5 Worst Southern Cities To Buy Property in the Next 5 Years, According to Real Estate Agents

As the real estate market continues to evolve, investors and homebuyers are always on the lookout for the next hot spot. However, it’s equally important to be aware of areas that might not offer the best return on investment .

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GOBankingRates reached out to Chris Wesser, founder and president of Redy , a marketplace that rewards home sellers for selecting agents who align with their sale goals, to get his insights on which Southern cities might be risky bets for property buyers in the coming years.

“Predicting which real estate markets will be hot or cold five years from now is exceedingly complex, but investors can increase their odds of success if they develop a methodology and stick to it when making investment decisions,” Wesser said.

Here are five Southern cities that potential property buyers might want to approach with caution over the next five years :

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Tampa, Florida (Hillsborough County)

Tampa tops the list of expected worst performers in the South. Wesser points out a critical issue facing the area: “Tampa is one of the most overbuilt markets in America.”

This oversupply of housing relative to demand can lead to stagnant or declining property values.

The problem of overbuilding is part of a larger issue that Wesser identifies: “Housing supply vs. demand — this means outbound migration leads inbound migration in an area with significant housing supply (too many houses, not enough buyers).”

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Jackson, Mississippi

Jackson could be facing challenges on multiple fronts.

Wesser noted that one of the key factors affecting this list of expected worst performers is “Technology/manufacturing/banking/job loss – this means these industries, and jobs in general, are disappearing at a rate likely to cause home value decline without other factors in place to offset or reverse the decline.”

While Wesser didn’t specifically mention Jackson in this context, the city’s inclusion on the list suggests it’s grappling with similar economic challenges.

Shreveport, Louisiana

Shreveport is another city that Wesser identified as an expected worst performer. Like Jackson, it appears to be facing economic headwinds that could impact its real estate market negatively over the next five years.

“Areas with job growth instead of decline, strong industrial or other bases to support jobs, increasing employment rates,” Wesser said.

Miami-Dade, Florida

Interestingly, Miami-Dade makes the list of expected worst performers, but for different reasons than Tampa.

Wesser explained that for some areas, the issue is “value or perceived value — with respect to expected worst performers, this is more a function of the fact that home values are relatively high, without sufficient supporting factors to continue driving up prices.”

This suggests that while Miami-Dade’s real estate market might seem attractive now, it could be overvalued and due for a correction.

Mobile, Alabama

Mobile rounds out the list of Southern cities expected to underperform in the real estate market over the next five years.

While there are more than a billion dollars of capital improvements on the Port of Mobile planned over the next 10 years, the city is still predicted to suffer from the issues Wesser described.

The Final Word

Even though these are cities that Wesser and Redy think aren’t great investments right now, he shared how to think about investing for yourself: “Start with a list of target markets – make it very broad, based on your initial set of criteria. Pull data from trusted sources on each of the factors you want to consider – economic, population, demographic, infrastructure, housing supply and demand, etc.

“Drop the data into a spreadsheet and sort high or low to create a list of markets having desirable (or undesirable) rankings for each factor,” he added. “Make a list of the cities that consistently rank high across multiple factors, as well as cities that consistently rank low across multiple factors, to arrive at your initial list of target markets.”

And while you might want to proceed with caution around these cities, you have to remember that real estate markets are often highly localized. Even within cities facing challenges, there may be neighborhoods or specific properties that could prove to be good investments.

“The secret sauce is how you interpret and test the data to draw conclusions,” Wesser said.

In other words, everyone needs to do their own research and consult local real estate professionals before making any investment decisions.

This article originally appeared on GOBankingRates.com : 5 Worst Southern Cities To Buy Property in the Next 5 Years, According to Real Estate Agents