The 5 best (and 5 worst) housing markets for 2012
January Buying Advice: Here are some predictions for which cities show promise and which ones buyers should avoid in the coming year.
Pittsburgh is among the housing markets expected to fare well in 2012. // © Jan Tyler/Getty Images
The outlook isn't totally bleak for this year's real-estate market. While a recovery was nowhere to be found in 2011, a handful of markets were spared the worst and are expected to rebound more quickly than others, thanks to a growing job and population base. (Bing: What's the unemployment rate in your area?)
In this month's Buying Advice, we'll identify the safest havens for buyers, and those where house hunters might want to sit the year out.
We'll check in with the latest housing statistics and see what buyers should take away from the big revision to the National Association of Realtors' monthly sales numbers going back several years. Plus, we'll answer a reader's question about whether it's OK to break a lease to buy a house.
Fish or cut bait? The 5 most promising and abysmal markets
Every year we like to gaze into the crystal ball and predict which markets will prove best for buyers. To make this prediction more accurate, MSN Real Estate asked forecasting firm Local Market Monitor which five housing markets it would pick as the most promising in the year ahead and why; by "most promising," we mean those that will suffer the smallest slide. Here are LMM's picks, in no particular order:
- Pittsburgh: This former steel town may lack some of the glamour of bigger metros, but it has better prospects than most U.S. cities. The job base of colleges, hospitals and other health-care employers is growing. And while the population has remained relatively steady, those who live here enjoy slightly higher incomes than the national average. Houses are relatively cheap too, with the average home costing just $168,612 as of Dec. 1. The housing boom boosted prices 16%, and there has been no real decline since. The recession in Pittsburgh also was mild, with jobs down just 2%. Prices might dip 1% in the next year, but from there values should pick up again, gaining 2% in 2013.
- Worcester, Mass.: High-tech job growth has returned to this market an hour west of Boston. Many urban dwellers are looking in this area for bigger, less expensive houses than they'd find in the big city. While the average home price of $237,020 has declined 3% over the last year, prices are beginning to bottom, with 2% growth expected in 2013.
- Houston/Sugarland/Baytown, Texas: Two things are fueling the market here — oil and people. The energy sector in these cities continues to create jobs, and population growth is triple the national average. Incomes are higher than the national average, and the housing bust was almost nonexistent here, with just a 4% drop from the peak. The average home here is a bargain at $176,489. This market is expected to hit bottom next year and — you guessed it — gain 2% in 2013.
- Akron, Ohio: The average home price of $148,508 has slipped 4% in the last year, but the future looks brighter. Jobs — especially manufacturing jobs — are coming back to Akron. Like many Midwest cities, there was no housing boom here to speak of. Values are down just 13% from the peak, about a third of the hit the U.S. as a whole suffered. There won't be a quick uptick in values, but buyers here can expect the market to hit bottom this year, with a 2% gain in 2013.
- New Orleans/Metairie-Kenner, La.: People are returning to New Orleans, and the outlook is good. While the average home price of $249,673 declined 2% in the last year and is expected to take another 2% hit in 2012, prices should appreciate 1% in 2013 on stronger job growth than the national average.
On the flip side, LMM pinpointed five markets where buyers should hold off on making a purchase. Overbuilding was rampant in these areas, and many also suffered a bigger loss in jobs, says Ingo Winzer, LMM's president. The huge supply of homes means that even if the jobs picture improves, it could take the better part of a decade for real growth to return to home prices.
The five markets LMM predicts will endure the most pain in the years ahead are Wilmington, Del.-Md.-N.J.; Atlanta/Sandy Springs/Marietta, Ga.; Virginia Beach/Norfolk/Newport News, Va.-N.C. and the California cities of Sacramento and Fresno. In these areas, prices are expected to decline another 7% to 10% in the next year alone.
- On our blog, 'Listed': Year closes with some positive housing data
Buyers: What would make you fall in love with a home? Owners: What features or aspects of your home have provided you with the most comfort and enjoyment? What did you think was important while looking, only to change your mind after move-in? Let us know, and we'll write about this in the February Buying Advice column. Send an email to firstname.lastname@example.org.
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Home-sales snapshot and the NAR's major revision. What was that all about?
The NAR in December revised its sales numbers for much of the downturn — scaling back sales between 2007 and 2010 a whopping 14.6%. The real-estate industry's largest trade group cited population shifts and an overestimation of for-sale-by-owner transactions for the disparity.
The change, NAR officials said, did not affect local multiple-listing-service information or local home prices, but it raises questions about the accuracy of the NAR's methodology for estimating U.S. sales using local listing services and a census benchmark, rather than property records.
Economists say the revision doesn't really change the outlook for the housing market going forward, so for most buyers it's kind of a non-issue.
Existing-home sales increased to 4.42 million in November, up 4% from the previous month, and a 12.2% jump from November 2010, according to the latest NAR data. The national median existing-home price declined 3.5% from a year ago to $164,200.
- MSN Money: Get financially fit in 2012
The pace of sales appears to be picking up. The NAR's Pending Home Sales Index, which tracks contract signings for homes, posted a 7.3% increase in November to 100.1, the highest it has been in 18 months and up from 93.3 in October.
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Again, Pittsburgh rises to the top.
I have lived here for some time and love it. It is by far one of the most beautiful and safest cities in the country. Things have changed and word is getting out about this town.
Recently, Pittsburgh was selected as one of only two cities in the country and few worldwide recommended to visit. Downtown's cultural district rivals most bigger cities and the growth of new housing, restaurants, casinos and shops on the South Side, East Liberty, North Shore and Shadyside (to name a few) are upscale and very popular.
This is not your father's Pittsburgh as blue collar has turned to white collar. Steel MIlls no longer exist. City schools are OK and suburb schools are excellent.
Pittsburgh recently has been named America's Most Livable City (again), US's top real estate market, top city to relocate, one of the best cities to raise a family, one of the best job markets, best economy and many more.
Taxes can be high, but weigh in livability, affordability and other factors, and this city is America's best kept secret. But, not for long... one only needs to look around at the many changes that come with year after year of ranking in top categories amongst other US cities.
Pittsburgh has than "small town feel" because most people live and die in the neighborhoods where they were born. If they go over any bridge they will be lost. Very racist. If you are anything other than white you will have a hard time climbing the corporate ladder. Sons drink in the same b ars their daddies sat in all day. I am finishing my degree from Carlow College and heading South. At least they are upfront with their racism. My mom is from the South. She has always called Pittsburgh "the Mississippi of the North." She is right.
There is no one, especially a sit behind a desk expert that can tell how many homes are going to be sold where for any certain amount. The weatherman would have a better chance of predicting the weather 3 months ahead before these bums could predict what house sold yesterday.
my prediction is if gas stays at $4 a gal. no one is going to buy anything but gas with the money these people are paid. period
the problem was not the banks or wall street or realtors or mortgage brokers or fannie freddie
the problem was people in general wanted bigger and better houses,they wanted to own investment property and 2nd homes,they wanted things they could not afford...why do we always look to blame the vehicle...people are not stupid....they knew what they were doing and took the risk....if real estate was still appreciating, they would still be doing it.......why don't you blame beer manufacturers for drunk driving and remington or winchester for crimes w guns...
it always comes down to people making bad decisions
as an economist myself: if I were to relocate, I would choose locations like..... Madison, WI, Austin, TX, Washington DC (area), raleigh durham etc.
Look for college towns/government centers. The US will always have an overstock of overpaid government jobs and top notch global Universities which can draw students from wealthy Asian countries to feed the local economies. These areas will flourish and can weather a private sector downturn.
I've been to Pittsburgh before, It's ok. They have a nice little downtown strip area and the casino is nice.
But, the people are just too "hillbilly" for me, sorry. I felt like I was in a Southern city the whole time I was there. I'd just rather be in an actual Southern city than one that feels like a Southern city in the North.
That's why I love New Orleans! Great food, culture, music, history, shopping, entertainment, and weather.
Sorry Pitts, you're just a little Appalachian town to me. :-(
Not sure who did the initial write up for Pitt. but finding a home for 170k is nothing to look at and more than likely the home will be 30 to 50 years old with no room. As for Pitt region property taxes are way out of site. Recently have been looking at home prices and taxes to get an idea of what I can expect when I build a new home for. Talk about an eye opener! 5000.00 to 7000.00 a year for property taxes! OUCH! no way would I go for that. Seems that most smaller counties follow the same deal and makes you wonder if these counties...Twp's. want people to move in the area.
Go to North Carolina---Cary, Apex, Raleigh....way cheaper, same schools or better and very affordable property taxes AND you get way more for you money. Friends have 8 year old home 2 story 2 car garage 2 acres of land and only spend several thousand in property taxes. And to to it off taxes on on the rise right now
No end in sight for actual financial recovery due to a now functionally negative GDP.
Inflation (Carter years) of basics is going to be the only way out (an ounce of fungible Gold buys the same amount of fungible Oil it always has). Basic necessities like Food are going to continue to set the ever higher bar. Taxes and hidden 'Fees' are going to always 'pay the bills'. Mysteriously, this graveyard spiral concept created in the name of 'Fairness and Equality' will Never be reported. What's up with that?