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Where Will Housing Recover First? Would You Believe D.C.?

Posted by: Peter Coy on July 26, 2007

Intriguing predictions from John Burns of John Burns Real Estate Consulting:John Burns.jpg

With so much doom and gloom in the market, we are going to focus on the positive this month. Here are our favorite markets. We are certain that there are great opportunities in almost every market in the country.

Favorite First-to-Turn-Around Markets: Washington, D.C. Orange County (California), San Diego, and Northern and Central New Jersey will follow shortly thereafter. All are low-supply markets that have been down for a while and have good economies. All markets in the country will suffer from the coming surge in ARM resets though, so our bullishness on these markets is temperate.

Favorite Long-Term Markets: Phoenix, Las Vegas, Atlanta and Orlando are where the current growth is and where future growth will be. These markets are competitive, however, so you have to be one of the best builders in town to make some good money. These markets were speculator favorites too, so their corrections this year will be steep.

Favorite Market After Housing Bottoms: We like Boise, where there are no national builders and the growth will be huge. Employers and consumers are discovering that Boise is a great place to live, and local leaders are embracing growth. This seems like a good place to buy distressed land after speculators hand the title to the bank.

Favorite Fairly Priced, Highly Competitive Markets: Austin, Denver and Raleigh-Durham. Strong demand for finished lots in good locations will benefit these markets over the long-term. All three did not participate in the housing boom earlier this decade because they were hit hard by the technology job losses. Accordingly, they are not overpriced and now most technology businesses are doing well.

In the past, we have been amused by how some people interpret analysis such as this to mean that all investments in these markets will pay off. Do your homework please! The more research you do, the more confident you will be in your investment.

Reader Comments


July 26, 2007 6:39 PM

If Austin and RDU were hit hard by tech job losses in the past, I hope you realize they will be again.

July 26, 2007 7:02 PM

I completely agree with the prediction of John Burns. DC should be on top of the list. Fortunately we have not undergone the turmoil as much of the rest of the country. Needless to say, amid woes by the general public, DC is about to under a transformation throughout its politically involved population thereby increasing real estate activity and maintaining or increasing the prices of homes. Have no fear!


Bruce Hiatt

July 27, 2007 9:52 AM

John's point about Las Vegas being a favorite Long Term market is partially correct. The Las Vegas single family housing market, given its current near 50% vacancy rate, is a longer term market indeed. There are still 6,000 people relocating to Las Vegas a month and they are buying homes which in turn reduces the vacant inventory.

Las Vegas luxury condos (high rise) on the other hand are more of a faster turn around market than long term. I would place that part of Las Vegas real estate on the DC level of first to turnaround. Unlike Miami, with its tens of thousands of luxury high rise condos, Las Vegas has a very limited supply due to dramatic rises in land and construction costs plus a significant amount of cancelled high rise projects. Las Vegas as a few thousand luxury high rise condos in existence, not tens of thousands, and fewer of those for sale. Additionally, the Las Vegas luxury condo market is internationally driven whereas the single family housing market is more driven by California.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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