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The Top 5 U.S. Real Estate Markets of 2008

A Today’s Financial News Research Report:
“The criteria used in preparing our top five real estate markets include local economic stability, colleges, and foreclosure rates. Suburbs are scored on the basis of median household income, median home price, access to higher education, and percentage of householders who have completed some college.”

Baltimore (TFN): Real estate prices are falling across the country. Foreclosures are rising, and swaths of unsold properties are looking for buyers.

U.S. real estate may look like the last place you want to invest your money, but there are still pockets where residential and commercial properties retain the potential for healthy returns. In these five under-the-radar markets, property prices are set for a rebound. If you know where to look!

Long-term real estate growth sectors

The list of U.S. communities we’ve compiled is an effort to combine the best of both real estate worlds: residential and commercial. We looked for areas where the built-in diversification makes for ideal investment opportunities.

The criteria used in preparing our top five real estate markets include local economic stability, colleges, and foreclosure rates. Suburbs are scored on the basis of median household income, median home price, access to higher education, and percentage of householders who have completed some college.

Another area we considered in our research is medical resource infrastructure. All aspects of healthcare — including medical facilities — will have to rise to meet the needs of an an aging baby boomer population. Due to this, medical properties are projected to ourperform other commercial property markets over the next decade.

A clean, safe, and convenient place to own property

Locations whose residents have higher education levels tend to have lower incidents of violent crime and higher expectations from community services. Whether it’s the timeliness of trash collection or the availability of fine restaurants, they come together to create a higher standard of living.

As the automotive fuel situation becomes more critical, regions with a sound infrastructure of well-maintained roads, and/or efficient public transportation, become more viable in terms of sustaining investment traffic.

Top U.S. Real Estate Market #5: Youngstown, Ohio

In his book, House Lust, Daniel McGinn quotes an investor’s criteria for new neighhourhoods as those “with a new Home Depot… before the Starbucks moves in.” That seems a fair assessment of burgeoning communities, although with Starbucks’ self-professed belt-tightening, perhaps it would be better to expand that analysis to include any table-service restaurant chain.

Youngstown, Ohio, tops the list for bust towns on the uptick. Not only is the town embracing an open-space program that involves demolishing abandoned properties in favour of parks and community gardens, it is providing for the systematic consolidation of community resources. Sewer, electric, trash collection and maintenance projects are becoming more efficiently localized. The community is also home to a state college — and the rental potential that comes with it in the age of the Echo Boom.

Wheeling, West Virginia, Flint, Michigan, and Dayton, Ohio have all studied the Youngstown plan and are investigating their own destruction-rehabilitation programs.

These communities represent positive long-term investment potential. They encourage development — often offering incentives to those investment projects that represent local job growth opportunities. Housing rentals are not welcomed nearly as favourably as retail/restaurant venues.

Top U.S. Real Estate Market #4: Buffalo, New York

Buffalo may not have one of the Nation’s top ten hospitals, but they are home to the Women & Children’s of Buffalo, Cornell Medical Campus, and the Niagara Family Health Center. Teaching and children’s hospitals generally represent a good opportunity for condo and short-term rental investments as both draw individuals and families requiring long-term care.

Buffalo is also home to a variety of colleges, which also represent good household rental potential — not to mention the vibrancy (and revenue) that a student population brings to a community..

Buffalo suburbs Tonawanda, Kenmore, Depew, and Cheektowaga have all made Money magazine’s list of best places to live. The average incomes are stable, property taxes are relatively low, and at least 45% of the population has some post-high school education. Stable suburbs represent a good opportunity for commercial investment, providing lease opportunities for medical offices and satellite campuses.

Top U.S. Real Estate Market(s) #3: Pittsburgh, Pennsylvania & Cleveland, Ohio

Yes, it’s a tie — these geographically close post-boomtowns share good prospects. They too feature a number of colleges and some great medical centers.

Downtown Pittsburgh is experiencing a resurgence, driven in no small part by it’s successful sports franchises.

Home prices are around $150,000 in the Cleveland area and effective steps have been made to assist homeowners at risk of foreclosure.

Another key benefit for investing in this region of the U.S. is the large existing property base. Unlike other boom-bust-hopeful towns, the Pittsburgh/Cleveland region has not experienced a sluice of outgoing property owners, providing a more stable base of property tax income.

Key suburbs of Pittsburgh include Penn Hills, West Mifflin, and Brentwood. Key suburbs of Cleveland include Garfield Heights, Shaker Heights, and Maple Heights.

Top U.S. Real Estate Market #2: Philadelphia, Pennsylvania

Philadelphia offers just about everything a real estate investor looking to diversify (but still write one commission check a month) could ask for.

Recommended resources for reviewing further real estate investment options, including individual regions and neighborhoods:

www.realtytrac.com – A good resource for reviewing actual sales prices and foreclosed property listings.

www.economy.com – This does require a subscription; however, the localized data for median price movements and consumer habits by county and metro region make it a great tool for the serious investor.

www.neighbourhoodscout.com – This site reviews crime, income and education statistics for large and small metropolitan areas and surrounding suburbs.

www.reotrans.com – This is another subscription site that allows investors, brokers and creditors to list, view and trade foreclosed properties.

www.naiop.org – National Association of Industrial and Office Properties management website – a good source for commentary and data on developing and managing business-to-business leasing.

www.reis.com – If “you get what you pay for” is true in the world of internet data, then this site is at the top of the list (for both fees and quality). Whether you’re looking to invest in a particular building or looking for details on a metro region or localized neighbourhood, Reis will find it for you.

Dozens of colleges call the city home including Swarthmore and Haverford (which both consistently rank in the top ten national review of liberal arts colleges) and University of Pennsylvania (which consistently ranks as one of the nation’s top ten colleges period). Then there is Holy Family University, Temple and Thomas Jefferson.

The University of Pennsylvania Health System is far-reaching with a variety of satellite offices, campuses and clinics throughout the region.

Key suburbs around Philadelphia include Nether Providence, Willow Grove, Lansdale and Montgomeryville.

Recent reports from Lehigh Valley Chambers of Commerce and business organizations lament their own local recession;however, their property base remains stable and the SEPTA transit system provides an excellent infrastructure for moving individuals throughout the region.

Top U.S. Real Estate Market #1: Raleigh-Durham, North Carolina

The Raleigh-Durham region has everything Philadelphia has, plus one important extra — high-value foreclosures.

Duke University consistently ranks as one of the best in the country, and it’s medical programs draw patients, staff and students from all over the world. Patients may only come for a few weeks or months, but students in post-graduate programs come for a minimum of seven years, providing a great mix for condo and rental developments.

Private industry in the Research Triangle area has the same appeal. Some of the highest-educated, most demanding and discerning individuals (and their families) in the world congregate here, requiring not only homes but offices, restaurants and retail enclaves.

What pushes this region to the number one spot, however, is its unique mix of foreclosures. Though not the nation’s highest (compared to 3.8% in Seattle or 4.9% in Detroit), foreclosures here represent a larger number of available properties at any given moment than in most areas.

Relatively low unemployment, property taxes, and the high overall quality of life in the Raleigh-Durham area, coupled with the lack of localization to the foreclosed properties, reveals these foreclosures to not be indicative of widespread economic distress, but rather of individual failures — and a regional banking system unwilling to carry the losses any longer than necessary.

Sound homes are being regularly sold 20-30% below market value.

Further real estate revival candiates: Charlotte, North Carolina, Oklahoma City, Oklahoma & San Antonio, Texas

These cities also have an unusually high mix of relatively low unemployment, stabilizing property values (not dropping more than 5% from the previous year), established universities or colleges, and unusually high levels of foreclosures — offering opportunities for both short-term investment (buying foreclosed properties below market) and long-term investment (rental/lease properties).

Evaluating Opportunity

In evaluating real estate investments, ask many of the same questions asked when analyzing individual stocks:

* When looking at commercial properties, do you understand the industry: Have you ever rented a home or apartment or leased an office?

* Do you understand the region: Are you comfortable with the ebb and flow of a college town, the urgency of a medical community, or the strong emotions of a rebuilding community? And, if your plan is to be in it for the long term — or until something changes — will you recognize those changes before it’s too late?

Special Bonus Feature:

Michael MastersonMichael Masterson, the best-selling author of Ready, Fire, Aim, and co-founder of the proven real estate course, Main Street Millionaire, reveals the formula that every real estate investor should know to be successful in today’s market. Watch this TFN video Winning with real estate now!