HomeVestors, also known as the "We Buy Ugly Houses®"company, and Local Market Monitor , the national real estate forecaster, today released a ranking of U.S. markets for the third quarter of 2013 that projects that investing in single family homes as rental properties remains a good bet, even as home prices continue to rise. 

Since 2011, HomeVestors and Local Market Monitor (LMM) have been providing quarterly rankings for 300 U.S. markets based on the level of risk each market presents to real estate investors.  The ratings concentrate on factors that affect the demand for housing and therefore affect home prices. The potential for price increases is the investment opportunity, and the potential for price decreases or stagnation is the investment risk. 

"The data clearly shows that investing in rental properties will be an attractive proposition for many years because of the increasing numbers of people who can't afford to be homeowners, but the added opportunity of investing in undervalued markets won't last long," said Ingo Winzer, president and founder of Local Market Monitor. 

This quarter's Top Ten list favors the South and Southwest.  Only two markets in the Midwest—Columbus, Ohio (number two), and Indianapolis (number four)—made the Top Ten. No markets from New England are included. The others, in addition to top-ranked Las Vegas, were Atlanta (number three), Fort Worth (number five), Little Rock (number six), Stockton, Calif. (number seven), Orlando (number eight), Jacksonville, Florida (number nine) and Baton Rouge (number 10).  

"The markets in the Top 10 listing all had strong job growth during the past year, and in many cases, strong home price appreciation, too, but are still undervalued by at least 15 percent," said Winzer. "Even Las Vegas, where prices jumped as high as 18 percent, remains 31 percent undervalued."

David Hicks, HomeVestors co-president, noted that risk of investing in all markets across the country has decreased sharply.  "Only six of the markets in the top 100 list are ranked as "speculative," down from 13 during the last quarter.  The others are ranked as either "low risk" or "medium risk." 

The "speculative" markets include Los Angles, Gary, Providence, Buffalo, Toledo and Cleveland.  "Most of these markets have higher than average unemployment rates, but have other factors such as undervalued home prices that make them attractive, albeit more risky,  investments," Hicks said.

"Even though most local real estate markets have rounded the corner, opportunities for investment remain plentiful because home values in many markets are well below the level that local incomes can support," Winzer added. "In these undervalued markets, both rents and home values will be increasing rapidly as the local economy improves and demand for housing runs up against the fact that there has been very little new construction in recent years."

Hicks said that the pace of growth the company is experiencing reflects the strong housing market.  "Our housing purchases have steadily increased over the past eight months and are on track to grow 60 percent over 2012. The interest in the housing market is also reflected in franchise sales – where we're on track to add more new franchises than any year in our history."