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| Top 20 Housing Markets to Avoid |
| Written by Jonathan Smoke | |
| 09.17.2007 | |
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Discuss this article on the forums. (0 posts) In my last post I revealed the top 20 markets for potential future housing returns based on an index we developed to compare a market’s prospects for strong local economic conditions, undersupply of new construction, minimal downside price risk, and strong price appreciation potential. The bottom 20 markets on the index are almost as interesting as the top 20. They are presented here in order of worst to best, relatively speaking. 1. Hagerstown-Martinsburg, MD-WV 2. Poughkeepsie-Newburgh-Middletown, NY 3. Barnstable Town, MA 4. Boston-Cambridge-Quincy, MA-NH 5. Reno-Sparks, NV 6. Green Bay, WI 7. Bangor, ME 8. Salisbury, MD 9. San Luis Obispo-Paso Robles, CA 10. St. Cloud, MN 11. Redding, CA 12. Anderson, SC 13. Fresno, CA 14. San Diego-Carlsbad-San Marcos, CA 15. Lawton, OK 16. Jackson, MI 17. Bakersfield, CA 18. Merced, CA 19. Lewiston-Auburn, ME 20. Riverside-San Bernardino-Ontario, CA There are several large markets for new construction represented in this list, particularly in California. Although there is some concentration in New England and California, most areas of the country are represented. As with the best markets, these markets also have differing reasons for being on this list. The top two markets to avoid, Hagerstown-Martinsburg, MD-WV and Poughkeepsie-Newburgh-Middletown, NY perform poorly on all of the underlying metrics.  Barnstable Town, MA has new construction in equilibrium with demand, but its local economic prospects are poor and so is the potential for home prices.Boston is middle of the road on the economic front, but is currently oversupplied and likewise has poor prospects for home prices. Reno and most of the California markets on the list score very strongly on the economic front, but these markets represent some of the worst scores on the demand-supply equilibrium and the likely direction for home prices. Even within some of these “markets to avoid” are areas that should outperform the average for the market. There are also areas that will under perform the projected dismal performance of these markets. So if you happen to be “stuck” in one or more of these markets, it’s still possible to influence your own performance with the right individual property investments. The optimal housing investment portfolio will pick markets and submarkets with the strongest demand and local economic conditions with the brightest prospects for home prices. In a turbulent and downward national market like this, location matters more than ever. If you are interested in our analysis of markets, please contact us. 
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