Mr Al Young Dot Com

Yes, there are still “hot” real estate markets to invest in as a recent Wall Street article has pointed out.  However, “hot” is a relative term.  Certainly, there are markets who are doing well relative to other markets who are struggling, but “hot” is not the 30-40% annual appreciation in some real estate markets just a few years ago.  Still, many markets are exceeding the 5.9% national appreciation rate, and some even in double digit returns.

The senior economist of the National Association of Realtors Lawrence Yun says “All real estate is local despite the headlines”.  Now you have to take anything the National Association of Realtors or their or their employees says with a grain of salt.  After all, they are in the business of selling houses, and they would like to paint an optimistic picture of the housing market.  Often times, too optimistic .  Only recently, they have even acknowledged a softening of the real estate market nationwide.  Most investors such as myself saw a weakening market 18 months ago.  However, on this point about all real estate being local, I agree.  It is the reason I invest mainly out of state  in search of the best local market.

Each market has its own factors which drive the growth of the real estate market.   The article points out several hot markets today such as Portland, Boise, Austin, Houston, and Raleigh NC.  Each of these markets have a strong economic base and several factors in their favor fueling the real estate market’s growth.

• Austin: College and Technology
• Houston: Energy
• Raleigh: Banking and technology
• Seattle: Aerospace

Common to all these cities is an above average educated workforce, a strong economic core, and still aaffordable housing which is attracting buyers from depreciating markets.  They also lagged behind other markets during the boom a few years ago, and is now catching up.

The point that all real estate is local is a good one, but I would suggest that even among local markets there are many sub-markets which have different factors driving its growth.  The investor who can identify these markets and take advantage of them will be successful even if the the nationwide trend of real estate prices is declining.