Blomquist: u201cInvestors leveraging demographic trends will often be able to amplify rental returns and home-price appreciation.u201d<@SM>In terms of rental yield, some areas are better for renting to Baby-Boomers than others. The darker counties had the strongest yields.<@SM>Philadelphia and Baltimore City, MD, offered the strongest rental yields from Millennial tenants.

[IMGCAP(1)]

IRVINE, CA—The best places to own residential rentals for Baby Boomers are in the Southeast and Arizona, while ideal Millennial markets are in Baltimore, Philadelphia and Jacksonville, FL, according to report from RealtyTrac. The report analyzed 370 counties nationwide to determine the best markets for buying residential properties, as well as the best markets for renting to Baby Boomers and the best for renting to Millennials.

For the report, RealtyTrac analyzed median sales prices for residential property and average fair-market rents for three bedroom properties in those counties with a combined population of 186 million people—60% of the total US population. Rental returns were calculated using annual gross rental yields: the average fair-market rent of three-bedroom homes in the county, annualized, and divided by the median sales price of residential properties in the county.

According to Daren Blomquist, VP of RealtyTrac, “Investors leveraging demographic trends will often be able to amplify rental returns and home price appreciation, particularly when it comes to trends in the Baby-Boomer and Millennial generations, which combined account for approximately 147 million people—more than 60% of the US adult population. Many individuals in both of those demographic groups are in the midst of major life changes that will often involve changes in housing, something that smart real estate investors should take into consideration when deciding when and where to buy or sell.”

Meanwhile, in the housing-sales market, as GlobeSt.com reported last week, “Distressed sales continue to represent a smaller share of the overall sales pie nationwide, helping to boost median home prices higher given that distressed sales tend to be in lower price ranges,” according to Blomquist. The firm reported distressed and short sales were down to 14.3% of US residential sales in May, down from 15.6% in April and down from 15.9% in May 2013.

[IMGCAP(2)]

[IMGCAP(3)]