Top 5 Best Real Estate Investment Markets in California

Luke Babich

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Luke Babich

July 14th, 2022
Updated July 14th, 2022

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California is a highly desirable place to live, making it an important state for investors to keep an eye on. Sacramento, Oakland, Arden-Arcade, Joshua Tree, and Hawthorne are all prime locations for real estate investments.

“Top 5 Best Real Estate Investment Markets in California

The Golden State is home to some of the country’s most beautiful beaches, best weather, and largest real estate investment markets. Close to two hundred years after the gold rush, many investors are still hoping to strike gold in this attractive market. However, while the state itself may be quite literally on fire currently, the real estate market has been cooling off somewhat, so this may be a great time for new buyers to snag a great deal on an investment property.

When most people think of Cali, they think of Los Angeles, but focusing solely on this media and entertainment hub will make you miss out on a number of other regions that all budding real estate investors should know about. In this article, we’re going to look briefly at the best five real estate markets in California, namely Sacramento, Oakland, Arden-Arcade, Joshua Tree, and Hawthorne.

Sacramento

Home to the state’s capital, this city located just northeast of San Francisco is a prime location to buy property. While the median home value is only expected to increase by 3.0% within the next year, this city has a price-to-rent ratio of 15.94, meaning that for most people, renting makes more sense than buying. This makes the city a great place to buy a property with the intention of renting it out, and you can expect to make a yearly income of approximately $20,000 by doing so if all goes well.

Sacramento real estate prices have been plateauing recently, leading to a pretty balanced market between buyers and sellers, potentially skewing towards buyers by the entire of the year. If this occurs, it will be a great opportunity to secure a property in this sunny city.


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Oakland

Another bay area city, Oakland’s proximity to San Francisco makes this a very viable market to get into. While the median home value in San Francisco is approximately $1,200,000, the median value in Oakland is only $734,900 - just a little over half the median value in San Fran. At less than an hour from SF, this positions Oakland as an ideal location for commuters and those who want to live near the silicon city without breaking the bank.

Oakland boasts a low unemployment rate of 3.6%, below the overall rate for California, and it’s been dropping since 2013. The future of this city’s economy looks bright.

Arden-Arcade

With 57.1% of households occupied by renters, Arden-Arcade is a great location for investors hoping to make a ROI through renting out their property. The current median home value is $371,500 and it’s expected to increase 3.1% over the next year.

Arden-Arcade has attracted interest from businesses, many of which are opening up new stores and establishments in the city. This is creating new jobs and strengthening the economy. In general, Arden-Arcade has been experiencing a general upward economic trend and there are no signs of it slowing down anytime soon.

Joshua Tree

Joshua Tree is located in San Bernardino county, and has experienced substantial growth over the past year. The median home value increased 22.2% in 2018, and it’s expected to grow by another 15.2% this year. The market is currently in favor of buyers, so this is an ideal time to look into acquiring a new property there.

If you’re interested in renting out your property on AirBnB, you can expect a monthly income of around $2,588. However, be aware that locals aren’t too happy about short term rentals in their community, so it’s possible there will be regulations that could negatively affect an AirBnB investment.

Hawthorne

For those looking to make a profit from traditional renters, investors will be thrilled to know that Hawthorne has the highest percentage of renter-occupied households in all of California. With 73.5% of all properties occupied by renters, this is a prime investment location. The projected annual profit from renting is $34,212.

Over the past year, the median home value in Hawthorne has gone up by 9.2% and is predicted to increase another 4.5% this year. The market is currently neutral, with no real bias towards either buyers or sellers currently.

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