National Markets to Watch in 2012


As the year rolls to a close, so roll out the experts, each with a unique opinion on what we should expect from real estate in 2012. We'll focus on a few of these "expert" predictions, as much to show how they diverge as how they converge-- and we'll make a few of our own-- as we approach the new year. Today we look at how a good climate for business drives a good climate for home sales, and how this relationship could develop in key national markets next year.

Best Cities for Business: Are These also Best for Real Estate Values in 2012?

Obviously, without industry, commerce, and innovation, there are no jobs. And where there are no jobs, there are no homebuyers. That's why we're making our own predictions here, based on the Wall Street Journal's Market Watch  2011 "Best Cities for Business" list that came out early last week.  We predict these cities offer not only job markets to watch, but also real estate markets to watch in 2012.

1. Washington D.C. tops the list, which coincides with earlier ZipCode blogs highlighting the economic strength of that city. The nation's capital offers diverse employment, many in businesses that are basically recession proof, for instance, the business of Federal Government and all its many departments.  This is the 2nd year in a row that D.C. has topped Market Watch's list, and we expect more of the same in 2012.

We also expect continued real estate strength. Here's the metro's median sale price performance for the past two years: 

(C) ZipRealty

Clearly, homes for sale in Washington D.C. have enjoyed an enduring value that's directly tied to the enduring high level of employment. We expect this trend to continue into 2012.

2. Boston: This city, with an economy kept afloat by myriad industries (education, tourism, retail, medical: you name it; Boston's got some of the best in every category). Boston has continually finished in Marketwatch's top 5, and this year made it all the way to number 2.  Here too, ZipCode has already highlighted how well Boston home values endure, particularly in neighborhoods nearest the city's prestigious colleges. Below is a breakdown of the past five years:

(C) ZipRealty

Again, homes for sale in Boston have weathered the economic storm relatively well- they haven't increased much, but considering home prices in some parts of the country are down as much as 50% (or more!), Boston's steady values are encouraging. And from these encouraging data, we see a city poised for continued growth and progress in the new year.

3. Des Moines, Iowa:  This incredibly strong employer made theMarketwatch  list again this year because Des Moines maintains "one of the lowest jobless rates in the country." We think this alone makes the city a candidate for "real estate market to watch," but we also have data to support us:Prices in Des Moines have been steadily creeping up for the past 11 years. In 2000, the median sales price here was around $73K, and that price rose slowly  (even as the national real etstae crisis sent other city real esate values down). This year, Des Moines experienced a huge jump, with a current median sales price of to $166K. That jump in values, surely tied to the strong economic climate here, makes Des Moines a city worth watching in 2012.

Experts Converge and Diverge

Expert opinions match our own predictions above, but not exactly. For example, Pricewaterhouse Coopers and the Urban Land Institute released their annual Top 5 Real Estate Markets to Watch and for 2012, they project the top 5 as follows:

  • Washington DC
  • Austin
  • San Francisco
  • New York City
  • Boston

While we agree these are strong markets (in fact, two of these match our own predictions!), we think Des Moines and perhaps a few other under-dog cities, where employment is diverse and unemplyment low, may surprise us in the coming year. But without a crystal ball, we can always turn to people actually working in the field: Realtors. In the end, it's these individuals who may know best what's happening in their local markets, and perhaps are the true "experts" about what's coming for real estate in 2012.