Posturing for Progress

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the latest Se r v ic i ng Or ig i nat ion SERVICING s e c on da r y m a r k e t a na ly t ic s Many markets still offer attractive opportunities for investors in singlefamily homes. Market Still Ripe for Investors Experts rate markets based on risk and investment opportunity. A s home prices rise across the nation, with some markets charting double-digit increases, many markets still offer attractive opportunities for investors in single-family homes, according to HomeVestors of America and Local Market Monitor. Together, the two companies recently released their quarterly Best Market Ratings report. The report labels markets as "dangerous," "speculative," "medium risk," and "low risk." The highest concentration of "low risk" markets is located in California, where 14 markets earned the label. Texas followed 44 | The M Report with 12 "low risk" markets, and Florida ranked third with 11 "low risk" markets. However, "[n]ot all low risk markets are equal," said Ingo Winzer, president and founder of Local Market Monitor. "When you factor in job growth and unemployment, it's clear that some markets like Texas have better long-term potential than a market like Florida." While home to the most "low risk" markets of any state, California is also home to five of the 11 markets where prices are now above their equilibrium home price (EHP), meaning homes are overpriced compared to local income. The Los Angeles-Long BeachGlendale market was most overpriced, according to the HomeVestors/Local Market Monitor report. Home prices in the Los Angeles metro are about 19 percent higher than the market's EHP. While a high EHP may appear as a deterrent for investors, Winzer said that "[m]arkets with a positive EHP can still provide strong rental returns for investors" because "most of those markets have strong population and job growth, which provides upward pressure on rents." Winzer points to the San Jose market as one such spot. "Although the EHP is six percent, strong population growth provides a good source of renters, making it a 'low risk' market, according to our data," he said. Thirteen of the top 100 markets in the nation fell into the "speculative" category. Many of these markets have high unemployment levels, but this negative characteristic is dampened by low EHPs, population growth, or attractive rental markets, according to David Hicks, co-president of HomeVestors of America. All 13 "speculative" markets are located in the Northeast and Midwest. Providence, Rhode Island, was the only market labeled "dangerous" in the report. HomeVestors of America, based in Dallas, and commonly known as the "We Buy Ugly Houses" company, purchases and renovates residential properties across the country. Local Market Monitor is a national real estate forecasting solution.

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