5 cities poised for a housing pop
Read the big, heavily publicized housing market reports and the only conclusion is that doom and gloom are the dual engines driving U.S. real estate. Double-digit dips are the norm in the recent Zillow Home Value Index, and the Case-Shiller Home Price Index is just as discouraging.
However, there may be good reason to shrug off those indexes. "I believe those indexes skew to the negative,” says Greg Rand, a real estate expert, New York City radio host, and author of Crash Boom! There are markets out there that are fundamentally healthy."
Eric Fox, vice president for statistical and economic modeling for Veros Real Estate Solutions, in Santa Ana, Calif., agrees. In a recent, comprehensive survey of U.S. housing markets, Fox found a number of markets on the upswing. More markets, he admits, remain stuck in neutral or reverse, but the good news is that an increasing number of markets seem to be healing, he says.
In the healthy markets, the supply of homes for sale is within normal bounds, unemployment and the cost of living is below the national average, and home prices remain comparatively low and stable. Add to that mortgage rates near historic lows and you’ve got an advantageous situation for homebuyers.
Median home price: $107,300
Unemployment rate: 6.5 percent
Cost of living index: 91.5
It may be a surprise, but this once-forgotten Rust Belt city now is on just about every list of cities with homes set to appreciate. According to Zillow.com, the average home price is a modest $107,300. There has been very little fall-off in prices, in part because Pittsburgh never saw the big run-up that hit many U.S. metros (prices rose to $112,000 in July 2007).
Also, the unemployment rate and the cost of living in Pittsburgh are well below the national average. Healthcare, higher education and banking give the local economy a solid bedrock. Veros projects that home prices in Pittsburgh will increase 2.3 percent from March 2011 to March 2012, which makes this city the leader of the pack.
Median home price: $136,800
Unemployment rate: 7.9 percent
Cost of living index: 96.4
Home prices in this extremely hard-hit sand state metro are off some 40 percent from their peak in mid 2006. Nonetheless, there are significant signs of life in this southern Arizona city. Case-Shiller predicts Tucson housing prices will hit bottom in the second quarter of 2011 and will tick upward by a predicted 7.2 percent in 2012. Another sign that Tucson is poised for a big real estate uptick is that experts say the city has largely worked its way through its once sizable inventory of foreclosed properties.
Another plus is that retirees--often from the upper Midwest--continue to be drawn to the region's weather and its affordable homes. Tucson’s cost of living and unemployment rate are both below the national average. All those factors reflect that Tucson is primed for a nice housing rebound.
Unemployment rate: 5.4 percent
Median home price: $294,800
Cost of living index: 139.9
A favorite large metro of Fox’s, the Washington, D.C. metro area encompasses two states (Maryland and Virginia) as well as the District of Columbia. With a median home price of $294,800, some experts believe home prices may drop by a percentage point or two in 2011. Expect small price gains--a percentage point or two--in 2012. Key to this metro is that the economy is driven by the federal government, which seems poised for continued growth. Unemployment in the metro is a very low 5.4 percent. The one negative: a cost of living that is well above the national average.
Median home price: $322,100
Unemployment rate: 6.5 percent
Cost of living index: 132.4
Boston is a city buoyed by an economy rooted in the growing healthcare and high-tech sectors, as well as higher education. "Things look very positive in the next 12 months," says Fox. Home prices have been trending upward over the last few years, according to Zillow’s calculations. This is creating an environment that fosters confidence among buyers who have seen many other markets decline even further in recent years. While the unemployment rate remains below the national average, this Northeast metro has a high cost of living, well above the national average.
Median home price: $148,500
Unemployment rate: 7 percent
Cost of living index: 95.6
The median sales price for a home in San Antonio is an affordable $148,500. All the ingredients for a healthy real estate market are here: affordable housing, unemployment and cost of living below the national average, and a diverse economy that ranks among the nation's top 20, according to a recent report from the Brookings Institution. This makes San Antonio an attractive real estate market that is ripe for a housing rebound. Data from Fiserv Inc. projects this housing market will claw out at least small price increases in 2012.
Metro unemployment rate is based on non-seasonally adjusted April data (latest available). Home price data is quoted from the National Association of Realtors 2011, first quarter median sales price of existing single-family homes, except Pittsburgh, which is quoted from Zillow.com. Cost of living data is based off ACCRA’s 2010 annual average figures. (The national average is equal to 100.)
Robert McGarvey, a busy freelance writer for 30 years, has written over 1500 articles for many of the nation's leading publications, from the NY Times to the Harvard Business Review. He presently also serves as a correspondent at large to Credit Union Times.