Some Real Estate Hot Spots Are Hotter Than Others

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There may be a whole wide world out there for boomers to invest in, but some points on the map appear to be particularly buoyant.

For those boomers considering an investment property or just taking stock of how much their own home is worth these days, experts offer their assessment of some markets that are currently hot.

Boomers desire to “get their foot in the door” is an assumption that is used when agentsacrossamerica.com picks areas that will experience appreciation, according to Sean Gaughan, director of Internet services with an Internet real estate marketplace, based in Chicago.

Gaughan says that “since property has and may very well continue appreciation in these areas, boomers cannot afford to wait 5 to 10 to 15 years to buy and retire here.” Cities the Web site lists, in no particular order, include Phoenix, Ariz.; Portland, Ore.; Raleigh-Durham, N.C.; Tucson, Ariz.; Ashland, Ore.; Salt Lake City, Utah; and Austin, Texas.

“Relatively affordable prices, and appealing climates and lifestyles” are some of the reasons he says boomers will continue investing in these markets.

In the past year, market appreciation in some areas has exceeded 20%, a growth rate he says is maintainable for the next 2 to 3 years. That growth, he continues, is likely to keep pace in Phoenix. But in regions such as Florida, he adds, the top of the bubble may already be near. “Sellers must price their homes aggressively or face a long market time and stiff competition from other sellers.” This follows a period of what he describes as “excellent appreciation.”

Boomers who have bought homes in Texas in the last two years “face stiff competition from new construction and will struggle to sell their home at a price that allows them to pay their mortgage, realtor and closing costs,” Gaughan adds.

Another Web marketplace, EscapeHomes.com, an online marketplace for second home buyers and sellers based in San Francisco, says that in the second home market, the top market of interest as measured by consumers conducting online searches was Myrtle Beach, S.C. Other popular destinations include South Padre Island, Texas; Naples, Fla.; Holden Beach, N.C.; Ocean City, N.J.; Las Vegas, Nev.; San Diego, Calif.; Park City, Utah; Orlando, Fla.; and Santa Fe, N.M., in that order.

New York is one area that is strong and will remain so, says Barbara Stone, president of Regency Capital Realty, New York.

Going forward, boomers most likely can expect a 3-6% annual appreciation, she says. Areas in New York that she predicts will appreciate include Harlem and Midtown West, an area currently being targeted for development.

Stone also says there is growth on Long Island and in boroughs including Brooklyn for boomers looking to invest in property. “Brooklyn is bursting at the seams with interest.”

If there is a real estate bubble, New York isnt part of it, says Carl Haacke, author of “Frenzy: Bubbles, Busts, and How to Come Out Ahead.” The area is benefiting from a decline in crime, a limited amount of land, and the fact that “it is one of the most exciting places on the planet,” he says.

Areas that he suggests could be “danger areas” for boomers considering a real estate investment are South Florida, Boston, Washington, D.C., and California.

San Francisco is currently a real estate bubble, says Edward Leamer, a director of the UCLA Anderson Forecast Report issued at the end of 2004 by UCLAs Anderson School of Management.

Leamer argues that the price appreciation compared to earning from rental is not sustainable. In San Francisco, he continues, when the dot-com boom was under way, earnings did sustain prices. But with the bust, comes a bubble, or more precisely, “a long, agonizing decline in prices like we had in L.A. in the early 1990s.” The price premium for a median priced home in San Francisco increased 20% at the start of the 1990s to over 100% in the year 1999, he adds in the report.

But while California is experiencing a bubble, the trend is still upward in Florida, says Hugh Bromma, CEO of Entrust Administration Inc., Oakland, Calif. In some areas of Florida, such as Tampa and Sarasota, “there are some remarkably good deals with new construction.”

New England, particularly western Massachusetts, and New Hampshire and Maine, offer a good opportunity for boomers, he continues. But Boston and Cape Cod are too expensive, he adds.

Outside of the United States, a boomer needs to research a potential investment purchase very carefully.

Bromma says that in Central America, the market is “pretty lively.” A lot of Americans and Canadians are flocking to the area and if boomers are considering a property as an investment, they may be disappointed. But if they are considering it as a retirement place, it may be wonderful, he adds. Bromma says that anyone considering a property in a Central American country like Panama needs to take into consideration differences from U.S. tax laws.


Reproduced from National Underwriter Edition, April 15, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.