4 Real Estate Markets Set To Rebound In 2011
Real estate experts sometimes wish they had psychic abilities, so they could always make accurate predictions. Without any extrasensory abilities, they must rely on market data to estimate where real estate markets will rebound in 2011. (Owning property isn't always easy, but there are plenty of perks. Find out how to buy in. See Investing In Real Estate.) IN PICTURES: 5 Simple Ways To Invest In Real Estate
While homeowners eagerly await price increases, those who are about to buy a home want to find that elusive moment when home prices have reached bottom and are about to climb. Homeowners and buyers may have a slightly different timeframe for when they want prices to rise, but virtually every consumer in the country is eager to see the housing market – and the economy in general – improve.
What Influences Real Estate Market Growth?
In general, experts base their predictions for the top markets on job growth, migration and an evaluation of home prices, in addition to other closely watched metrics such as interest rates. Metropolitan areas with a strong economy, or one with a particular sector that economist expect to improve in the coming year, are also likely to see an improving housing market. Not only will local residents move from rental properties to homeownership when the job market is thriving, but more residents are likely to move to the area to take advantage of employment opportunities. Both these actions drive demand for homes, and therefore should lead to higher home prices.
Real estate experts also review the past performance of a housing market to determine the future. Areas with little or no price declines in recent years are expected to remain stable and even experience rising home prices. Those with fewer foreclosures are also considered a safer place to invest in housing. Based on these factors, the following four markets are worth watching for a rebound.
- Austin, Texas
Trulia identifies Austin as a thriving real estate market for 2011 because of the high-tech job growth in the city. The website says that, from 2000 to 2010, Austin's job growth rose by 14%, and from 2000 to 2009, net migration was 51%.
Home prices in Austin are relatively affordable, with the National Association of Home Builders (NAHB) estimating that 74% of Austin families can afford to buy a home there. (The best real estate investors all share these traits and practices. Check out 10 Habits Of Highly Effective Real Estate Investors.)
- Madison, Wisconsin
Madison made the "top ten real estate markets for 2011" list on two sites: Trulia and Zillow. Zillow says that home prices appreciated in Madison rose by nearly 1% from the third quarter to the fourth quarter of 2010, and dropped by 2% when comparing December 2009 to December 2010, a relatively low level of depreciation compared to other real estate markets. The NAHB affordability index shows that 76% of Madison residents can afford to buy a home there.
According to Trulia, Madison has a thriving job market in technology and life science sectors that is expected to continue to expand in 2011.
- Pittsburgh, Pennsylvania
Clear Capital, a real estate research provider, says that while 35 out of the 50 largest real estate markets are expected to see home price declines in 2011, 15 of these markets are expected to rebound. Among those expected to rebound is Pittsburgh, where Clear Capital thinks home prices will rise by 0.8% in 2011.
Pittsburgh also made the list of markets that Zillow expects to thrive in 2011, since home prices already increased in 2010. Home prices in Pittsburgh rose by 1.1% from the third quarter to the fourth quarter of 2010, and rose by 1.2% when comparing December 2009 to December 2010. In addition, the foreclosure rate in Pittsburgh remained low at 0.471% in 2010.
- San Antonio, Texas
Trulia says that job growth in San Antonio, especially in the military and manufacturing sectors, are part of the reason for the growing population in the city. Job growth rose by 11.4% from 2000 to 2010 in San Antonio, and net migration from 2000 to 2009 was 102%. The affordability factor helps San Antonio's market, too, with NAHB estimating that 69% of families can afford to purchase a home there. (Don't let a slow real estate market drag you down - steer clear of these pitfalls. To learn more, read 5 Mistakes Real Estate Investors Should Avoid.)
While predictions of locations for a revitalized real estate market are helpful, buyers should also keep in mind the extreme localism of real estate. One neighborhood in Austin, for example, may rebound faster than another, depending on the age and quality of the homes in the area, proximity to transportation and other amenities and access to commuter options. However, one of the most important factors that will impact every neighborhood is employment. Whether you are a real estate investor or want to buy a home for yourself, follow the jobs to find rising home values.