2015 Market Predictions? Where? and Why?

10 Replies

I am curious to hear everyone's predictions on where the hot spots are for real estate investing in 2015. I'm currently investing in Indianapolis and would like to diversify my portfolio into another market.

What market will give me both positive cash flow and appreciation? And why?

Thanks everyone!

Hi @Account Closed  

Most of the experts predict a real slowing in appreciation in 2015 which has already been happening for the last year. Clear Capital is projecting the Midwest to have the highest appreciation rate in 2015 which is unusual. Indianapolis is a great market but I like Kansas City a lot too. KC is very similar to Indy and is currently seeing over 8% appreciation. Cerner Corp is doing a $4.4B development that is expected to create 16,000 new jobs. This will be the largest development project in the history of the state.

I had Alex Villacorta from Clear Capital on my radio show in October and he talked about his forecasts for this year. You can find it on the podcast page of my website. Just look for the 10-11-14 show, It should give you some good info.

Hi Joey,

You want to research where the population have moved from 2000 to 2010 and where I they are continuing to move into 2020. The northwest and the Midwest is slowing with a growth of 3.2 and 3.9% respectively in the last decade. West has grown 13.8% while the south has grown the most at 14.3%. From a head count standpoint, the population in the south has grown almost double that of the west.

Some of the fastest growing states on percentage basis include: Utah, Texas, Nevada, North Carolina, Idaho, Georiga, Florida, and Arizona. You also want to research where the big companies (Fortune 500 headquarters) are moving to for lower cost of living, better weather, tax reduction, business friendly environment, and better life style. More and more families in the Midwest and the east coast will be looking for this as these locations  are the main gateways moving South. 

To answer your question about:

"What market will give me both positive cash flow and appreciation? And why?"

The school clusters, demographics data, and HI ratio is something I look at very closely. The HI ratio is the median home price / median household income. The lower that number is in an "A" class neighborhoods, the higher the chance of appreciation in that zip code. You also want to watch carefully what type of demographics are moving into the zip code. The HI ratio is the way I try to gauge the valuation of a zip code like I would when valuing company stocks. I see the population, demographics trends to continue into 2020.

@Mike D'Arrigo ,

I agree that in 2015, the appreciation will not be like what we have seen in 2012 - 2014 and different markets will preform differently. However, I respectfully disagree with Mr. Villacorta's forecast from Clear Capital that the Midwest is projecting to have the highest appreciation rate in 2015 compared to the other parts of the region in the U.S..

Can you please provide your reasoning why?



Originally posted by @Mike D'Arrigo:

Hi @Joey Noel 

Most of the experts predict a real slowing in appreciation in 2015 which has already been happening for the last year. Clear Capital is projecting the Midwest to have the highest appreciation rate in 2015 which is unusual. Indianapolis is a great market but I like Kansas City a lot too. KC is very similar to Indy and is currently seeing over 8% appreciation. Cerner Corp is doing a $4.4B development that is expected to create 16,000 new jobs. This will be the largest development project in the history of the state.

I had Alex Villacorta from Clear Capital on my radio show in October and he talked about his forecasts for this year. You can find it on the podcast page of my website. Just look for the 10-11-14 show, It should give you some good info.

Originally posted by @James Park:

@Mike D'Arrigo,

I agree that in 2015, the appreciation will not be like what we have seen in 2012 - 2014 and different markets will preform differently. However, I respectfully disagree with Mr. Villacorta's forecast from Clear Capital that the Midwest is projecting to have the highest appreciation rate in 2015 compared to the other parts of the region in the U.S..

Can you please provide your reasoning why?


James, this isn't my prediction. It's that of Clear Capitals and others, however, I agree with it. They looked at it by region and are projecting the Midwest region to have the highest appreciation rate in the country. Will there be markets within regions that will have higher growth than the Midwest? Most likely but overall, the Midwest will probably outpace the nation. Look what's going in Indianapolis and Kansas City right now. Their appreciation rates are actually accelerating again after some slow down. Median prices in Indianapolis were up 6.2% in December and Kansas City was 11.6%. Nationally, price gains are expected to only be in the 3 to 3.5% range.

Originally posted by @James Park:

The lower that number is in an "A" class neighborhoods, the higher the chance of appreciation in that zip code.

James, if this was the case, then the Midwest would definitely be the highest appreciating region. The Midwest, especially Indianapolis, typically has the lowest HI ratios in the country. Personally, I don't think HI is a good predictor of appreciation because in spite of low HI, the Midwest typically doesn't have high appreciation. The Midwest is characterized as having affordable but stable prices. 

The hottest housing market is Brooklyn, NYC.  Many of the young and recent college graduate millennials working in Manhattan are getting priced out of living in the city so they've been moving to Brooklyn and this trend will continue in 2015.

Charlotte, Raleigh-Durham, Portland, Denver and Atlanta are also in top 10 markets. 

It is really not rocket science to predict which markets will do well...Follow the education system and STEM jobs growth and you have a good indicator of solid housing markets. 

@Mike D'Arrigo,

"   They looked at it by region and are projecting the Midwest region to have the highest appreciation rate in the country."

I understand that the Midwest is a big place, but I am still not understanding why? Not trying to argumentative, but just trying to understand why you think the Midwest region will have the highest appreciation rate in the country in 2015.

The HI ratio maybe low in the Midwest, but it needs to be also backed up by the population growth, demographics changes, and job growth. The HI ratio being low in itself is not enough. The population growth trend in the Midwest is very slow compared to the south and the west and I believe this trend will continue into 2020.

I left Chicago for Atlanta in 2011 as I had no interest in building my real estate career or investment portfolio in Chicago. I lived in a 6-7-6 school zone in a solid C+ area in the northwest suburbs of Chicago and paid double the property taxes in my Chicago property compare to a 10-10-10 school zone in a solid A area in the northern suburbs of Atlanta. The purchase price of both homes were similar. I can personally testify that this move was one of the best lifestyle decisions I've ever made for myself and my family.

Let's start from a high level which is the population growth by state. The chart below shows the largest populated states and its population changes from 2010 - 2014.. 

You can see that population has grown more than million in three states from 2010 - 2014: California, Texas, and Florida. The fourth largest head count growth goes to New York and the fifth largest head count growth goes to Georgia. Among the largest populated states, IL, OH, and MI are slowing.

1) Green -  A Exceptional Inflow migration. 
2) Yellow - B Strong Growth.
3) Orange - C Growing but Slowing.
4) Red - D - Slowing and population may decrease over time.

You can see that the fastest growing counties in the U.S are located in Georgia, Texas, Virginia, Florida. Forsyth County, GA is my home and where I invest : which is highlighted below. Forsyth County has strong growth and a low HI ratio. When I was researching demographics and population trends while living in Chicago 7-8 years ago, I knew that I needed to leave Chicago (developed city) for Atlanta (emerging city).

@James Park, thanks for sharing this interesting info. Would you mind sharing where you are pulling this data from? census.gov I assume? Just curious so I can save a little time and go dig around and look at some things in more detail. Thanks.

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