Midwest and Sunbelt Multifamily Markets: Hidden Gems for Investors in 2024
The affordable multifamily housing markets in the Midwest and Sunbelt regions offer untapped potential for savvy investors, particularly in the current economic climate. While big Sunbelt cities like Austin, Nashville, and Phoenix have seen skyrocketing prices, emerging tertiary markets like Lubbock, Texas; Clarksville, Tennessee; and Northwest Arkansas offer a unique blend of affordability, growth potential, and economic resilience. These hidden gems defy the trends of overpriced coastal and major Sunbelt cities, presenting real estate investors with opportunities that are increasingly hard to find elsewhere in 2024. Here’s why these regions stand out.
Lubbock, Texas: A Growing Hub of Opportunity
Lubbock is more than just a college town—it’s an economic powerhouse driven by its education, healthcare, and agricultural sectors. The city’s population has grown steadily, with a notable 7% increase over the past decade, supported by the presence of Texas Tech University, which injects $2.5 billion annually into the local economy. Job growth in Lubbock is projected at 3.1% in 2024, outpacing the national average, thanks to expanding healthcare facilities and tech-driven agricultural advancements. For investors, Lubbock’s business-friendly environment and below-average cost of living create a strong rental market with high occupancy rates and reliable cash flow. With multifamily cap rates averaging around 6.5%, Lubbock offers a more attractive return than many overbought Sunbelt cities.
Clarksville, Tennessee: Booming with Military and Manufacturing Strength
Clarksville’s growth story is closely tied to its strategic location near Fort Campbell, which supports over 40,000 military personnel and their families, and its expanding manufacturing base. The city has experienced explosive population growth of 20% over the past decade, driven by new job opportunities and a high quality of life. Unemployment in Clarksville is at a low 3.4%, bolstered by investments from companies like LG Electronics and Google, which have created thousands of jobs. Multifamily housing demand is skyrocketing, with rental rates increasing by 6% year-over-year. Despite this growth, real estate prices remain affordable, and multifamily properties continue to offer strong returns compared to the increasingly saturated Nashville market.
Northwest Arkansas: A Hidden Jewel of Economic Growth
Northwest Arkansas, including Fayetteville, Springdale, and Bentonville, is one of the fastest-growing regions in the country, with the population surging by nearly 30% over the past decade. This growth is fueled by major employers like Walmart, Tyson Foods, and J.B. Hunt, which collectively employ over 50,000 people in the region. Northwest Arkansas’s economy is projected to expand by 4.2% in 2024, driven by continued corporate investment and a burgeoning tech sector. Despite this robust growth, the area maintains relatively low housing costs, making it an attractive destination for young professionals and families. Multifamily properties in the region offer an excellent entry point for investors, with cap rates between 6-7%, well above what is typical in more mature Sunbelt markets.
The Value of Investing in Affordable Housing in Emerging Markets
These markets highlight the broader trends that make the Midwest and Sunbelt regions appealing: strong population growth, economic diversification, and relatively affordable living costs. The demand for affordable multifamily housing is higher than ever, especially in regions that continue to attract jobs and people away from overpriced coastal and Sunbelt cities. As housing affordability issues persist, investing in markets like Lubbock, Clarksville, and Northwest Arkansas offers a counter-cyclical opportunity to capture growth without the inflated costs seen in more well-known areas.
Investing in these hidden gem markets isn’t just about riding a trend—it’s about aligning with a mission to provide quality, affordable housing where it’s needed most. At Ocean Ridge Capital, we’re dedicated to turning underappreciated properties into thriving communities that deliver strong financial returns while making a positive impact. For investors looking to balance profit with purpose, there’s no better time than now to seize these opportunities in markets that we know well.