Clearwater Real Estate Blog

Forbes.com: Housing Trends
Best Places For Real Estate Deals
Matt Woolsey, 10.08.07, 12:01 AM ET

Home sales have sunk to their lowest levels since 2001. Investors are jumping ship, foreclosures are mounting and lenders are exercising caution.

Still, there are areas of the county where it makes sense for some to buy. That's because, in a market slump, sellers eager to unload their homes often accept less money from buyers. New construction also slows. Both bode well for those hoping to score a deal--if the market in which they are buying is expected to experience increased sales.

To find such places, we paired with Moody's Economy.com to research current home sales patterns and sales projections in the country's 40 biggest real estate markets. Based on models that estimated 2008 housing inventory, sales rates and turnover, we arrived at a list of markets that are experiencing price stalls or declines, but where over the coming year are expected to provide deals for buyers.

In Pictures: Best Places For Real Estate Deals

A buyers' market in the purest sense is one where there are far more sellers than buyers, creating a supply and demand dynamic that benefits those looking to invest in a home. However, by that definition, a floundering market like Detroit is a good buyers' market because prices are dropping and inventory is high.

"A market with declining prices and few sales is a strong buyers' market," says Anthony Sanders, professor of real estate finance at Arizona State University. "But it is also a risky market given that prices could decline further."

With that in mind, we required the slumping or neutral markets on our list to have expected volume and turnover increases, based on sales and inventory models run by Moody's Economy.com.

The results turn out three types of markets and three types of deals.

Attractive Arrangements
The first are undervalued, affordable markets like Fort Worth, Texas, which haven't felt huge, post-boom price corrections, but where there is an expected acceleration in sales volume, making now the time to buy.

Second are markets like Long Island, N.Y., and Washington D.C. These are traditionally strong areas that are recovering from speculation, especially in the D.C. condo market and by Long Island's second-home buyers. Once these areas stabilize, the market as a whole should return to health.

"Long Island is continuing to slip, but a modest amount," says Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm. "In [Long Island] the upper-end market was the market of choice for speculation and tear downs."

Third are riskier markets such as Las Vegas or Orlando, Fla., which are experiencing lending and inventory problems but relative to regional markets--in Las Vegas' case, Los Angeles and in Orlando's case Tampa and Miami--are expecting to see significant pickups in sales activity, according to Moody's, and therefore become better buyers' markets because of a relatively lower risk.

But economists caution that while over the next year the dust may settle in these 10 spots, buyers should be prepared for future swings. This is especially true in the case of riskier markets like Orlando and Las Vegas, where the expected increase in sales volume and housing turnover doesn't necessarily mean that the price trough is imminent.

"Housing market activity revives when house prices decline sufficiently to restore housing affordability and entice buyers to step up and make a purchase," says Mark Zandi, chief economist at Moody's Economy.com. "Some markets are already approaching those price points, in many others prices will have to decline much more to get to that point."