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8 cities where home prices will rise

Written By Trading Forex News on Sunday, February 28, 2010 | 10:51 PM

8 cities where home prices will rise
Tacoma, Wash.
Median home price: $239,000
Value lost since 2006: 22%
Forecast gain through 2011*: 4%

Tacoma's downtown has gone through a revival over the past few decades, with new museums, a light rail system and a branch of the University of Washington.

The metro area lies within striking distance of some of the most spectacular scenery in the Pacific Northwest, including Puget Sound, Mt Ranier and Olympia National Park.

Still, the local housing market lost more value -- 22% -- than did nearby Seattle in the past three years. It did, however, outperformed the nation as a whole, where prices fell 27.1% since September 2006.

Fiserv and Moody's Economy.com project the city to keep outperforming the nation, with an annualized gain of 4% through September 2011.

Helping to boost prices will be careful growth policies that the state has urged its cities to pursue. Development is limited to mostly a few core areas and density is encouraged while much of the area's exurbs are maintained as farmland and natural reserves.

Kennewick, Wash.

Median home price: $172,000
Value lost since 2006: Gained 5.7%
Forecast gain through 2011*: 3.9%

This small metro area -- population of about 250,000 -- may share the same state with Seattle and Tacoma, but it's an entirely different world on the eastern side of the Cascades.

Kennewick is in the rain shadow of the mountains and geographically has more in common with dry, southwestern Idaho than the rainy Washington coast. It lies very near the Hanford nuclear site, where plutonium was once produced for the Manhattan Project.

Employment has remained strong here with many high-paying jobs for scientists and support personnel being created at the Pacific Northwest National Laboratory in Richland. The unemployment rate in December was, at 8.1%, well below the national average.

The median income for the metro area is more than $61,000 while home prices, at a median of $172,000, and other expenses remain low. The cost of living is about 27% lower than Seattle. That should keep housing markets on their steady uphill climb.

Napa, Calif.

Median home price: $360,000
Value lost since 2006: 45.7%
Forecast gain through 2011*: 3.6%

Napa, the Mecca for American wine lovers, has gone through a housing bust like few other metro areas.

Values here dropped a whopping 45.7% in the last three years (ended September 2009). Napa was a big participant in California's housing bubble, and when the bubble burst, prices had a long way to fall.

The losses will continue well into 2010, according to Fiserv and Moody's Economy.com. Prices will fall an additional 3.6% through Sept. 30, 2010, before turning around in 2011.

After that, however, it will be a return to double-digit price increases with 11.2% gain over the following 12 months, as the inventory overhang is worked through and the job picture starts to improve.

It's not just the great grapes; Napa is both beautiful and boasts a vibrant life style with wonderful restaurants, a lively arts scene and great recreation. When Bay area residents and other Californians regain their financial equilibrium, they look to this area for second home and retirement purchases.

Cheyenne, Wyo.

Median home price: $172,000
Value lost since 2006: Gained 2.9%
Forecast gain through 2011*: 3.5%

All's well in cowboy country: Cheyenne was one of the few metro areas that recorded home price gains in the past three years.

The city has attracted some new employers in recent years, and one of the latest is a regional distribution center for Wal-Mart. The area's economy is also tied to the city's status as state capital, which has kept area unemployment below the national rate.

Home prices have been stagnant lately and are expected to remain flat through most of 2010. But in 2011, prices are should take off, climbing more than 7% by September 2011, according to Fiserv and Moody's Economy.com.

Population growth will help drive home prices up. The number of city residents jumped by double digits during the 2000s and will probably do so again in the coming decade. That will provide a steady demand for housing..

Seattle

Median home price: $365,000
Value lost since 2006: 18.1%
Forecast gain through 2011*: 3.2%

Seattle has become a world-class city with a diverse, vibrant economy. As a home to manufacturers, such as Boeing, and software providers, such as Microsoft, the job market has held up better than average, with December's unemployment rate sitting at 9.1%.

Home prices had a softer landing as well, dropping just 18.1% over the past three years, about half the national average, according to Fiserv, a division of Moody's Economy.com.

In the next six months prices are expected to grow 1%. After that, the market should gain momentum. By September 2011, the city could see a price gain of 5.5%.

And while that may not sound all that robust for those jaded by the annual double-digit returns recorded during the boom, that performance will be one of the best of any large city during that period.

Fairbanks, Alaska

Median home price: $211,000
Value lost since 2006: 3.8%
Forecast gain through 2011*: 3.1%

Fairbanks is a boom/bust city at the end of the road in America's Last Frontier. The economy often depends on government -- especially military contracts -- and the volatile oil industry.

The next big project could be a proposed natural gas line that would stretch form the North Slope to Prudhoe Bay and would cost billions to construct.

The area's unemployment rate has remained a bit lower than the national average, 8.3% in December. And wages tend to be high -- as are living expenses.

The city has a rapidly expanding population, putting housing in short supply and contributing to projections of accelerating home price increases over the next couple of years.

Anchorage

Median home price: $231,000
Value lost since 2006: Gained 1.4%
Forecast gain through 2011*: 3.1%

Alaska's biggest city faces some of the same issues as Fairbanks. The metro area's population has grown in double digits, sometimes triple digits, for decades and, hemmed in by mountains and sea, the city has limited space to grow.

The city managed, just barely, to stay mostly on the positive side of the home price trend for the past three years, according to Fiserv and Moody's Economy.com They turned down a bit in the past year but are expected to ramp up again in the next 18 months.

The economy should sustain the increases as job losses have not affected Anchorage as much as the average U.S. city. The unemployment rate was just 7.7% in December.

Charleston, S.C.

Median home price: $192,000
Value lost since 2006: 14.1%
Forecast gain through 2011*: 2.9%

Lovely, historic Charleston has a lot going for it but, for decades, growth wasn't one of them.

The core city lost population for decades until things started turning around in the 1960s. Since then the number of residents has increased to 100,000 from a low of about 60,000.

Economically, the city has ridden a tourism surge; it has added large numbers of hotels, bed-and-breakfast inns and restaurants over the past 40 years. And there has also been a jump in tech jobs.

Job losses have been a problem lately, however, with an unemployment rate of 10.2% in December, higher than the national average.

After recording modest home price declines over the past three years, Charleston is poised for a comeback, according to Fiserv and Moody's Economy.com. Prices will climb an average of 2.9% between now and September 2011.


By Les Christie cnn.com

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