Growth Opportunities in Undervalued Markets?

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While there are questions as to whether or not the housing market in certain metros has grown with unstable speed, there are particular areas that remain promising areas for property investment. Considering that the housing market has been on the rebound for still less than a year, the opportunity for investment gains through intelligent property acquisition remains open. Granting that certain areas might be too expensive, or otherwise too uneasy in their outlook (California springs to mind), which areas might be prime considerations for investment allocation?

According to a new report from Forbes, many of these promising markets remain in more populous metro regions. Comprehensively speaking, the regions noted in the Forbes article tend to combine lower median home prices with the likelihood of persistent consumer demand. Many of these areas also experienced particularly sharp plummets during the 2008 crash and were much more gradual to recover than California’s sudden-rebound markets.

Among the regions that the Forbes piece noted as promising growth metros was Las Vegas, whose plummet in real estate values was so drastic that its rebound was subsequently prolonged past many of America’s other major property markets. As a positive (but somewhat unsurprising) consequence, Las Vegas’ return to health has remained even and steady, and its growth outlook for the immediate future remains promising. To return to the counterexample that’s emerging in California, there’s a respectable chance that the Golden State’s rise in home values is too meteoric to be sustainable. Home prices could in fact rise so drastically that a bulwark of potential buyers could be forced to waylay purchases, resulting a potentially dangerous jostling of the supply-demand equation.

What About Other Metros?

In addition to Las Vegas, the Forbes report was keen to point out both Chicago and Atlanta as two promising big-city housing markets. The former could emerge as a particularly appealing metro for long-term property investments, with the area’s median home price having grown at gradual but stable levels (without having risen too high) throughout the past year. In addition, Chicago has a persistently low rate of unemployment and a strong local economy, a factor that helped the Windy City avoid some of the recession’s worst economic pitfalls. The metropolitan area surrounding Chicago has also developed rapidly throughout the last decade, as certain regions outside the city have become promising job hubs as well- the Illinois Technology Corridor being the quickest to spring to mind.

In terms of Atlanta, the city’s home values have maintained similar trends to those found in Chicago. Its local home prices remain lower than those throughout Chicago, which value gains have been somewhat sharper. Atlanta’s local economy also remains exceptionally healthy, and the area’s diversity of industry, high presence of major corporations, and growing digital and technology sector all forecast growing appeal for young professionals- one of the major (if not the major) health signs in a local market. As a general rule, it seems that job growth and the continued ability to draw financially secure first-time buyers, may be the strongest barometer of a local housing market’s stability and ensuing appeal as a source of property investment.

Ultimately, for those looking to find secure and more long-term real estate investments, metros with slower value growth and positive employment outlook are likely your best bets. Beyond the regions that currently stand out, certain other housing markets will inevitably emerge with similar demographic and growth trends. Metros with more organic growth motivators – as opposed to those with more pronounced hedge fund manipulation – will likely remain the safest considerations.

Photo: sunsurfr

About Author

Harrison Stowe is a writer for NVR Inc., a prime developer of Baltimore new homes. Addressing a range of topics including investing, mortgages, and real estate, Stowe combines finance knowledge with additional experience working with Ryan Homes in the current real estate market.

4 Comments

  1. Hi Harrison, nice blog shared above. Ya, we can see growth in the real estate market mostly in the metro regions. The real estate properties prices are also high in these regions as more no. of people are opting for properties in these regions.

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