Signup for our free newsletter:

The Hottest U.S. Housing Markets

Written By Brian Hicks

Posted August 12, 2013

Housing prices were up in May, and they are only expected to soar in the coming year. The housing market is hot, and that is a good thing for everyone. You can buy, sell, or invest to reap the benefits of the recovering market easily.

But this is not true everywhere. You only have to look at Detroit to see an example. Knowing where to get your foot into the housing market is important because some cities are doing better than others are.

san franciscoThe Best Cities for Housing Market Investing

1. San Francisco

San Francisco is the hottest housing market. The supply of homes in the city is plummeting, down as much as 80% since 2008. When supplies are down, people scurry to find a house, and they are willing to pay more for when they find one that meets their needs and wants.

People aren’t having trouble with paying more either because the state has a low unemployment rate of 6.5%, as of June. Home prices have gone up 24.5%, according to S&P/Case-Shiller Home Price Index, and they should continue to rise as much as 12.7% over the next year, projected by Veros Real Estate Solutions.

2. Los Angeles & San Jose

The boom in San Francisco has spread over to Los Angeles and San Jose too, and housing prices are expected to experience an 11.6% value increase and 11.1% increase, respectively, according to Veros.

3. Philadelphia

On the other side of country, Philadelphia’s housing market is heating up as well. Houses are bought within 30 days of listing date – an incredible selling rate.

4. Texas

Texas is known for its low house prices, but that’s about to rise too. This state expects to see a home valuation increase of 11.1%.

5. Phoenix

Analysts expect home price increases of 10.9% in the next year, and that may be quite accurate because, according to Zillow, Phoenix’s housing market rose 24 percent from year to year.

Taking Advantage of the Hot Housing Market

You can make money with the housing market in three ways:

1. Sell your home

Home prices are increasing at an alarming rate. This is a relief after the huge crash just a few years ago. As you see the value of your home increasing, consider selling it to make a profit.

It’s likely you bought your home when prices hit a low, which was devastating for sellers at the time. At that time, there was a large supply of homes and prices were low, making it a buyer’s market. But now it’s a seller’s market because supply is low and home prices are increasing. As a homeowner, this is the best time to sell.

2. Buy a home

Yes, you were just told that it’s a seller’s market, but guess what? It’s a good time to buy a home too.

Home prices haven’t hit ridiculous highs yet, which means they are still affordable. Interest rates are lower than they’ve been for decades, which means your monthly mortgage payment won’t be as high as it will be as the rates increase to go along with the improving housing market. But rates are starting to rise quickly, so if you want to invest in the housing market by buying a home, do it now.

3. Flip a home

Flipping homes hasn’t been a lucrative investment opportunity for years. House prices have been down in the dumps, and they weren’t getting out of it until now. If you were to buy a house, fix it up, and sell it in the next year, you should see a profit.

As stated above, the hottest housing markets such as San Francisco, Phoenix, and San Jose will see significant increases in house prices next year, so that’s just enough time for you to find, buy, and fix a home for reselling when the value goes up.

Other Real Estate Investment Options

If you’re not interested in buying property but still want to take advantage of the housing market, consider a Real Estate Investment Trust (REIT). These are businesses that buy real estate.

While many of them buy commercial properties, some invest in single-family homes and other residential properties. They usually buy them, fix them up, and rent them out. The rent is divided among shareholders. Some REITs that are worth your time are:

  • W. P. Carey Inc. (NYSE: WPC)

  • Liberty Property Trust (NYSE: LRY)

  • PS Business Parks (NYSE: PSB)

  • Cousins Properties Inc. (NYSE: CUZ)

  • One Liberty Properties Inc. (NYSE: OLP)

  • Winthrop Realty Trust (NYSE: FUR)

With a quickly and significantly improving housing market and four ways to invest, there’s no reason why investors shouldn’t take advantage of it. You can sell a home, buy one for a long-term investment, buy and sell for a short-term investment, or back a company that will give you part of its profits.


If you liked this article, you may also enjoy: