My husband and I learned the hard way that it’s often best to buy closer to the bottom of a real estate market. Here are five markets worth a second look.
When my husband and I bought our home, prices were near their peak in our area.
At the time, we had no idea that home prices in our market were near the peak. We thought we were buying in an area that had potential. We bought in a new subdivision. The town was expanding. Things were starting to blow up.
Unfortunately, at the time, we didn’t exactly have our fingers on the pulse of what was happening. We didn’t realize that housing permits were dropping in number, or even that employment was stagnating in our area.
A year later, the financial crisis changed everything for everyone, and now, several years later, our home’s market value is $13,000 less than we paid.
We learned a valuable investing lesson from this experience. We learned that it’s important to pay attention to more than just (possibly) bubble-inflated prices — and to carefully consider where we are buying to ensure that the housing market in the area really is on the way up.
Perhaps most important, we learned that it’s often best to buy closer to the bottom of a market. That’s when you can find the best deals. In fact, my colleague Nathan Slaughter — editor of Street Authority’s High-Yield Investing newsletter, says if there was ever a time to invest in real estate, it is now. To put it bluntly, if you wait too long, you could miss out on a ton of potential profits from an opportunity that only comes along once every couple of decades.
With that in mind, here’s a list of markets that are booming right now. Next time we decide to buy — or rather, if we decide to buy again — we will research the situation more, and we will look for markets that recently saw bottoms but are truly heading higher.
According to the NAHB/First American Improving Markets Index (IMI) issued on August 6, 2013, Phoenix is one of the 247 metro areas in the United States showing improvement in housing. Prices have improved 34.8% from their trough in 2011. This improvement is solid, but it also means that there are plenty of undervalued homes available in Phoenix.
On top of that, the IMI notes that permits have increased 3.4% and employment has improved 6.6% from their troughs of recent years.
There is solid, but undramatic improvement, and it’s possible to get some good deals in this popular area.
Texas has been on a lot of lists lately, with its cities showing signs of solid economic growth and housing market recovery. One of these towns is Odessa.
According to the IMI, Odessa has seen a 27% improvement in prices since its trough in late 2010. Permits are also on the rise, gaining 29.9% since 2009. This means that you might have a choice of newer homes to choose from, as opposed to Phoenix, where there is still something of a glut of existing home inventory.
Employment is growing as well. Odessa has experienced 29.1% employment growth since its 2009 bottom.
Bismarck, North Dakota
This town might be considered by some to be located in the middle of nowhere, but it has made its mark in the aftermath of the financial crisis.
North Dakota is one of the states that didn’t see a huge drop in employment, and that was sheltered, to some degree, from the worst of the recession. But the housing market is still blowing up in Bismarck. Indeed, home prices are up 29.4% from their trough in early 2010, and permits are up 41.8%. The IMI also says that employment is also still improving — up 13.9% from its trough in 2007.
I’m from Idaho (but not Boise), so I found it interesting that Boise was represented on the IMI’s list of improving markets. When I considered the hit my uncle took when he sold his house during the recession, though, my surprise evaporated. After all, a market that ended up being smashed can make a great opportunity later, when you catch it on the upswing.
Boise has seen a 26.4% improvement in prices since the trough it reached in 2011. Permits are up 3.8%, and employment has improved 8% since their 2009 troughs. As with Phoenix, one way to look at these stats is to realize that there are plenty of good deals to be had on existing homes.
Yes. Detroit. Really.
In spite of concerns over the city declaring bankruptcy, the housing market in Detroit is starting to heat up, probably due to the fact that there are people like Donald Trump who think that Detroit is worth investing in right now. It might not be a poor choice.
Home prices have rebounded 24.5% from their 2011 trough, and permits are up 10%. Even employment is improving, gaining 6.6%, according to the IMI, from the 2009 trough. If Detroit really is on the verge of a renaissance, now might be the time to get in on it.
The Investing Answer: Now is the time to start thinking about investing in real estate — or even buying a primary residence. Prices, although up from their troughs in many markets, are still far from their pre-crash peaks. That means that, with the right research, you could get in now, while the markets are starting to blow up. You can get a good deal and even possibly see decent appreciation in the future.
by Justin Lombard
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Phoenix real estate statistical reports for the trailing 12 months for Greater Phoenix and surrounding communities represented in the shaded areas on the map below.
On the charts below, hover over the graphs and click on the legend for interactive features.
Sold Listings (#/units)
Average Sale Price
Average Days on Market
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