Risk-Adjusted Residential Real Estate
Risk-adjusted residential real estate rankings for the 40 largest U.S. metropolitan areas. Combining price appreciation with historical volatility using Sharpe ratio methodology to identify superior investment opportunities.
Measuring risk-adjusted returns across U.S. residential markets
Risk measured by calculating the volatility of each MSA's average home price using standard deviation of price changes over 20 years of historical data.
Returns measured using the Zillow Home Value Index (ZHVI), which includes single-family residences, condos, and co-ops for comprehensive market coverage.
Sharpe ratio combines risk and return, showing which markets deliver superior returns relative to their volatility—the true measure of investment quality.
Where Rx is the annual return of the metropolitan area, Rf is the risk-free rate (10-year US Treasury), and StdDev(x) is the historical standard deviation of returns. Higher Sharpe ratios indicate better risk-adjusted performance.
Sample data from Q1 2019 shown for illustrative purposes
| Rank | Metro Area | Annual Appreciation | Std Dev (20yr) | Sharpe Ratio |
|---|---|---|---|---|
| 1 | Indianapolis, IN | 12.46% | 4.12% | 2.42 |
| 2 | Cincinnati, OH | 8.37% | 3.56% | 1.65 |
| 3 | Kansas City, MO | 8.89% | 3.98% | 1.60 |
| 4 | Charlotte, NC | 9.10% | 4.52% | 1.46 |
| 5 | Dallas-Fort Worth, TX | 8.74% | 4.68% | 1.33 |
| 6 | Columbus, OH | 7.90% | 4.07% | 1.33 |
| 7 | Atlanta, GA | 10.39% | 7.44% | 1.06 |
| 8 | San Antonio, TX | 6.17% | 3.62% | 1.01 |
| 9 | Austin, TX | 6.26% | 4.11% | 0.92 |
| 10 | Cleveland, OH | 6.06% | 3.95% | 0.90 |
Rankings shown are based on historical data and provided for illustrative purposes only. For current rankings, detailed methodology, and complete market analysis covering all 40 metropolitan areas, contact us today.
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