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| Markets with Weak Prospects |
| Written by Jonathan Smoke | |
| 01.11.2008 | |
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Discuss this article on the forums. (0 posts) Continuing the post from yesterday, today I’m highlighting the bottom 20 markets on our Housing Prospects Report. The bottom 20 markets represent the weakest relative prospects over the next five years, and this list has interesting variety to it as it clearly encompasses many former bubble markets as well as those markets whose local economies are sick and in transition. Here are the bottom 20: Champaign-Urbana, IL Orlando-Kissimmee, FL Kankakee-Bradley, IL Ocean City, NJ Madison, WI Rockford, IL Milwaukee-Waukesha-West Allis, WI Los Angeles-Long Beach-Santa Ana, CA New York-Northern New Jersey-Long Island, NY-NJ-PA Baltimore-Towson, MD Lansing-East Lansing, MI Allentown-Bethlehem-Easton, PA-NJ Des Moines-West Des Moines, IA Atlantic City, NJ Richmond, VA Jackson, MI Waterloo-Cedar Falls, IA Gainesville, FL Detroit-Warren-Livonia, MI Barnstable Town, MA  In the former bubble category are Orlando, Ocean City, Los Angeles, New York, Baltimore and Atlantic City. All of these markets land on the list because of home price risk brought on primarily by prices having risen too far and too fast in these markets, thus spilling over and impacting current supply issues and low to negative future home price appreciation. What these former bubble markets have in their favor are relatively robust economic forecasts.At first I was amazed that the bottom 20 did not include more former bubble markets, but I think this is driven by the fact that our 5-year horizon for the prospects report is going beyond the length of the correction that other bubble markets need to go through to fix price and supply issues. Most of the rest of the bottom dwellers are markets that have ailing economies that don’t see prospects of improving over this time horizon. These economically suffering markets are Champaign-Urbana, Kankakee-Bradley, Madison, Rockford, Milwaukee, Lansing, Allentown, Des Moines, Jackson, MI, Waterloo-Cedar Falls, Detroit and Barnstable Town. The notable exceptions to cleanly fitting in either category are Richmond, VA and Gainesville, FL. Both of these markets were on the cusp of being called a former bubble market so much of their diminished prospects come from price risk and limited price appreciation potential. Gainesville also has a significant current inventory problem to work through, but it has a very strong economic outlook. 
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