater Silicon Valley) historically has some of the lowest cap rates due to robust rent growth and investor demand. Even with recent shifts, cap rates for institutional multifamily are often around 4% or just above. Secondary locations or older properties might achieve mid-4% to 5%. Cap rates have risen slightly from the rock-bottom ~3.5% seen in 2019-2020, but not drastically – perhaps a 50–75 bps increase as of 2023. One dynamic is that investors seeking yield in the Bay Area often turn to the East Bay (Oakland, etc.), where cap rates are higher, while San Jose itself stays pricier . Still, given interest rate hikes, there’s pressure on sellers to offer a bit more return; well-capitalized private buyers are taking advantage of any slight cap rate decompression to acquire assets in this high-barrier market . For BTR projects, Silicon Valley’s economics are tough: high land costs mean acceptable yields might only be achieved in peripheral areas or by using creative strategies (like dense townhome rentals). But any such project that pencils can likely find eager investors, as the long-term appreciation prospects here are excellent.

• Vacancy Trends: Silicon Valley’s rentals have largely recovered from the early pandemic spike in vacancy. The San Jose metro’s overall vacancy fell to 3.3% in 2021 and is roughly 3.7% in 2022–2023 , which is very low. Some submarkets, especially those heavy on luxury newer stock, had elevated vacancies in 2020-21 but have since leased up. San Jose’s job market had some turbulence with tech layoffs in late 2022, but many laid-off workers remained in the area (often quickly re-employed by smaller firms or different industries), so we did not see a massive vacancy increase. Future supply is modest – local development constraints keep new deliveries limited (e.g. just 2,300 units forecast in 2023, down from 4,000 in 2022) . Thus, vacancy should remain in the 3–4% band. One thing to watch: if remote work persists, some renters may prefer living slightly further out (where they get more space) which could keep a few more units open in the urban core. But with companies like Google and Apple building new campuses, Silicon Valley’s draw for renters isn’t in doubt. In short, vacancy is low and stable, and any uptick in unemployment tends to be short-lived in this innovation economy.

• Regional Dynamics: Supportive: Silicon Valley is home to some of the wealthiest renters in the country – dual-income tech households who can and do pay high rents. This creates a robust top end of the rental market. The region’s economy – anchored by global tech firms, startups, and venture capital – continues to produce high-paying jobs and has a strong innovation pipeline. Additionally, California laws (like recent SB-9 and ADU laws) are making it easier (in theory) to add small-scale housing units, which could marginally increase rental stock but also presents opportunities for investors to convert single-family properties into multiple rentals. Challenges: The cost of development is extremely high, and community resistance to density is strong in many Silicon Valley cities. Large-scale BTR projects may have to locate at the region’s periphery. Rent growth took a hit during the pandemic in San Jose (rents dropped and only recently exceeded pre-pandemic levels), reminding investors that even this market isn’t invincible. Also, any downturn in the tech sector can have outsize effects. Lastly, existing multifamily in Silicon Valley is subject to California’s rent cap (max ~10% increase annually) and just-cause eviction laws; while not as restrictive as SF’s rent control, they do limit extremes. Nevertheless, for investors with a long-term horizon, Silicon Valley’s combination of limited supply and unlimited innovation makes it a cornerstone market – current for-sale market conditions just reinforce how many people will continue renting here.

Kansas City, MO-KS

• Investment Opportunity: Kansas City’s housing market has heated up enough to give sellers an upper hand this spring – a sign that demand is healthy. For investors, K.C. offers a compelling mix of growth and affordability. The metro has seen solid job creation and big projects (like a new USDA office relocation and expansions in engineering firms) that are slowly boosting population and housing needs . Build-to-rent is an emerging opportunity here: Kansas City’s suburbs (both Missouri and Kansas side) have inexpensive land and many families who might rent a home if it’s modern and well-located. Developers can capitalize on that by building rental communities in areas with good schools that attract those who can’t buy yet. On the acquisition side, Kansas City has been attracting coastal capital looking for better yields, given its historically low vacancies and stable rents . Investors can target large suburban garden complexes, especially as some local owners take profits. K.C.’s rental market fundamentals – historically in the nation’s top 10 for low Class A vacancy – provide confidence that new investment will lease up. The key is that while K.C. doesn’t boom, it steadily grows, and current market momentum (quick home sales, rising prices) indicates a supportive environment for renting as well.

• Cap Rate Trends: Kansas City’s cap rates are moderate to high, providing a nice spread over interest rates. Of late, cap rates for good multifamily assets have been in the 5.25%–6% range. Some Class A newer deals might be sub-5% if there’s competitive bidding (though rare in the current climate), while older or secondary location assets easily go north of 6%. Over the last year, cap rates here likely moved up about 50 bps. However, as noted, coastally-based investors have been increasingly active, which could put downward pressure on cap rates . For instance, a portfolio sale in late 2022 saw multiple West Coast buyers, and as a result pricing held firmer than expected. Kansas City still ranks a bit lower in investor preference than, say, fast-growing Sunbelt cities, so it hasn’t been bid down as severely – that’s good news for current buyers, as you can lock in higher yields. With interest rates stabilizing, we might see cap rates level off at these slightly higher levels. There is also ample diversity within the metro: Johnson County, KS properties often trade at lower cap rates (due to strong demographics) than, say, older properties on the Missouri side. So investors can pick their strategy – core suburban vs. value-add urban – to match yield targets.

• Vacancy Trends: Kansas City’s vacancy has risen from record lows but remains around pre-pandemic norms. After a very tight 2021 (vacancy ~3.4%), it climbed to 4.2% in 2022 and about 5.0% in 2023 . Essentially, vacancy is back to roughly 2018 levels. This increase was expected as the metro delivered a substantial number of new units in 2022-23. Nearly 60% of deliveries were focused in just two areas – central K.C. and the South KC/Grandview corridor . These new deliveries caused availability to “inch back up” toward the 5% range, which is actually more in line with historic averages . Net absorption has kept up reasonably well, thanks to continued job growth and in-migration, but not at the frenetic pace of supply, hence vacancy up a bit. It’s important to note that certain segments are still extremely tight: for example, as of late 2022, Kansas City had one of the top 10 lowest Class A vacancy rates among major markets – a testament to strong leasing in top-quality properties. We expect vacancy to hover around 5% as the new stock is absorbed, and possibly drift back down if construction slows in the next couple of years. For investors, a 5% vacancy environment is quite manageable, and K.C.’s history shows even in recessions, vacancy doesn’t spike drastically here due to moderate building levels.

• Regional Dynamics: Supportive: Kansas City benefits from being a bi-state metro – Missouri and Kansas both contribute to its growth, often with healthy competition in offering business incentives. The metro’s cost of living is low, attracting residents from higher-cost regions. Recent corporate moves, like Waddell & Reed relocating headquarters downtown (1,000+ jobs) and growth of the tech sector, provide optimism for housing demand. Additionally, Kansas City’s central location and robust infrastructure (rail, highway, new airport terminal) bode well for long-term economic vitality. Challenges: Kansas City’s population growth, while steady, is not rapid – household formation is near flat in some years , which limits how fast housing demand can grow organically. The metro also sprawls a lot, meaning there’s plenty of land to build (which can keep homeownership within reach for many, and rentals competing with new homes). In city proper, some neighborhoods still struggle with blight or crime, which can concentrate rental demand into the safer, thriving areas. For BTR, a potential challenge is that Kansas City’s homeownership is relatively affordable; BTR developers must offer a lifestyle or flexibility that buying can’t, to attract tenants. In summary, Kansas City is a slow-but-steady market: it may not deliver huge short-term appreciation, but it offers stable occupancy and income – and right now, the tight for-sale market is providing an extra boost to rental demand that investors can seize.

Milwaukee, WI

• Investment Opportunity: Milwaukee’s housing market is tighter than it has been in years, with spring sellers seeing quick sales – a somewhat unusual situation for this historically slow-moving market. This indicates that a lack of new construction and hesitant sellers have crimped supply, pushing buyers (and thus would-be buyers) into the rental market. For investors, Milwaukee presents a chance to get strong cash flows from both BTR and multifamily plays. On the build-to-rent side, Milwaukee’s suburbs (and even parts of the city) have many aging single-family homes; a new rental community of townhomes or small houses could attract empty nesters and young professionals who want modern amenities but not a purchase commitment. Milwaukee hasn’t seen much of this product yet, so competition is low. On the multifamily acquisition front, Milwaukee has historically been dominated by local owners, but we’re seeing some ownership shuffle as uncertainty (and rising rates) prompt sales . This opens the door for new investors to acquire assets. Milwaukee’s apartments have shown resilience – downtown fundamentals improved in spite of economic headwinds , and vacancy remains tight by national standards. With relatively low pricing per unit, investors can achieve attractive yields and potentially modernize units (value-add) to drive NOI. The time is opportune: seller-side momentum suggests confidence in valuations, yet Milwaukee’s properties still trade at a discount to most metros.

• Cap Rate Trends: Milwaukee offers above-average cap rates, in the ballpark of 5.5%–6.5% depending on asset class. It’s one of the higher cap rate markets on this list, which correlates with its slower growth and smaller investor pool historically. In 2022-2023, cap rates here have risen slightly, like elsewhere, but Milwaukee didn’t experience the ultra-low caps of coastal markets even at the peak – so the adjustment has been moderate. Notably, Milwaukee’s buyer landscape is shifting: historically about 75% of deals (especially sub-$10M) were by local buyers , but some national buyers are stepping in now, sensing opportunity. This could gradually compress cap rates if competition increases. For now, though, Milwaukee still provides one of the widest spreads between cap rates and financing costs, which savvy investors can exploit. Properties with value-add potential (often Class B/C buildings in the city or inner suburbs) continue to trade and often fill the transaction pool – these usually have cap rates in the high 6% or even above 7% after improvements. Given Milwaukee’s stable if modest rent growth, investors should prioritize cash flow; the good news is the market yields support that.

• Vacancy Trends: Milwaukee’s vacancy ticked up recently but remains relatively low. The metro ended 2022 with vacancy rising sharply back to its 2019 level (around 4.3–4.5%) after an unusual dip in 2021 when it was ~2.2%. In 2023, vacancy is about 4.5% , following a modest inventory expansion of 1.6% (roughly 2,500 units delivered) . Essentially, Milwaukee’s vacancy is back to a normal equilibrium – earlier in the pandemic it was abnormally low due to pause in construction. Downtown/Shorewood areas have strong fundamentals and are outperforming the metro average in occupancy , thanks to a draw of young renters and some corporate moves (Fiserv relocating HQ downtown, etc., boosting rental demand) . New additions are mostly in southern Milwaukee County suburbs (Franklin, Oak Creek) and are leasing up reasonably well given limited competition. We expect vacancy to hold in the mid-4% range; Milwaukee doesn’t have a huge pipeline upcoming. One note: Milwaukee’s rental demand is somewhat subdued by slow household formation , so landlords can’t count on demand surges, but on the flip side, they rarely face severe oversupply. Rent growth has been decent – interestingly, Milwaukee notched one of the top 10 fastest rent growth paces at one point in 2023 (likely as it rebounded from pandemic stagnation) . With vacancy stable, Milwaukee’s rent growth may moderate but should remain positive, benefiting investors’ bottom lines.

• Regional Dynamics: Supportive: Milwaukee’s economy, while not high-flying, has stable anchors: manufacturing, healthcare (Milwaukee is a regional medical hub), financial services, and a growing tech/startup scene. It’s also the largest city in Wisconsin, pulling in young people from around the state for jobs and education. The metro area has several universities, keeping a steady student rental market. Additionally, Milwaukee’s downtown revitalization (new arena, riverfront development) is making the city more attractive to renters and reversing some flight to suburbs. Challenges: Population growth is minimal – Milwaukee has even seen slight population declines, which caps housing demand growth. Many renters eventually aim to buy in relatively affordable Milwaukee, which can limit rent growth potential. Winters are harsh, which isn’t a direct real estate issue but affects migration trends (Sunbelt markets poach some people). From an investment perspective, Milwaukee historically hasn’t attracted big capital, so liquidity can be lower if one needs to exit (though this is changing gradually). On the positive side, the lack of frenzy means less volatility – Milwaukee’s ups and downs are milder. Given current conditions (low inventory for sale, steady renting), Milwaukee offers a high-yield, stable environment. Investors entering now can collect solid income and perhaps benefit from any incremental improvements in the local economy or a possible future when Midwest markets get more attention for their stability and affordability.

Strategic Takeaways: Across these 17 metros, the seller’s market conditions of spring 2024 – marked by low home inventory, fast sales, and high listing views – are a signal for investors. They indicate a housing shortage and robust demand, which translates into opportunities for rental investments. Key metrics show that while home sellers are getting premiums (e.g. listings fetching tens of thousands more and selling a week faster ), the rental side is also strengthening: cap rates have adjusted upward to more attractive levels and vacancies, though rising in some markets due to new supply, generally remain at or below historic norms, reflecting persistent housing undersupply.

Recommendations for Developers and Investors:

• Pursue Build-to-Rent in Underserved Niches: In many of these metros, especially the Sunbelt and growth markets (Las Vegas, Inland Empire, Columbus, etc.), there is a clear opening for new rental housing that bridges the gap between apartments and homeownership. Focus on areas with population growth and limited for-sale construction – the data shows renters will be ready and waiting. Use the current lull in for-sale listings to secure development sites (less competition from builders) and aim to deliver units into the continued housing shortage.

• Target Value-Add and Core-Plus Acquisitions: Leverage the higher cap rates now available. Markets like Baltimore, St. Louis, Milwaukee offer yields that can offset higher financing costs, and even tight markets like LA, DC, SF have seen slight cap relief, giving patient capital a chance to buy into prime locations at a reasonable spread. Focus on assets that can benefit from improved management or light upgrades – with vacancies generally low, even incremental rent growth can significantly boost NOI.

• Mind Regional Dynamics: Each market has unique drivers – e.g., tech in San Jose, government in DC, healthcare/education in Philadelphia. Align investments with these strengths (for instance, student housing in college towns, or BTR communities near new job centers in Columbus). Also heed challenges: factor in regulatory climates (California’s rent caps, Portland’s renter protections, NYC’s stabilization laws) and supply pipelines (watch those metros like Austin or Nashville – not in this list, but a general principle – whereas in our list Vegas, Sacramento, St. Louis had notable supply surges). Choose submarkets that balance growth potential with manageable competition.

Finally, connect the dots between the seller’s side and the renter’s side: the same conditions making March 23–30 the best week to sell – high demand, low supply – mean renters have fewer alternatives. Many prospective buyers will remain renters due to being outbid or unable to find a home. This adds depth to the renter pool across these metros. Thus, investor momentum can confidently follow seller momentum: the savvy move is to buy or build rental housing while the for-sale market is tight. This strategy positions developers and investors to provide much-needed housing, enjoy strong occupancy, and potentially ride the upside as markets normalize (or if homebuying picks up later, BTR assets could even be sold off individually). In sum, the current housing market dynamics offer a prime opening for those on the investment side to step in and supply what’s missing – quality rental homes – in these top 17 metros, converting today’s seller-market signals into tomorrow’s investor success.

Sources: Key market data and trends were referenced from Realtor.com’s housing analysis , Marcus & Millichap’s 2023 Multifamily Investment Forecast (for vacancy, rent, and construction stats) , and various local and national reports on cap rates and rental demand . These metrics and narratives illustrate the alignment of current for-sale conditions with rental investment opportunities across each metro. Each market’s section above contains specific citations.