I hope the 2013 is treating you well! As far as the real estate market goes, there are several cities with housing markets that are set to enjoy the benefits the new year will bring. As I mentioned in a previous post, Trulia economist Jed Kolko has announced his list of predictions for his short list of spots across the country that he projects will have the healthiest housing markets in 2013. He was also asked to share his rationale for choosing which cities made the list.

I already shared Kolko’s list, but now I’d like to talk about his reasoning behind it. In a recent interview Kolko explained:

“The healthy markets that made the list have strong job growth (Bureau of Labor Statistics), which bodes well for housing

Kolko also cited “low vacancy rates (U.S. Postal Service)–low enough to encourage new construction, but not so low that inventory and sales are restrained; and low foreclosure inventory (RealtyTrac), since foreclosures tend to hold back recovery.”

His list is from among the 100 largest metros and it’s important to note that Peabody MA refers to the Essex County metropolitan
division, which includes the suburbs north of Boston, with a population of 740,000.

Of Kolko’s 10 choices, four are in Texas (Houston, San Antonio, Austin, and Fort Worth);
two are on the West Coast (San Francisco and Seattle); two are northeastern suburban metros
(Bethesda, next toWashington DC; and Peabody MA, north of Boston). Omaha and Louisville
round out the list. Kolko doesn’t feel these are necessarily the markets with huge price gains going into 2013, but
they have strong fundamentals.

For instance:

◦Houston, San Francisco, Austin, and Seattle have some of the fastest job growth in the country.
◦San Antonio, Omaha, Fort Worthand Louisville had only mild price declines during the housing crisis.
◦Seattle, San Antonio, and Peabody have low, manageable vacancy rates.
◦Bethesda and Omaha have very low foreclosure inventories.”

Interestingly enough, Kolko went on, “rising prices were not included as part of our definition of healthy
local housing markets. Many of the markets with the largest price gains in 2012 were rebounding from
huge price declines during the bust, but they still have weak fundamentals, such as high vacancy rates,
large foreclosure inventories, or slow job growth. For instance, Las Vegas and Phoenix both have high
vacancy rates and large foreclosure inventories going into 2013, despite having year-over-year asking
price increases of 14% and 27%, respectively, according to the November Trulia Price Monitor. And Detroit
has a sky-high vacancy rate and is suffering job losses, even though asking prices in Detroit rose 10%

“Just as losing lots of weight might be part of an unhealthy cycle of yo-yo dieting, big price gains aren’t
necessarily a sign of a healthy housing market if they’re being driven by a post-crash rebound, rather
than solid fundamentals. That’s why Las Vegas, Phoenix, and Detroit aren’t on the healthiest-markets
list for 2013.”

To learn more about what these predictions could mean for your real estate investment plans or to get my eBook about securing money partners, visit my website You can also check out my Radio Show, “Real Estate NOW! with Bill Barnett” on our new DFW home, “The Answer,” KSKY…660 AM at 4:00 PM on Saturday afternoons begining Jan. 19th!