14 Markets With Nowhere To Go But Up

I thought you would find this interesting.

I often find myself talking to people about investing in real estate, only to learn that an investor will stay away from a particular area, just because it hasn’t bottomed out yet. They say things like “I’m just not sure it won’t still go down a bit further.”

I’m not sure if their perception stems from greed, but I am nonetheless intrigued by their way of thinking (or lackthereof). What I mean is, if you can buy a particular property in a particular area at 30 cents on the dollar (that’s a 70% discount), and that particular market might still go down to 25 cents on the dollar, are we just splitting hairs? If I offered you that new Porsche or Mercedes-Benz you would like to buy at 70% off the retail price, would you say reply by saying “I’m just not sure, what if I can 75% off from you if I wait a bit longer?” I don’t think so. If you can buy a $100,000 Porsche for $30,000, and you know it will (someday) be worth $100,000 again (or more), you would grab it instantly. Heck, even if it only went back up to $72,000 in your lifetime, you still made a GREAT deal!

For those who are only looking for markets that have bottomed out, I normally would stay away from predictions because NOBODY has a crystal ball. Furthermore, I caution you that the following list does NOT necessarily represent my personal hunches or predictions either.

But there could be some credibility to the information below.
Why do I feel this information is credible?

This is from a leading mortgage INSURANCE company - PMI Mortgage Insurance Co.
Insurance companies are extremely good at evaluating risk.

Rarely do insurance companies lose money by miscalculating risk. Therefore, this information is quite interesting to me and I thought perhaps for you as well.

PMI Mortgage Insurance Co., has ranked the nations 50 largest metropolitan statistical areas according to the risk that home prices will decline further during the next two years.

The highest risk is in areas where home price growth was the greatest during the housing boom. The lowest risk of prices declining further is in areas where affordability has increased.

PMI identifies these areas as having a less than 1 percent risk of home prices declining further:

• Milwaukee-Waukesha-West Allis, Wis.
• Cleveland-Elyria-Mentor, Ohio
• Austin-Round Rock, Texas
• Denver-Aurora, Colo.
• Charlotte-Gastonia-Concord, N.C.-S.C.
• Kansas City,Mo.-Kan.
• Columbus, Ohio
• Cincinnati-Middletown, Ohio-Ky.-Ind.>
• Indianapolis-Carmel, Ind.
• San Antonio, Texas
• Houston-Sugar Land-Baytown, Texas
• Pittsburgh, Pa.
• Dallas-Plano-Irving, Texas
• Fort Worth-Arlington, Texas

If you are interested, you can read the whole list of metro areas ranked on the risk index.

Source: PMI Mortgage Insurance Co. (07/01/2008)

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