Cleveland & Kansas City: Why These Markets Are Poised for Growth

As a real estate investor, I always have my ear to the ground for insights from industry leaders. So, when Dr. Lawrence Yun, the Chief Economist for the National Association of Realtors (NAR), speaks, I listen. His recent comments at the Midyear Real Estate Summit highlighted two markets that are particularly interesting for us: Cleveland and Kansas City. He believes these cities are uniquely positioned to respond faster to lower U.S. interest rates, and I couldn’t agree more.

• Interest Rate Sensitivity: Cleveland and Kansas City are expected to react quickly to falling interest rates.
• Kansas City Equity: Homeowners have accumulated significant equity, fuelling market mobility.
• Cleveland Affordability: A large renter base in their 30s is poised to enter homeownership with lower rates.
• Rental Market Strength: Both cities offer robust environments for rental property investors due to underlying demand.
• Strategic Opportunity: These markets present strong cash flow and appreciation potential for savvy investors.

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Dr. Yun’s Insights – The Interest Rate Catalyst

Dr. Yun’s analysis offers a clear roadmap for where to look next. He specifically pointed out that “2 markets likely to respond faster to lower US interest rates are Cleveland and Kansas City.” This is a crucial distinction, as not all markets are likely to react equally when rates do finally start to come down towards the end of this year.

Kansas City: Equity-Rich Homeowners Driving Mobility

In Kansas City, Dr. Yun highlighted the significant equity accumulation for homeowners. He stated, “someone who bought a home in KC 10 years ago would have accumulated $204,000 in equity today.“ This is a massive amount of accumulated wealth. Why does this matter for investors?

• Increased Liquidity: Existing homeowners have substantial equity to leverage for a down payment on a new home, or to fund renovations.

• Retiree Downsizing: Many retirees, sitting on this equity, will be looking to downsize. This frees up larger family homes while creating demand for smaller, more manageable properties, often ideal for rentals.

• Market Activity: High equity levels encourage more transactions, keeping the market liquid and dynamic.

Cleveland: Affordable Housing Meets Pent-Up Renter Demand

Cleveland’s potential, according to Dr. Yun, lies in its affordability and a ready pool of future homebuyers. He noted that “there are a lot of renters in their 30’s that would be able to afford to purchase a home if interest rates come down to 6% as is forecast to happen by the end of 2025 and through 2026.” This is a powerful combination:

• Affordable Entry Point: Cleveland consistently ranks among the most affordable housing markets in the U.S.

• Reduced Mortgage Payments: A drop to 6% interest rates will significantly lower monthly mortgage payments, making homeownership a reality for many who are currently priced out.

• Surge in Buyer Demand: Dr. Yun predicts this will “create a surge in potential homebuyers in Cleveland – especially because house prices are already more affordable there.”

Related: Why Blackstone Are Buying More Rental Properties in the U.S.

My Personal Take – Why I Invest in Cleveland and Kansas City

I’ve personally watching the potential in both Cleveland and Kansas City, and they’ve been key parts of my own investment strategy. I own rental properties in both markets, and I’ve helped lots of my international clients invest there also! My experience aligns perfectly with Dr. Yun’s observations, particularly when it comes to rental properties.

Cleveland: The Cash Flow Powerhouse

Cleveland has been a consistent performer for cash flow. Even with rising rents, the median home price remains incredibly attractive, allowing for strong rental yields. I’ve found that the tenant base is relatively stable provided you focus on high quality tenant vetting, and there’s a continuous (and growing) demand for good quality rental housing.

This is especially true for those renters in their 30s who, as Dr. Yun noted, are saving for a down payment but might be renting longer due to past higher rates. This creates a robust pool of reliable tenants, as well as a growing market of potential buyers. You can learn more about investing in this market here: Investing in Cleveland Real Estate.

Kansas City: Steady Growth and Diverse Opportunities

Kansas City, while perhaps not as low-priced as Cleveland, offers incredible stability and consistent growth. The diverse economy, strong job market, and a growing population make it a reliable choice for long-term appreciation.

The equity accumulation Dr. Yun mentioned is a testament to this market’s resilience. For rental investors, this translates to predictable tenant demand and a market that continues to build wealth for homeowners and investors alike. It’s consistently ranked among top investment cities.

Related: Northeast is Hottest U.S. Housing Market in June 2025

Strategic Implications for Real Estate Investors

The forecast for lower interest rates, combined with the unique dynamics of Cleveland and Kansas City, presents a powerful opportunity for real estate investors. Here’s how to capitalize on it:

• Anticipate Buyer Surge: In Cleveland, be prepared for an increase in demand from first-time homebuyers. This could lead to appreciation in property values, benefiting your existing rental portfolio or creating opportunities for strategic sales.

• Focus on Rental Demand: Even with more buyers, the need for rental housing won’t disappear overnight. The transition will be gradual, and these markets will continue to have strong renter pools, especially as people move for jobs.

• Leverage Affordability: In Cleveland, the lower median home prices (May 2025 Report) mean you can acquire properties with better cash flow potential.

• Consider Turnkey Options: If you’re looking to enter these markets without the complexities of direct property management or renovations, turnkey rental properties are an excellent lower-risk option. They’re already renovated to a high standard, often come with tenants, and are professionally managed, allowing you to benefit from these market trends immediately.

Related: 30 Cities Where Housing Inventory is Still Tight in 2025

Conclusion: Seizing Opportunity in Cleveland and Kansas City

Dr. Lawrence Yun’s insights from the NAR Midyear Real Estate Summit reinforce what many experienced investors already know: Cleveland and Kansas City are standout markets. Their unique blend of affordability, strong underlying demand, and sensitivity to interest rate changes positions them for significant growth.

All credible forecasts point to lower mortgage rates by the end of 2025, and even lower through 2026/7. If Dr Yun is right, this will likely translate into an increase in demand for housing. I think investors who leverage current market conditions to get a great deal on a rental property in these markets today will do exceptionally well over the next few years

Whether you’re looking for consistent cash flow, long-term appreciation, or a combination of both, these two cities offer compelling opportunities. By understanding the forces at play and positioning yourself accordingly, you can build a robust and profitable real estate portfolio in these promising U.S. markets.

Previous Article: Why Canadians Bought 53% More U.S. Properties

❓ Frequently Asked Questions

Why are Cleveland and Kansas City considered top markets for real estate investors right now?

According to NAR Chief Economist Dr. Lawrence Yun, these markets are poised for faster growth with lower interest rates due to significant homeowner equity in Kansas City and a large pool of affordable renters in Cleveland ready to buy.

What makes Kansas City particularly attractive for real estate investment?

Kansas City has shown strong equity accumulation, with homeowners gaining an average of $204,000 in equity over 10 years. This equity can fuel future market activity, including downsizing and new purchases, benefiting the broader real estate market.

How will lower interest rates impact the Cleveland housing market for investors?

Lower interest rates, forecast to reach 6% by late 2025/2026, are expected to significantly reduce mortgage payments in Cleveland. This will make homeownership more accessible for the city’s large renter population in their 30s, driving a surge in buyer demand and potentially increasing property values.

What are the benefits of investing in turnkey rental properties in Cleveland and Kansas City?

Investing in turnkey rental properties in these markets offers a lower-risk entry point, providing immediate cash flow and professional management. This allows investors to capitalize on the strong rental demand and potential appreciation without the complexities of renovation or direct tenant management.

What should real estate investors consider when looking at Cleveland and Kansas City?

Investors should focus on the strong fundamentals of job and population growth, the affordability of homes relative to other major markets, and the potential for sustained rental demand. Leveraging local market insights and considering professional property management are also key.

About the Author

David Garner has over 120+ personal property acquisitions in the U.S. real estate market as a Non-Resident Alien foreigner, bringing extensive practical experience to his insights. He specializes in guiding international investors through the complexities of the U.S. property landscape, focusing on cash flow opportunities, financing, and strategic wealth building. His deep understanding of the market, combined with his client-centric approach, makes him a trusted advisor for global investors seeking to establish and grow their U.S. real estate portfolio.