Asset classes do not move independently; their behavior reflects the prevailing phase of the global cycle. Across phases, both return potential and the way each exposure transmits risk within a portfolio change.

As growth and inflation momentum evolve, so do volatility patterns, correlations, and drawdown characteristics. Early in the cycle, risk assets may act as recovery engines. As the cycle matures, those same exposures can become sources of instability. Duration can shift from a performance drag during reflation to a stabilizer as growth slows. Credit may transition from carry engine to spread risk. Commodities and high-beta assets often lose diversification benefits once the cyclical momentum peaks.

The key insight is that exposures cannot be assumed to behave consistently over time. Their portfolio role changes as macro conditions change. Historical cycle patterns do not provide certainty, but they offer a probabilistic framework for assessing whether current risks are aligned with the prevailing environment.

Practitioner Tip: Rather than focusing solely on expected returns, professionals should regularly reassess how each exposure contributes to portfolio volatility, correlation, and drawdown risk as the cycle evolves and adjust when those relationships begin to shift.

First-time homebuyers and small investors look for many of the same attributes when considering where to buy real estate: affordability, safety, stability, employment, accessibility, limited competition, and prosperity. That’s why Zillow’s 2026 Best Markets for First-Time Homebuyers also serves as a handy cheat sheet for investors.

Kara Ng, a senior economist at Zillow, told CNBC Make It that one thing the top buyer markets have in common is that they are all located in the Midwest or the Sunbelt. In other words, stay away from pricey coastal markets if you’re looking for a good investment.

Having a property that at least pays for itself—given current interest rates—and that increases in equity moderately, should be the goal of any investor who plans to buy using a loan.

Avoiding a financial disaster should the property be vacant for a month or two also ties into the affordability aspect of Zillow’s top picks, where all the selections fall below the 30% of monthly housing costs recommended for financial well-being.

The Zillow Top 10

That said, Zillow’s top 10 list does raise a few eyebrows. Here is the full list, along with the reasons investors should consider these metros.

1. Jacksonville, Florida: Median home price: $282,895 

The Florida city was ranked No. 1 by Zillow, primarily due to affordability and, of course, the lure of the Florida lifestyle and bustling port. Florida’s most populous city is never short of potential renters, which is why 21% of single-family homes in the city are owned by corporations.

2. Birmingham, Alabama: Median home price: $135,870

This has been an investor hot spot for a while. A city where around 50% of the population are renters, affordability, and a younger, employed demographic make this a good place to invest.

3. San Antonio, Texas: Median home price: $249,810

Affordability and the relative financial health of the renter population mean this is a place where you are more likely to receive your rent on time. 

4. Atlanta, Georgia: Median home price: $385,599

“Hotlanta” is rarely out of the news for sports, entertainment, and more. It has a generally financially well-to-do population, affordable housing, and many employment opportunities, which offer high gross yields for investors in the right neighborhoods.

5. Houston, Texas: Median home price: $264,336

Although the population skews slightly older, it’s generally affordable, with multiple employment opportunities and booming suburbs. The scale of the city and its economic diversity work in Houston’s favor.

6. St. Louis, Missouri: Median home price: $181,928

Over half the Zillow listings here are within reach for first-time homebuyers, which also means that rent is affordable and cash-flowing opportunities exist.

7. Detroit, Michigan: Median home price: $75,358

Detroit is very much a neighborhood-by-neighborhood, block-by-block city for investors, despite its well-documented demand. Find the right property, though, and it will most likely be affordable, with a large renter pool. Meticulous tenant screening is essential.

8. Raleigh, North Carolina: Median home price: $433,996

Breaking even is the goal in super-hot North Carolina, which is relatively affordable given its high-paying tech and education-driven economy and appreciating prices. It’s a good long-term investment.

9. Baltimore, Maryland: Median home price: $188,101

Baltimore might be a surprising inclusion for some, but don’t let its gritty reputation fool you. Not all of Baltimore is like an episode of The Wire. The home of novelist Anne Tyler and filmmaker John Waters, among many others, Baltimore has an artistic and academic reputation, with several neighborhoods worth investing in, where affordability gives it a clear advantage over other East Coast cities.

10. Louisville, Kentucky: Median home price: $261,482

Median-income renters have plenty of choice here, allowing small investors to cash flow a single-family home. For investors willing to put in some work, it’s possible to unearth some real gems here, such as this one.

What All The Cities Have in Common

Rents in these areas are unlikely to trouble tenants while allowing investors to break even, if not cash flow, even with current interest rates.

Employment and younger demographics all augur well for buy-and-hold investors looking to commit long-term, reaping benefits through appreciation, rent growth, and eventual mortgage paydown.

The Contrast to Other Markets

While it is possible to find more affordable real estate markets, the combination of affordability, a large tenant pool, incomes, and employment makes these Zillow markets vibrant urban ecosystems that buck the trend of inaffordability and negative cash flow that has befallen many pricier markets, where sales are down, complicated by high rates and global geopolitical tensions.

“There is little in the near-term backdrop to suggest a quick rebound in sales,” Daniel Vielhaber, an economist at Nationwide, told Reuters after March’s national sales numbers showed a nine-month low. “We continue to look for sluggish sales this year, particularly in the first half, before a gradual pickup as mortgage rates decline in the second half and into 2027.” 

Consequently, the National Association of Realtors lowered its estimate of home sales growth to 4%. “Lower consumer confidence and softer job growth continue to hold back buyers,” Lawrence Yun, NAR’s chief economist, said. Plus, “inventory remains a major constraint on the market. The inventory-to-sales ratio, or supply-to-demand ratio, is below historical norms.”

Final Thoughts

While the metros on Zillow’s list aren’t immune to economic and global headwinds, many of these cities have avoided the worst of the predictions due to their inventory, affordability, and lack of cost-burdened tenants.

Recent surveys suggest that the focus will remain on affordable, somewhat insulated markets in which to live and invest. A recent Retirement Confidence Survey conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research found that Americans—both working and retired—were deeply concerned about their ability to sustain themselves, which plays into the affordability of Zillow’s selections.

“Retirement confidence has clearly softened this year, and the data show why,” said Craig Copeland, director of wealth benefits research at EBRI, in a press release, “Americans are contending with a mix of immediate financial pressures and long-term uncertainty. Many workers are struggling with debt, inflation, and rising housing and healthcare costs, while retirees are increasingly worried about the future of Social Security and Medicare. Together, those pressures are making it harder for people to feel secure about their retirement.”