Buying a home can be a very solid investment and amass wealth for generations. The flipside is that some cities have real estate markets that make it very hard or impossible to come out on top financially.
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Everything from low demand to population declines can make a city not desirable to real estate investors. GOBankingRates reached out to finance experts to get their takes on the worst cities to buy homes in.
Read on to find out why these cities are problematic.
David Kindness is a certified public accountant (CPA) and personal finance writer at Best Money. He commented that high prices and a mass exodus of residents make San Francisco a dubious city to buy property in.
“Home prices are sky-high — over $1.3 million in many cases — but demand isn’t what it used to be. The population’s not growing, more people are moving out, and combined with California’s tax structure, the total cost of ownership keeps climbing.”
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Like San Francisco, the Big Apple has seen its population go down since the pandemic, but homes are still incredibly expensive.
Steven Kibbel, a certified financial planner and financial advisor at Prop Firm App, warned that mortgages aren’t the only high price real estate investors will be paying in New York City.
“It has high property tax rates, slow growth in terms of people and high maintenance costs, particularly in co-ops or structures with old systems in place,” Kibbel explained. “It’s difficult to support the buy unless it’s purely for a lifestyle decision.”
Kindness cautioned buyers looking to make money off the LA rental market, commenting that it might be harder to do than it seems.
“The high prices for properties costing at least $800,000 fail to deliver attractive rental returns,” Kindness added. “An initial appearance of profitability through property analysis becomes unprofitable upon total expense calculation.”
Property taxes are high in Chicago. Paired with a pricey mortgage, owning a home in Chicago can be cost-prohibitive.
“Residential property taxes in Chicago rank among the highest nationally,” Kindness commented. “The decreasing population negatively affects the local demand levels. People who own properties in Chicago might face years of minimal market value increase while paying substantial annual tax bills.”
