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Top U.S. Housing Markets For Investment

forbes.com — Cash is flowing to cities from coast-to-coast as international buyers see plenty of opportunities

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  • lodwar, on 07/11/2008, -5/+2goddamn Ambulance chasers! :>
  • Texmurphy01, on 07/12/2008, -1/+5Foreigners buy up US cities.
  • PhilLesh69, on 07/12/2008, -4/+1What about DC?

    Real estate in the DC area is always appreciating. Even in the worst economic times, housing prices only go down just a little, but the overall return since 1975 averages out to about 7.9%.

    Not to mention, you include Middleburg, Great Falls and McLean, where there are 2, 5 and even 20 million dollar estates, and the market is humming right now.

    Hell, Prince Bandar of the House of Saud, Queen Noor of Jordan, Jim Kimsey an original AOL investor, and several dozen other extremely wealthy people have built estates along route 123, overlooking the Potomac River.
    • gaqua, on 07/12/2008, -0/+5Did you even read the list? DC is like #2.
      • PhilLesh69, on 07/12/2008, -1/+1I scanned the story, but I couldn't see DC.

        My bad.
    • Y0tsuya, on 07/12/2008, -0/+1The 7.9% it depends on where and how you take your data points. Doing regression analysis on data from the Census Bureau http://www.census.gov/hhes/www/housing/census/hist ...
      shows that median housing price in D.C. appreciates at 5.2% annually from 1940-2000. But if you adjust for inflation it only appreciates 1.2% above inflation. This tells us that housing tracks inflation, namely wage inflation. The extra 1.2% can be attributed to better mix of housing and maintenance + improvements done on the properties. Basically you don't make much money investing on D.C. real estate, or any real estate. Crunch the numbers and you'll see. Also you have to throw out the data after 2000 since we know it's all just a huge bubble.
      • PhilLesh69, on 07/12/2008, -0/+1I said from between 1975 and 2005.

        You're such a mathemetician, tell me what these numbers mean....

        My parents paid $360,000 for a house in 1987, that is assessed at $895,565 today. They bought that house by buying a house for $135,000 in 1980 and selling it in 1987 for $355,590.

        I bought a townhouse in November of 2002 for $416,500, and about 3 months ago, a comparable townhouse in my neighborhood sold for $745,000.

        7.9% appreciation is the average across the entire Northern Virginia real estate market. There are strategic locations, like Mclean or Vienna, or Great Falls, that do much better.

        My townhouse is less than 10 miles driving distance to the White House. That sells homes. I drive to my office at 15th and H St NW. in less than 20 minutes during rush hour.
      • Y0tsuya, on 07/12/2008, -0/+1You've never heard of the housing bubble I guess. You soon will. Hint: there was a bubble from 1985 to 1989. Your parents timed it right. Your townhouse is not worth $745. It will go back down to 2000 prices in a few short years. Then, you will see how wrong you are.
      • Y0tsuya, on 07/12/2008, -0/+1I bought my house in the SF Bay Area for $380K in 1989, A comparable house in the neighborhood sold for $800K a few weeks ago. But I know my house will go back down to ~400K in a few years, because that's the price local income levels can support. You need to do the math and set some expectations so you don't get disappointed later.
      • Y0tsuya, on 07/12/2008, -0/+1Oops, that was a typo. I bought my house in 1998, not 1989.
      • PhilLesh69, on 07/13/2008, -0/+1Y0tsuya,

        Prices have gone down, but they'll never go back below 2000 prices in the DC area.

        In fact, the market will most likely see a major bump come January 2009, as a new administration arrives and the old one leaves. Every administration turnover causes a bump in sales, which in turn causes some level of increase in home values.

        DC is a unique market. In the 1990-92 recession, housing prices stagnated, maybe decreased about .5 to 1% for a year or two. But then they bounced right back and kept on trucking.

        I know what the bubble is, and it is a regional thing that just happens to have occurred in a lot of regions (not even just in the US, but in England and Australia and other places.)

        Until the US Government stops collecting taxes, this area is going to be unique and generally always growing. Fairfax county just suffered an increase in the unemployment rate from 2.7% to 2.8% What is the national average? 5.5%?
      • Y0tsuya, on 07/14/2008, -0/+1The U.S. tax base is going to take a hit, though they could always inflate their ways out of it unlike the more unfortunate state governments. In that case you'd have to factor inflation into your calculations. 2009 is going to be the start of the long-awaited Alt-A reset wave, so I don't see things getting better until 2012. But if there's a sucker's rally in the stock market, I'm going to ride it and make some $$$, then I'll short it like I'm doing right now.

        You talk with people, and everybody feels their area is "unique". We'll see in a few years who's right. No sense arguing about it now.
  • cheezintern, on 07/12/2008, -1/+9Indymac is a good company to invest your money into, what can possibly go wrong?
    • PhilLesh69, on 07/12/2008, -1/+2That's funny. NBC Nightly News had Cramer on, Friday night, talking about how this should not be a big worry.

      Too bad they seemed to have forgotten Cramer telling people to hang onto their bear-stearns stock a few days before the Fed basically gave the company away.

      http://www.youtube.com/watch?v=gUkbdjetlY8 That was March 11. And Bear Stearns failed on March 17th? People who listened to Jim Cramer lost 90% of their position in Bear Stearns. A stock that was selling for $80 when Cramer said not to sell was listed at $2 after the Fed bailout.

      GOOD CALL!!!
      • Y0tsuya, on 07/12/2008, -0/+3After he proved himself to be tool time and again by making numerous bad calls (BSC was just a culmination of that) people still tune into his show. That's America for you. They must be dumber than he is.
      • vertigoacid, on 07/12/2008, -0/+1Is this garbage still being spread?
        I don't like Jim Cramer. I think he's an obnoxious loudmouth...
        But, the question was about liquidity of funds held in BSC, not about investment in it. Now, I think showing the graph weakens the point and was a total mistake, but it's also not necessarily his fault.

        Unless you've got more than $100K held with IndyMac, or indeed if you were investing (read: betting) money on them, this should not be a big worry. While it is a ***** huge bank failure, bank failures happen on a fairly regular basis, and life goes on.
  • eatsrcks, on 07/12/2008, -2/+0Russian Tycoons buying up property in resort towns too in today's Wall Street Journal: http://online.wsj.com/public/article/SB12157229311 ... [wsj]

    If you're interested in buying investment property in California, Krunching.com has it covered and lets you search for properties that cashflow (free registration): http://www.krunching.com
  • JustinTX, on 07/12/2008, -1/+2How about Houston and Austin?

    The most common remark I hear around here is: "What recession?!?"

    Existing property values continue to rise and new construction hasn't seemed to slow at all.
    • PhilLesh69, on 07/12/2008, -0/+2*****, I see construction cranes all over the DC area, especially in Tyson's Corner, VA.

      Don't forget that even during the Great Depression, they managed to build the Empire State Building.

      Labor is cheaper when people are losing their jobs. That is the time to build.

      Besides, DC is recession proof, all you folks are still paying taxes, and all those taxes flow right into the Nation's Capital, and is spent on all the defense contractors ringing the beltway.

      You guys are enjoying $140 a barrel oil, so now you know what it's like. ;)
    • richmomz, on 07/12/2008, -0/+2Texas is about the only region in the country that still has a healthy housing market and expanding economy. Good jobs are plentiful and the cost of living is cheap. Austin and Houston are good markets; Dallas/Ft. Worth is probably even better.
      • PhilLesh69, on 07/13/2008, -0/+1Texas, DC, NYC, are all doing quite well.

        Of course, all that is left in our economy, besides consumer spending which makes up 72% of our economy, is oil, banking and government. So I guess those three places are the only ones that can logically still maintain growth.
  • Y0tsuya, on 07/12/2008, -0/+3Foreigners don't know crap about U.S. real estate market. They have no sense what the real value is so they always pay more than the locals. Having spent very little time stateside they just buy what the Realtors (tm) tell them. But we all know how credible the Realtors (tm) are. Last time the Japanese bought out a bunch of U.S. real estate they end up getting burned.

    Also, the housing bubble is global. If they wait a few months they may have plenty of opportunities back home.
    • PhilLesh69, on 07/12/2008, -0/+2No, they didn't get burned.

      Wealthy people are not anything like Joe and Jane family trying to buy a $300,000 home in a new city. They're buying 5 million dollar properties, and it is very hard to whitewash a home in a bad part of town if you're paying 5 million or more.

      The Japanese who bought up all of our businesses and real estate in the 80's have all made off like bandits.

      Don't forget the amazing years for real estate between 1998 to 2005. I bought a townhouse for $400,000 in 2002 that is now worth $730,000. (down a little bit from the peak sales price of about $775,000). Lot's of Japanese owned property and were smart enough to sell at the peak.
    • yennyenn, on 07/12/2008, -0/+1In downtown LA, the Japanese bought Arco Plaza for $640M in 1986. Sold in 2003 for $270M.
      • PhilLesh69, on 07/13/2008, -0/+2Yup, and there are people who bought Goolge for $711 a share and sold it later for $320 a share.

        So Google is a bad investment?

        How about the guy who bough it for $100 in August 2004, and sold at the end of the day on Friday, when it closed at $533.80?
  • bonshepherd, on 07/12/2008, -0/+1I can't afford a property.
    • PhilLesh69, on 07/12/2008, -0/+2save up. By the time you can afford to buy, the market will have turned around.

      Real estate will always win. Just consider what it costs you to rent, versus what it costs you to buy into your own equity.

      Renting is giving some landlord money to own property. Paying a mortgage is giving some bank money to own your own home.

      Just do the math.
  • Y0tsuya, on 07/12/2008, -0/+3I don't understand these foreigners. They want to convert their safe currencies to a falling dollar to purchase real estate that will most likely fall in price? Three of the cities on the list (Boston, SF, NY) haven't even crashed yet but we all know they're set for a big fall. But what do I know? I guess buy high sell low is the new investing fad.
    • PhilLesh69, on 07/12/2008, -0/+1"haven't crashed yet"????

      Try, Will Not Crash! They are not going to crash.

      Seriously. DC lost a little bit in the last year and a half, I think about 4 or 5 percent. But considering that we enjoyed 25, 30 even 40 percent appreciation for the last 9 or 10 years, that isn't anything to worry about.

      Even NYC has lost a little bit of value in the last 18 months, maybe 1, 2 percent, in certain pockets of the market.

      Just because dynamic and robust cities aren't suffering like Cleveland or Miami or Las Vegas doesn't mean that it is only time for it to happen. It means those are cities that are immune to such price shocks.
      • Y0tsuya, on 07/12/2008, -0/+1Past performance does not indicate future values. Many real estate "investors" forgot and got burned. Real-estate prices doe not exist in a vacuum. Either people can afford it or they can't (Hint: they can't).
      • PhilLesh69, on 07/13/2008, -0/+1Hint: people in cities that have poor economies can't. People that live in the DC area are enjoying the same levels of growth and a robust economy they've always enjoyed.

        Sales of million dollar plus homes are booming in this area.

        Unemployment is at 2.8%.

        Homeland Security, the DOD, and other government agencies are pouring money into contracts all over the area. People are swimming in money around here.

        I know a guy that has a software contract with the Navy, he's 26, just bought a 2.5 million dollar house, had a 10 car garage built for his collection of sports cars and owns two planes and rents an entire hangar at the Manassas airfield. His contract is for something like 10 million over 2 years, and he employs 5 programmers. Actually, he has them on contract, so he doesn't even have to pay for their benefits. So he's got about a million in "payroll" expenses over the two years, and the rest is almost all profit.
  • nontoxyc, on 07/12/2008, -0/+110,000 suckers are born every day (in asia)
    • PhilLesh69, on 07/12/2008, -0/+2If you own property, that's a good thing.
  • blacktriangle, on 07/12/2008, -0/+2This has got to be written by the National Association of RealtWhores.
  • richmomz, on 07/12/2008, -0/+1I would say that's a list of housing markets that I absolutely would NOT want to invest in. Figures are based on the fact that those markets have seen the sharpest decline and so they must have the biggest rebound potential, (but don't consider that they may have much further to fall) - ask investors of IndyMac and BearStearns how that strategy worked out. Foreign investment demand is likely being driven not by a perception of cheap real estate prices, but by the free-fall of the dollar and the desire to convert that plummeting asset into something tangable.

    If you are interested in a good market, I have one word for you: Dallas.
  • aldrichnichol, on 07/12/2008, -1/+0Verenium has had a tough go in part because it is in the highly controversial biofuels segment, in part due to expectations that the company is going to burning more cash through 2008 and in larger part because it is still in early stages of its build-out of its manufacturing facilities and still has a ways to go in terms of proving out its cellulosic business.Get more at http://tiny.cc/i8UjX .
  • CHANNELOCK, on 07/12/2008, -0/+0Compton is the Monaco of California and Riverside is what Singapore is to Asia.
    That's where the most bang for your buck is.
  • jeflin, on 07/13/2008, -0/+0If an investment spot appears in the papers and is known to everybody, it is usually too late to invest.
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