Yet the run-up in the U.S. housing market in some parts of the country has raised concerns about valuations and whether it still makes sense to buy, said Steve Hovland, director of research for HomeUnion, a real estate investment management firm. The U.S. economy is also in its eighth year of economic expansion, the third-longest expansion in the country’s history. That’s prompting questions about whether a pullback is on the horizon.
Singling out locations that provide strong investment returns as well as low risk may help mitigate the chances of losing money on a property. The company used school ratings as one way to measure risk since communities with strong school systems generally keep their appeal even in weaker economic periods.
“A lot of people are worried the market is too hot and whether it’s a good time to buy property,” Hovland said. “When you buy an investment property, your hold period should be about five years, so most people are looking at the possibility you might have to hold during a recession.”
Some of the areas identified by HomeUnion are “hot” real estate markets around the nation that have already seen significant property appreciation, while others are located in rust-belt states where housing prices aren’t as rich.
Yet the communities share one trait: They are where the upper-middle-class tend to live. The home values in the zip codes are generally higher than in their greater metropolitan areas, which means not every investor or homebuyer will be able to snap up property within their borders. But looking for a fixer-upper in these communities could be a smart strategy, Hovland said.
“Buying the worst house in the block in a very nice neighborhood will always be beneficial to the homeowner,” he added.
Forestville/Cherry Grove, or zip code 45255, is a suburb of Cincinnati, not exactly one of the country’s hot property markets. Yet the neighborhood has an annualized total return of 5.9 percent, while the schools rate in the 75th percentile for school quality, according to data company Maponics.
The median home value in the Forestville/Cherry Grove zip code is $194,600, according to Zillow. That’s actually slightly lower than the median national home value of about $200,000, yet more than 50 percent higher than the typical home value in Cincinnati.
Current for-sale properties range from million-dollar homes with views of the Ohio River to more modest split-level properties.
Source: cbsnews.com
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