The Upside of the Downturn; America’s Best Hidden Housing Markets

by 09 Oct 2012

Despite the delicacy of it all, it’s hard to ignore the sound of a bubble bursting. With the remaining dam holding back a recession thoroughly broken in 2008, the myriad economic factors waiting to sink the housing market burst through and turned the economy into a much bleaker place for real estate investors. This sort of rising tide, it seems, puts us all underwater equally.

However, despite the at-best middling health of the housing market and lackluster investor enthusiasm, some housing markets have either sustained reliability or made a quiet return. For the all-weather investor, here are some regions where property investment might not be an exercise in irrational exuberance:

Tennessee – Nashville metro region: According to a recent report compiled by local outlet News Channel 5, the Nashville metro region is showing signs it may emerge as a promising place for realty investments. While not a perfect drop-bounce in terms of investment opportunities, a combination of a recession-induced sink in housing prices combined with increasing interest in home purchases spells a possible opportunity for those who care to make inroads into new investments.       

Quoting sales statistics as well as remarks from David Klein, CEO of the Greater Nashville Association of Realtors, condominium sales have rebounded with notable strength since the housing bubble burst. While this still indicates a type of hesitancy and frugality on the part of the area’s homebuyers, an uptick in the purchase of conservatively priced units points to a more even-keeled consistency in property acquisitions.         

The gauged value of certain property holdings in Nashville has dropped to a clear third of their price at during peak evaluation. By contrast, monthly home closings in August were up 27.3% from those recorded during August of last year. This is also the highest number of home closings recorded since 2007. While there’s much to be said about the consequence of fools rushing in, prudent foresight and shrewd investments could yield promising results.

Oregon and Southern Washington: According to a new post on the Portland Business Journal’s blog, certain areas of Oregon and Washington are showing promising areas of investment for industrial real estate. The written analysis, provided by brokerage firm CBRE Inc.’s vice president Stuart Skaug, points to a spread of factors supportive of cautious optimism. Tenants in the region are committing to increasingly long leases, land purchasers are demonstrating a willingness to purchase vacant or undeveloped land, and low interest rates mixed with a high volume of local institutional capital all portend a slow but steady recovery in the area’s housing market. While a local publication’s endorsement of its own region’s economic health and investment promise can understandably invoke skepticism, the greater Portland region could possibly emerge as an otherwise overlooked property region with workably promising returns.

Washington, D.C. metro region: While centering on one of America’s most densely populous and affluent regions, and a far cry from the comparative quiet of Portland, Washington, D.C.’s standing demographic factors point to promising trends for the shrewd property investor. Our nation’s capital has long maintained a well-earned reputation for tenant transience, and according to a new release from the Washington Post, a wave of retirement among the region’s wealthier boomers portends migration outward from the city heart towards the more serene local suburbs. Citing Waverly Hills in particular, the report highlights that so-called ‘urban villages’ have long been popular with middle-class government employees, and are becoming even more popular with the current demographic shift. Shrewd investors could well make sound predictions and stay at the crest of a possible wave of housing migration.

Paterson, New Jersey: In line with cautious optimism around a slow housing recovery, and similarly in step with the uptick in seasonal buys experienced this summer in Tennessee, Paterson, New Jersey is seeing new life pour into its housing market. According to reporting from Northjersey.com, the current time a house stays on the open market has fallen substantially since 2008. Another promising sign is the fact that, on average, current home sales return 93.8% of the asking price, a rise from the average return of 88% on the list price recorded in 2008. Similarly, townhomes in the area tend not to demand the exorbitant prices rightfully associated with many of the neighborhoods closer to metro NYC. As is the case with other newly emergent housing neighborhoods, prudent investment could lay the groundwork for healthy returns.

Whether speculation around a gently rebounding housing market proves to be either exaggerated or premature, a few preliminary signs point toward opportunities to unfreeze spare capital you may have held back after the bubble burst and to invest it carefully into what would have previously been unremarkable regions.

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