Top Housing Markets: Where You Should Buy a Home?

There’s no good news in the housing market. Home prices across the country continue to fall.  The tax incentives are over and the national economy remains lackluster.

But not all housing markets are equal.  There are a few geographic pockets of strength. Only 4 regions – Los Angeles, San Diego, San Francisco & Washington DC – showed year-over-year gains through October 2010.

Top 5 Regions 1-Yr % ChangeBottom 5 Regions1-Yr % Change
Washington DC+3.7%Chicago-6.5%
Los Angeles+3.3%Atlanta-6.2%
San Diego+3.0%Detroit-5.5%
San Francisco+2.2%Portland, OR-5.2%

Source:  Standard & Poor’s & Fiserv – Data through October 2010

The biggest problem for housing is foreclosures.  Lenders will foreclose on more homes in 2011 than any other year since the housing crisis began in 2006.  Foreclosures are expected to be worst in 6 states that have already suffered the worst and which accounted for over 50% of the country’s foreclosures in 2010: Arizona, Florida and California, Nevada, Michigan and Illinois.

On the positive side, most measures of housing affordability have improved as prices have come down to 30-year lows.  If unemployment ever does improve and we can get decent GDP growth, maybe the prospects for housing will start to improve.  But I won’t be holding my breath.

So, Where Would I Buy?

I certainly won’t be rushing to Detroit (it’s a dump), Chicago (bad winters, punitive new taxes), Las Vegas (all desert, too much decadent temptation), Portland (homeless haven, rainy) or Phoenix (illegal immigration, scorching summers) to buy my dream home.  And I get why a bloated Federal bureaucracy, over-paid Congressional representatives and their entourages will continue to prop up prices in Washington, D.C.  But I’m not a politician.

That leaves 3 big coastal cities in California – the most debt-ridden, tax-happy, dysfunctional economy of them all!  This presents a real dilemma for discerning investors.

Maybe I need to expand my horizons further afar:  Italy’s Amalfi Coast . . . Belize’s Ambergris Caye . . . Thailand’s Ko Samui . . . Vietnam’s Nha Trang Coast . . . Turkey’s Aegean Coast . . . Australia’s Gold Coast . . . Bay of Islands, New Zealand . . . a Caribbean yacht . . . a Paris luxury apartment or London pied a terre . . . Cape Town, So. Africa.  The mind boggles!

. . . Where would you buy a house?

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