Generally speaking, real estate experts base their forecasts and predictions of the top markets on job growth, migration and an evaluation of home prices, along with closely watched ‘outside’ metrics such as interest rates. Metropolitan areas with a strong economy or a specific economic sector expected to be vastly improving in the coming year, are excellent indicators to see an improving housing market. Here is a brief description of the sentiment behind these evaluations and four markets predicted to fare well accordingly.
The basic sentiment is as such: local residents move from rental properties to home ownership when there is a thriving job market. Also, more residents are likely to move into the area to take advantage of the new or improved employment opportunities. Thus, the combination of these two actions, cause a reaction from home prices to rise, demand vs. supply 101.
Other indicators of a rebounding market can be (but are not limited to) areas with little to no price declines in recent years or a region with fewer foreclosures. The scene has now been set, here are four markets worth watching for a rebound in 2011:
- Austin, Texas – Trulia labels Austin as a thriving real estate market in 2011, based upon its bustling high-tech job growth in the city. According to the website, from 2000-2010, job growth rose by 14 percent, and net migration was 51 percent.
- Madison, Wisconsin – Madison made the “Top Ten Real Estate Markets For 2011” list on both Trulia and Zillow. According to Zillow’s website, home prices appreciated in Madison rose by nearly 1 percent from the third quarter to the fourth quarter of 2010. Trulia says that Madison has flourishing job market in technology and life sciences that predicts will continue to grow in 2011.
- Pittsburgh, Pennsylvania – According to one of the respected real estate research providers Clear Capital, only 15 of the 50 largest real estate markets are expected to have a rebound in home prices in 2011. Pittsburgh is one of those 15, with a predicted rise of .8 percent. As we mentioned last month, Pittsburgh made a list of markets that Zillow expects to thrive in 2011. Home prices in Pittsburgh rose 1.2 percent when comparing December 2009 to December 2010, and rose 1.1 percent from third to fourth quarter in 2010.
- San Antonio, Texas – Trulia reports that job growth in the city is in large part to military and manufacturing sectors set it up well for a prosperous 2011. From 2000-2010, job growth rose 11.4 percent and net migration during the same time period was 102 percent in San Antonio. Highlighting the reasons for San Antonio’s bounce back, is that according to the National Association of Home Builders (NAHB), 69 percent of families can afford to purchase a home in San Antonio.
The job market is the single most influencing variable where rebounding real estate markets are concerned. So, if you find a city with a good job market situation, real estate investments there should, for the most part, be solid. If you think about it, this is only common sense.