As interest rates continue to fluctuate and housing markets evolve, investors in real estate face unprecedented challenges and opportunities. Multifamily properties, in particular, have emerged as an attractive asset class due to their resilience and profit potential in uncertain economic conditions. Neil Bawa, a self-described "recovering technologist" and now a celebrated real estate data scientist, offers a transformative approach to identifying lucrative markets using data-driven techniques. His innovative methodology, "Location Magic", simplifies complex real estate analytics into actionable insights for investors.
This article delves into Bawa’s strategies for leveraging data to rank cities for multifamily and single-family investments, the current state of the U.S. real estate market, and what lies ahead for multifamily properties.
The Case for Investing in Multifamily Properties
Bawa’s insights come at a pivotal time: while single-family housing markets have remained stagnant despite rising interest rates, multifamily properties have been more responsive to market forces. Here’s why multifamily real estate offers a unique opportunity:
- Price Adjustments in Multifamily Markets: Unlike single-family markets, which have resisted price corrections despite higher borrowing costs, multifamily properties have seen more predictable price reductions. In some areas, prices have dropped by 20-30%.
- Unyielding Demand: The demand for multifamily housing remains strong as homeownership becomes increasingly unaffordable. With fewer people able to buy homes, rental markets are poised for growth.
- Supply Dynamics: A record-breaking supply of multifamily housing entered the market in 2023 and 2024. While this temporary influx muted rent increases, new construction is already tapering off in most regions, paving the way for stronger rent growth in 2025 and beyond.
Bawa predicts that multifamily rents will see an upward trend in the coming years, especially as supply pressures ease. For investors, this presents a compelling opportunity to acquire assets at discounted prices while anticipating steady rent growth.
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The Five Metrics That Matter Most in Real Estate Investment
At the heart of Bawa’s methodology is a powerful yet accessible model that evaluates cities based on five critical metrics. By focusing on these "800-pound gorillas" of real estate data, investors can pinpoint areas with the highest potential for growth and returns:
- Population Growth: A strong influx of residents signals increased demand for housing, driving up both rental and property values.
- Job Growth: Employment opportunities attract new residents and support income stability, making an area more desirable for renters and homeowners alike.
- Income Growth: Rising incomes enable individuals to afford higher rents, boosting profitability for multifamily investors.
- Home Price Growth: Markets where home prices are steadily rising often indicate strong demand and limited supply, creating opportunities for appreciation.
- Crime Reduction: Lower crime rates improve the quality of life in a neighborhood, making it more attractive to potential renters.
While these metrics may seem straightforward, Bawa emphasizes that the key lies in understanding their specific ranges. For example, an area with moderate population growth might outperform one with extreme growth if the latter is overbuilt and lacks supporting infrastructure.
Why Smaller Markets Are Now the Sweet Spot
One of the most significant shifts in the U.S. real estate landscape is the rise of secondary and tertiary markets. Traditionally overshadowed by major metropolitan areas, smaller cities and mid-sized regions are now hotbeds of growth due to their affordability and quality of life. Some standout markets include:
- Idaho Falls, Idaho
- St. George, Utah
- Northwest Arkansas (Bentonville, Rogers, Fayetteville)
- Provo, Utah
These regions are growing at rates 2-5 times faster than the national average, offering exceptional opportunities for investment. However, Bawa cautions that even within these growth markets, micro-market analysis is essential. For instance, while Indianapolis as a whole may not shine, its northeastern suburbs – such as Carmel, Fishers, and Noblesville – are poised for exceptional returns.
Multifamily vs. Single-Family: A Data-Driven Comparison
Bawa’s analysis suggests that the single-family market is unlikely to experience significant price growth in the near term. Despite rising interest rates, single-family home prices have remained stubbornly high due to two key factors:
- Lock-In Effect: Millions of homeowners are locked into ultra-low mortgage rates of 2-3%, reducing inventory as they are unwilling to sell.
- Inventory Constraints: Limited supply continues to prop up home prices, even as demand wanes.
In contrast, the multifamily sector has already undergone a price correction, making current valuations more attractive. Additionally, the end of the recent construction boom will restore pricing power to landlords, leading to rent increases and, consequently, higher property valuations.
A Look Ahead: What the Future Holds for Real Estate
Bawa identifies three transformative trends that will shape the real estate market in the coming years:
- Slower National Growth: The U.S. population growth rate is slowing due to declining birth rates, mirroring global trends. As a result, identifying pockets of high growth will become even more crucial for investors.
- Regional Variance: The Midwest and Northeast are expected to outperform the traditionally booming Southeast in terms of rent growth, as the latter grapples with oversupply.
- Sustained Multifamily Demand: With homeownership increasingly out of reach for many Americans, demand for rental housing will remain robust, particularly in the mid-market segment.
Key Takeaways
- Prioritize Multifamily Investments: Multifamily properties are better positioned than single-family homes to deliver strong returns in the current market environment.
- Focus on the Five Metrics: Population growth, job growth, income growth, home price growth, and crime reduction are the cornerstones of profitable real estate investments.
- Embrace Secondary and Tertiary Markets: Smaller cities like Idaho Falls, St. George, and Provo offer high growth potential at a fraction of the cost of major metros.
- Track Regional Trends: The Midwest and Northeast are poised to lead in rent growth, while the Southeast faces challenges from recent overbuilding.
- Adapt to Changing Demographics: With declining birth rates and slower population growth, micro-market analysis will be more important than ever.
- Capitalize on Timing: With multifamily prices down and demand set to rise, now is an ideal time to invest in this asset class.
- Look Beyond Large Cities: Smaller markets and suburban areas often provide better long-term opportunities than crowded urban centers.
Final Thoughts: Data Is the Investor’s Best Friend
Neil Bawa’s approach to real estate investment is a masterclass in leveraging data for strategic decision-making. Whether you’re a seasoned investor or new to the field, adopting a data-driven mindset can help you navigate market complexities and identify opportunities with confidence. The future of real estate belongs to those who understand the numbers – and act on them wisely.
Source: "How to Find Profitable Real Estate Markets Using Data for Multifamily Investors, with Neal Bawa" – Gary Wilson Global Investor Agent @ eXp Realty, YouTube, Nov 12, 2025 – https://www.youtube.com/watch?v=KrF4upDCtvE
