Gambling on Urban Real Estate in 2012? Here are some places to do it

Above: City of Pittsburgh courtesy of Jan Tyler/Getty Images

Pittsburgh, Worcester, Houston, Akron and New Orleans. Five cities that appear very different on the face of things. Some are post-industrial cities trying to position themselves for a comeback. Houston is a post-WWII city based on energy and built via sprawl. And New Orleans—well, we know the challenges New Orleans has faced since Hurricane Katrina.

So what do these five very geographically diverse cities have in common?

According to the forecasting firm Local Market Monitor and as reported by MSN online, these are the five most promising cities for real estate in 2012. A bit of the rationale:

• Pittsburgh: Colleges, hospitals and the health-care industry have helped the city avoid the major job declines faced by other cities during the recession.
   
• Worcester: High-tech job growth throughout the Boston region has made outer-ring cities an attractive, more affordable alternative to Boston.
   
• Houston: The growing trend toward alternative energy has created a boom in Houston’s energy sector, resulting in job and population growth despite the recession.
   
• Akron: Manufacturing, once the linchpin of Akron’s economy, is finally beginning to return to the city. Because Akron didn’t experience the housing boom like other cities, existing homes retained a high percentage of value compared to the national average.
   
• New Orleans: Simply, efforts to rebuild the city are starting to work. People are returning.

Meanwhile, the research firm predicts continued weak markets in Wilmington (DE), Atlanta, Virginia Beach/Norfolk, Sacramento and Fresno—ranging anywhere from another 7% to 10% decline in housing value over by the end of 2012.

Interestingly: I was at the Urban Land Institute’s annual Boston meeting this past fall. Here, real estate investors all indicated that there was little chance their companies would invest in “second- or third-tier cities,” such as Akron and Worcester. Instead, they preferred to pay higher prices for investing in cities like Boston, New York and San Francisco because these were safe markets that would still provide a return on investment.

So readers - what do you think of these all predictions? In which cities do you expect real estate values to increase? Where would you place your bets if you had to purchase real estate in 2012?

BY Amanda Maher on January 24th, 2012

TAGS: cities | real estate | local assets | economic development | housing