Local Market Monitor (LMM) recently released its 2010 list of Best and Worst Cities for Real Estate Investing. I found summary articles on WSJ.com and Forbes.com. The reason I point both out separately is because the lists are different. So I’ll just share both…
WSJ.com reported best and worst as of October 1, 2010. Forbes.com reported only the worst on October 8, 2010. I don’t think the list of cities should have changed that drastically so I’m guessing they highlighted different criteria. For example, their mention of population size was different, which I emphasized with bold text. Also, WSJ reported “metro areas” and Forbes reported “cities”.
Why did I share this information with you?
- Tulsa’s #1 (on the good side)!!!
- Oklahoma City’s #2 (on the good side)!
- I love maps, lists, and useful data.
- LMM is a very reputable research firm.
Money’s cheap, Tulsa’s good, I’m great… So, get off the fence and buy an Oklahoma house… yes, with me! (It’s subtle.) 🙂
Source: “10 Best and Worst Markets for Real Estate Investors” http://blogs.wsj.com/developments/2010/10/01/10-best-and-worst-markets-for-real-estate-investors/
Source: www.LocalMarketMonitor.com. Excludes markets with populations less than 200,000.
*New-indicates they are new to the top 10 list, not necessarily new to that classification
Top 10 Conservative Metro Areas*
- Tulsa, Okla. new
- Oklahoma City, Okla.
- San Diego-Carlsbad-San Marcos, Calif. new
- Albany-Schenectady-Troy, N.Y. new
- Indianapolis-Carmel, Ind.
- El Paso, Texas
- Winston-Salem, N.C.
- Cincinnati-Middletown, Ohio-Ky.-Ind. new
- Worcester, Mass. new
- Louisville-Jefferson County, Ky.-Ind. new
Top 10 Dangerous Metro Areas*
- Ocala, Fla. new
- Lakeland-Winter Haven, Fla.
- Reno-Sparks, Nev.
- Orlando-Kissimmee, Fla.
- Deltona-Daytona Beach-Ormond Beach, Fla.
- Port St. Lucie, Fla. new
- Las Vegas-Paradise, Nev.
- Boise City-Nampa, Id. new
- Prescott, Ariz.
- Cape Coral-Fort Myers, Fla.
The report excludes towns with less than 200,000 residents and focuses on price-appreciation rather than rental income. High-ranking areas for investor suitability are places where there’s a positive three-year home price forecast, employment is stable and only a small share of jobs are in highly volatile industries such as construction and financial services. The best markets for conservative investors show signs of price stabilization; dangerous markets are those where it appears prices will fall further and probably won’t turn around soon because of poor local economies. Speculative markets are those with higher upside potential, but more risk.
The article references a previous report, current as of July 31, 2010: http://online.wsj.com/article/SB10001424052748703791804575439871207245044.html Here’s a screen shot:
Good markets for conservative investors are those that already have stabilized and should yield average returns, Mr. Winzer says. Dangerous markets probably will see further price declines and have little potential for a turnaround because of poor local economies.
So-called speculative markets, by contrast, are those where prices could fall further, but which also have potential for greater appreciation of 3% to 5% annually after bottoming outmaking them more suitable for investors with stronger stomachs.
Source: “The Worst Cities for Real Estate Investing” http://blogs.forbes.com/francescalevy/2010/10/08/real-estate-investing-housing-foreclosures-speculation-home-prices/
LMM selected markets with a population of at least 40,000 and ranked them based a combination of jobs forecasts, historic population growth and home-price changes, based on data through September 30.
The Top Ten Worst Cities for Real Estate Investing
1. Lakeland-Winter Haven, FL (MSA)
2. Reno-Sparks, NV (MSA)
3. Orlando-Kissimmee, FL (MSA)
4. Deltona-Daytona Beach-Ormond Beach, FL (MSA)
5. Port St. Lucie, FL (MSA)
6. Las Vegas-Paradise, NV (MSA)
7. Boise City-Nampa, ID (MSA)
8. Cape Coral-Fort Myers, FL (MSA)
9. Phoenix-Mesa-Scottsdale, AZ (MSA)
10. Warren-Troy-Farmington Hills, MI Metropolitan Division
“Some markets were ‘investor’ markets, with buyers from elsewhere who were essentially speculating on home prices in the guise of buying second homes. That goes for much of Florida, Nevada, and Arizona,” [LMM President Ingo Wizner] says. “The California markets, and others, have growing populations to soak up the excess homes that were built; the investor markets don’t.”
What you’ll need get started as an investor
- Common sense
- We don’t want to repeat mistakes.
- Quite a few bucks and/or good credit (620+)
- Be a cash buyer, get up to 80% financing, or get higher percentage financing.
- You’ll still need money for inspections, closing costs, and repairs/remodeling, as applicable.
- Finding a deal doesn’t always happen in a day.
- If you buy REO (a bank-owned property) or a short sale (owner selling for less than their mortgage balance due), don’t expect to close in less than 30-60 days, especially for short sales.
- Selling or Leasing your property might not happen as soon as it’s listed for sale or for rent.