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By Benjamin Clarke•Last Updated August 26, 2025

Unlocking Opportunity: Investing in Emerging Real Estate Markets in Secondary Cities

Introduction: The Rise of Secondary Cities in Real Estate Investment

Over the past decade, the real estate landscape has undergone a significant transformation. As major metropolitan areas reach saturation and affordability declines, both individual and institutional investors are increasingly turning to secondary cities for new opportunities. These emerging markets are no longer simply alternatives-they are now drivers of growth, innovation, and resilience in the U.S. and global real estate sectors. [1] This article explores key trends, specific markets, actionable steps, and challenges for investors interested in capitalizing on the momentum of secondary cities.

Understanding What Makes a City ‘Emerging’

Secondary cities are typically mid-sized urban areas that are overshadowed by their larger metropolitan counterparts. They are considered emerging real estate markets when they demonstrate sustained population growth, job creation, rising home values, and robust infrastructure development. These factors attract buyers, renters, and businesses seeking affordability, quality of life, and long-term upside. [5]

Defining the Criteria

The fastest-growing secondary markets in 2025 generally meet at least three criteria:

Consistent home price appreciation
Faster-than-average sales pace
Clear signs of in-migration and/or job market momentum

For example, cities like Buffalo, NY and Indianapolis, IN are attracting investors due to affordable entry prices, brisk sales activity, and a steady influx of new residents. [5]

Key Trends Fueling Growth in Secondary Markets

Several trends are propelling the rise of secondary cities:

Affordability and Quality of Life

Secondary cities offer more affordable housing relative to major metros, which is especially attractive as buyers and renters seek to maximize their living standards. For instance, Buffalo’s median home value is around $239,000, and homes sell in just 12 days due to strong job growth in healthcare and education. [5]

Job Growth and Economic Diversification

Economic expansion in sectors such as healthcare, education, logistics, and technology is drawing both corporations and residents to these cities. The South, including Nashville and Austin, continues to see job opportunities and business-friendly environments, while the Midwest cities like Columbus and Des Moines benefit from affordable living and an influx of buyers from coastal regions. [1] [3]

Remote Work and Lifestyle Changes

The shift to remote and hybrid work post-pandemic has encouraged people to seek larger homes, outdoor spaces, and proximity to amenities-factors prevalent in secondary markets. [1]

Institutional and Private Investment

Institutional capital is increasingly targeting Sun Belt cities like Dallas, Nashville, and Tampa due to strong fundamentals, population influx, and affordable housing. Multifamily housing, student housing, senior living, and life sciences are particularly attractive sectors. [3]

Leading Emerging Markets in 2025

Data-driven insights highlight several secondary cities as top picks for investment this year:

Buffalo, NY – Affordable entry points, strong job growth in healthcare and education, and rapid sales cycles.
Indianapolis, IN – Growing economy, diverse industries, and a resilient housing market.
Hartford, CT – Attractive for its affordability and stable local economy.
Providence, RI – Increasing in-migration and a vibrant cultural scene.
Kansas City, MO – Expanding job market and infrastructure investments.
Richmond, VA – Population growth and business-friendly climate. [5]

Other markets such as Boise, ID; Greenville, SC; and Tucson, AZ are also experiencing growth, driven by affordability and desirable lifestyles. [1]

How to Access Opportunities in Secondary Markets

Investors and homebuyers interested in these markets can follow a series of practical steps to identify, evaluate, and act on opportunities:

Step 1: Conduct Thorough Market Research

Start by analyzing local economic indicators such as job growth rates, population trends, and median home prices. Resources like the National Association of Realtors, Zillow, and local economic development agencies can provide current data. For deeper insights, consider consulting regional market reports or engaging with local real estate professionals.

Step 2: Engage Local Experts

Connect with real estate agents, property managers, and investment advisors with experience in your target city. They can provide neighborhood-level insights and help you navigate local regulations, zoning laws, and tax incentives. Attend local open houses, community forums, and virtual tours to familiarize yourself with different areas.

Step 3: Assess Property Types and Investment Strategies

Decide whether you are interested in single-family homes, multifamily units, or alternative asset classes such as student housing, senior living, or logistics centers. Each sector has its own risk and return profile-multifamily housing, for example, remains a resilient choice in many secondary markets. [3]

Step 4: Evaluate Financing Options

Many lenders offer specialized loan products for investors targeting secondary cities. Compare interest rates, loan-to-value ratios, and down payment requirements. Consider consulting credit unions or local banks, which may offer favorable terms for regional investments.

Step 5: Diversify and Monitor Performance

Invest in different markets or property types to spread risk. Use tools such as rental market analytics and property management software to monitor your investments’ performance over time. Stay updated on local ordinances, tax changes, and infrastructure developments that may impact property values.

Case Studies: Real-World Examples

Buffalo, NY: An investor purchased a duplex near the medical corridor for $230,000. Within a year, rental demand rose sharply due to hospital expansions, enabling the owner to increase rents while maintaining full occupancy. The property’s value appreciated 4% in 12 months, outpacing regional averages. [5]

Reno, NV: A tech worker relocated from California and bought a single-family home in Reno, benefiting from spillover demand and ongoing economic diversification. The property saw 7% appreciation within two years, with strong rental prospects due to a growing professional population. [4]

Orlando-Kissimmee-Sanford, FL: An investor targeting vacation rentals leveraged the region’s tourism and healthcare-driven demand, securing above-average returns despite increased inventory. [4]

Challenges and Solutions for Investors

While secondary markets offer many advantages, investors should also anticipate potential hurdles:

Inventory Constraints: Rapid demand can lead to supply shortages, driving up prices. Solution: Act quickly, expand search areas, and engage with local builders or off-market sellers.
Market Volatility: Smaller markets may be more sensitive to economic shifts. Solution: Diversify investments and monitor economic indicators regularly.
Regulatory Differences: Local zoning, rental laws, and tax codes can vary widely. Solution: Work with experienced local professionals and consult official city planning departments.

Alternative Approaches to Entering Emerging Markets

For those not ready to buy property directly, consider:

Investing in real estate investment trusts (REITs) focused on mid-sized cities
Participating in real estate crowdfunding platforms for fractional ownership
Partnering with local syndicates or investment clubs

To find these options, search for “secondary city REITs” or “real estate crowdfunding for mid-sized markets” on established investment platforms. Always verify the legitimacy of any platform or fund before investing.

Summary and Key Takeaways

Secondary cities are increasingly shaping the future of real estate investment. Driven by affordability, job growth, and lifestyle shifts, these markets offer strong potential for both immediate returns and long-term appreciation. By conducting thorough research, engaging with local experts, and remaining adaptable, investors can effectively tap into the opportunities that secondary cities present in 2025 and beyond.