DAYS ON THE MARKET
By JODI SUMMERS
This just in: 13 real estate markets have more than a 50 percent chance of experiencing falling home prices within two years. The most recent quarterly report by PMI Mortgage Insurance Co. cites that eight of those areas are in California; three are in Massachusetts; one is in New York and one is in New Jersey. The major real estate markets at the greatest risk of a price decline are San Diego-Carlsbad-San Marcos, Calif.; Nassau- Suffolk, NY.; Boston-Quincy, Mass.; Santa Ana-Anaheim-Irvine, Calif.; and Sacramento-Arden-Arcade-Roseville, Calif.
Fortunately there are many markets — in California and elsewhere that defy the national downtrend. Locally, CNN/Money likes Victorville, Calif. They report, “As Los Angeles grows, development is creeping north of the San Bernardino Mountains. Home construction is on fire in once-sleepy Victorville. Four Wal-Mart Supercenters are coming to the area.”
Locally, it is predicted that trade with China through the country’s largest port will fuel a boom in logistics, warehousing and distribution centers. With freight volume projected to triple by 2030, warehouse builders will become the fastest-growing commercial developers in the region.
Up north, the action is moving east from the Bay area: The Sacramento metro region will build more housing and office space in the next 25 years than any other Western megapolitan city, with the exception of Las Vegas. There will be a vulture-like acquisition of property owned by old, declining industrial businesses in the Bay area for pennies on the dollar.
Elsewhere,“The country’s most heavily populated megapolitans brace for another boom,” predicted Paul Kaihla and Krysten Crawford of Business 2.0. They say that over the next 25 years, “Most of the development will go up — urban infill will outstrip suburban growth.”
Obviously, there is a new urban landscape developing on the Gulf Coast from Houston to New Orleans, but urban hubs like Boston, New York, Washington, as well as rustbelt locations like Pittsburgh, Detroit and Chicago will see a boom.
Kaihla and Crawford choose places like “Joliet,an old steel-mill boomtown on the Des Plaines River and the hub of Will County, is expected to be among Illinois’ fastest-growing towns by the next quarter-century.”
As mentioned last week, south central hot spots include Kansas City, San Antonio and Dallas will cater to “the Latino population boom. A new generation of Hispanic business owners and industrialists will drive the growth, and the area will become a magnet for foreign firms trying to cash in on the U.S.Latino market.”
The U.S. Census Bureau projects that the fastest-growing states in the nation from 2000 to 2030 will be Nevada, which is expected to grow 114.3 percent, followed by Arizona at 108.8 percent and Florida at 79.5 percent. Other fast-growing states include Texas, with a projected population increase of 59.8 percent; Utah, with a projected population growth of 56.1 percent; Idaho at 52.2 percent; North Carolina at 51.9 percent; Georgia at 46.8 percent; Washington at 46.3 percent and Oregon at 41.3 percent.
Business 2.0 likes Phoenix and Tucson because of their supply of raw, buildable land at the lowest prices. The big draw is a Palm Springs lifestyle at a substantial discount. It is predicted that Phoenix will remain the top destination city for Americans moving from other states. Expansion at Arizona State University will increase its enrollment by 50 percent to 90,000 students and generate more than 10,000 new jobs by 2020. CNN Money likes Buckeye, Ariz., stating, “Today it has fewer than 15,000 residents and sits in an empty desert. But a handful of mega-development projects will transform Buckeye into a more populous city than Phoenix by the end of the next decade.”
North Carolina is another hotly-anticipated market. The North Carolina Association of Realtors reported that statewide sales rose 10 percent from January through May this year compared to the first five months of 2005.
“North Carolina seems to lag behind the rest of the nation in real estate trends,” said Renee Hentschel, an associate broker for Realty Executives in Hickory, NC. “We hear about this big real estate boom and we’re saying,‘Where’s it at?’ A couple of years later we hear about the slowdown. We’re not slowing down here.”
Quantities of cheap, prime greenfield surrounding Seattle, Portland and Eugene give the Northwest megapolitan explosive growth potential. By 2030, the three metro regions will be intertwined. CNN/Money likes Beverton, Ore., the home to Nike’s headquarters and Intel. A light rail train that went online in the late 1990s is driving development, which has been growing at a rate of $100 million per year.
In Idaho’s Ada County, which includes the capital city of Boise, existing-home sales grew 16 percent from May 2005 to May 2006, and the median price increased 26 percent, according to Intermountain Multiple Listing Service statistics.
Meanwhile, the National Association of Realtors reported that the national rate of existing-home sales dropped 6.6 percent in May 2006 compared to May 2005.
Trela Bird, a realtor with GMAC Real Estate in Utah, said the Greater Salt Lake City began to boom last year.
“We’re seeing a lot (of buyers) from California, and a little bit from some of the East Coast states, some from Texas, Arizona and Nevada,” she said. “I think the news has gone out — we’re No. 4 in job growth right now and prices compared to a lot of places are still reasonable.”
Business 2.0 reports that Florida posted the nation’s highest job growth last year. Land scarcity will drive urban growth. The 65-and-older population will continue to swell, doubling by 2025.
Best residential real estate bet: Preconstruction condo units between Venice and Tampa, where demand is so high that builders hold lotteries.
Best commercial real estate bet: Inland lots in Manatee County, where cities will bloom by 2010. And, there’s no state income tax.
For more on Southern California commercial properties there is a great information blog at www.socalindustrialrealestateblog.com. (Jodi Summers is director of the investment division at Boardwalk Realty. For your real estate needs, , or call (310) 309-4219, or visit her Web site at www.santamonicalandmarks.com.)
Originally published in the Santa Monica Daily Press print edition on August 16, 2006. Read the original PDF.