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Top 5 U.S. Housing Markets of 2012


Writing on, Daniel Torelli names his Top 5 Housing Markets From 2012.

The East Coast is conspicuously absent…

5. Austin, Texas

Mr. Torelli says: “rent prices are off the charts in Austin – meaning that more people are looking at buying as a more cost-effective alternative. Right now, Austin homes are spending half as long on the market as they were in 2011.”

4. Phoenix, Arizona

“Phoenix has surprised real estate experts all year long – first with its median sale price increases, and now with the surge of investors that have descended on the city. All-cash transactions have actually become common here.”

3. San Antonio, Texas
“It takes a special housing market to see a surge heading into the holiday season, but that’s exactly what happened in San Antonio back in October! And, since the Alamo City has a legitimate chance at breaking December sales records, it earns the #3 spot on our list.”

2. Seattle, Washington

“In every month, Seattle’s median selling price was higher than the corresponding month in 2011. In November, the median selling price was $420,000 – a major improvement over $379,000 in November 2011! Thanks to eager buyers, the average Seattle home is spending a mere 30 days on the market.”

1. Houston, Texas

“When you can sit around and legitimately argue that a city is “fiscal cliff-proof”, that’s a big deal! Big enough that Houston gets our nod for the city ending 2012 on the very best note. Heck, Houston STARTED 2012 on a good note!”

It’s sometimes unclear how news of the single-family market affects the commercial real estate industry. To be sure, home values and demand are one of those major economic factors (like inflation, employment, and GDP) that will inevitably influence CRE activity, for better or worse. The question is, How?, and that depends on which market/sub-market and asset class we’re talking about, not to mention outside factors like the lending environment and job growth. It’s complicated.

Still, we can come to some general conclusions, especially about these markets’ economic drivers. The dominance of Texas cities on this list shows the tremendous benefits of two major sectors in these cities (one established, one growing): the energy and technology sectors. The latter industry, of course, accounts for Seattle’s strong single-family prices and quick closing times, too.

Phoenix is the real anomaly here, as one of the markets (like Las Vegas, like much of Florida and California) that suffered the worst effects of the housing bubble. Phoenix, a place of enormous growth prior to the recession, is yet to see the industry growth of other markets on this list, but its slow-but-steady recovery has created an opportunity that sets it apart from the others: its multitude of distressed homes to be rented out and “flipped” in the future.

Though the strategy of buying and operating single-family rentals is as yet unproven, it’s been tremendously popular among institutional investors, including private equity leader Blackstone Group (NYSE: BX) and Two Harbors, whose Silver Bay Realty Trust focuses on this asset class (and recently completed a $245 million IPO). While I still prefer the stable, strong growth in Texas cities, Seattle, and San Francisco, the speculative home-buying in Phoenix is nonetheless providing a much-needed boost for the city.

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