John Burns Consulting recently had an excellent blog post on booming, and busting
Here are the key points:
Why are some markets booming? He said its due to:
- Technology boom. There are great high tech jobs in the San Francisco and Seattle areas. Silicon Valley has hundreds of high tech companies. Seattle is home to Microsoft, Amazon, Nintendo. With the stock market on the rise, employees at these companies are doing better…and can afford to push prices up to get what they want.
- Pro-growth environment and oil boom. Texas is the star here. They are creaming all other states when it comes to recruiting outsiders to come to their state.
- 45+ buyer markets. The oldest Baby Boomer turns 68 this year, and the youngest turns 50. They are buying homes like there is no tomorrow because they feel much better with the Dow at nearly 17,000 and their portfolios almost fully recovered!
Here are the markets where the sledding is tougher:
- Markets that overshot things . Phoenix, Las Vegas, inland California came back too far and too fast thanks to tremendous investor activity coupled with Federal Reserve driven mortgage rate stimulus. Rates rose, investors pulled back, and now entry-level buyers suffer from sticker shock because the monthly payment has risen 30%+ in one year.
- Lower FHA limits in expensive markets. The same markets mentioned above, as well as San Diego, Charlotte, Los Angeles, Orange County, CA, Orlando, and Phoenix also got hit by lower FHA limits . FHA will no longer insure a high percentage of buyers in those markets.
- Oversupply. A few markets have also seen a surge in supply, such as Raleigh, and Nashville.
You may want to consider purchasing properties to rent out in a market like Phoenix. If you want to look outside the main metro area, outlying areas you may want to contact a property manager in an area like Vistancia or look for a home rental agency in Maricopa