The 7 Best Housing Recovery Bets

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The national average home price over the next 2 years may not seem promising. But there are cities predicted to post gains.

According to CNN Money, below are the 7 top cities:

1. San Francisco:
The market there may come roaring back: Fiserv predicts a 14.3% gain between June 2010 and June 2011. Averaged out, that means a 4.8% gain over the next two years. One reason for the sharp comeback is that much of the area’s excess inventory will have been sold. It’s already dropped by nearly in half over the past year. More info…


2. Seattle:

Seattle has become a world-class city with a diverse, vibrant economy. As a home to manufacturers such as Boeing and software providers such as Microsoft, the job market has held up better than average, with a current unemployment rate of 8.8%.  After another modest price decline of 2.3% in the next eight months, the market should begin to turn up. Between June 2010 and June 2011, the city should see a gain of 6.2%. Averaged out, that means a 3.8% gain over the next two years.  More info…


3. Pittsburgh:
Pittsburgh’s main problem has been a brain drain. The metro area has been losing residents for years: Its population shrank 3% since the 2000 census, and the core city of Pittsburgh has lost almost half its population over the past 50 years. But that worked in Pittsburgh’s favor when it came to real estate. There was no shortage of housing during the boom years, which helped keep a heavy lid on housing prices. Homebuyers never had to resort to exotic mortgages just to buy a starter place.

Once the national recovery begins in earnest, the housing market should start to record moderate gains. Fiserv predicts a home price rise of 0.5% by June 2010 followed by a 1.7% increase in the following 12 months. Averaged out, that means a 2.2% gain over the next two years.  More info…

4. Rochester:

Rochester has had to reinvent itself. Old economy companies like Eastman Kodak and Xerox have lost much of their importance and reduced their workforces.  The slack has been picked up by such newer companies as Paychex, a successful payroll-service company headquartered there, as well as high-tech optical companies. The current unemployment rate of 8.1% is was well below the national average of 9.6%.  Rochester home prices never bubbled during the boom, but they have enjoyed slow, steady growth during the bust, gaining 5.2% over the past three years*. Since many of the area’s jobs pay reasonably well (the median household income is $63,000, which is above the national median), the relatively affordable housing market has been open to most of the population.

The prices also meant few homebuyers resorted to toxic mortgages, and New York’s strong consumer protection laws tended to discourage predatory lending. As a consequence, Rochester has been less burdened by foreclosures than most big markets. Only one property for every 276 had a foreclosure filing against it during the first six months of 2009, about a third the national rate.  More info…


5. Memphis:

The Memphis metro area boasts some of the most affordable housing in the country — and it grew considerably cheaper during the past few years, falling nearly 20%.  That downturn will continue for another year or so, with prices declining another 1.2% before rebounding 2.2% during 2011. Averaged out, that means a 1% gain over the next two years.

The metro area has been growing steadily in population since the 2000 census, up nearly 7%. The added demand for housing should support home prices, although land in the city’s far-flung exurbs can be purchased and developed quite reasonably. The competition from new home builders tends to keep a tight lid on the gains of existing home prices.  More info…


6. Oakland:

Looming over Oakland’s metro area is the exotic mortgage, such as option ARMs, which will start to reset to higher rates over the next few months. It’s feared that could fuel another severe wave of foreclosures.  Still, the foreclosure problem of Oakland pales in comparison with those of inland California cities.

With the prospect of continued job losses, it’s no surprise that Fiserv is predicting an 11.7% drop in home prices by June 2010. After that, however, Fiserv expects Oakland to take off again thanks to its strong and varied businesses, such as health insurer Kaiser Permanente, Clorox and retailer Dreyer’s.

Its position across the Bay from San Francisco and its great educational institutions, led by the University of California, provide a further base for the economy. Fiserv forecasts that home prices will return to double digit growth starting next June and produce gains of 13.7% in the following year. Averaging out the drop and the gain, Fiserv expects a 0.4% rise over the next two years.  More info…


7. Birmingham:
Alabama is filled with metro areas that recorded positive returns for home sellers during the past few years. Birmingham recorded a gain of 6% during past three years, but several other state cities recorded double digit gains, including Mobile, where prices grew 13.4%.

Birmingham, like most Southern metro areas, is marked by a “high elasticity of supply,” said Mark Fleming, chief economist for First American CoreLogic. Developers are relatively unrestrained in building, and these markets tend to be far less volatile than places like San Francisco or Portland, where development is restricted either by government policies, in Portland’s case, or geography, in San Francisco’s.  As a result, these cities seem to exhibit slow, steady growth rather than big peaks and valleys. Birmingham is no exception. Fiserv forecast a slight 12-month loss of 0.7% through June 30, 2010, and then a gain of 1.1% the subsequent 12 months. Averaged out, that means a 0.4% gain over the next two years.  More info…

Source:  CNNMoney.com; Statistics – Fiserv: From June 30, 2009, through June 30, 2011.


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  1. […] This post was mentioned on Twitter by Jennifer Griner. Jennifer Griner said: RT @wordpressdotcom The 7 Best Housing Recovery Bets « The Backyard Wealth Blog http://wp.me/pyWPP-jE […]

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