What makes a market a high risk market?

[Rapy Narruhn]

I saw a photo that someone posted up from a recent seminar identifying that Portland and Seattle are one of the few high risk markets in the nation. What are the factors that play in indicating that a certain market is a “high risk” market?

[John Barrett]

@Rapy Narruhn that's a really hard question given the little detail you have provided.  Generally speaking though coastal markets (specifically the west coast) are high cost areas that have seen large run ups in housing prices over the last decade.  These markets have either matched or exceeded their previous tops prior to the last recession.  Given the high purchase prices for properties & low cap rates many feel this indicates that the market is very risky.

Please note that many other investors take a completely opposite view of the high appreciation and cap rates and look at these markets as lower risk. Low cap rates indicating a more stable lower risk asset.

Ultimately the only opinion that matters is yours.  Your job is to look at all the information being provided from the various sources and distill it into a your view of the market and use that as your guide for investment decisions.

Best of luck,

John