The 10 Healthiest U.S. Housing Markets Going in to 2013

Metros with strong job growth, low vacancy rates and low foreclosure inventory.

Along with what’s in and what’s out for housing in 2013, I’ve got my eye on 10 "healthy" housing markets with solid fundamentals. The healthy markets that made the list have strong job growth (Bureau of Labor Statistics), which bodes well for housing demand; low vacancy rates (U.S. Postal Service) – low enough to encourage new construction, but not so low that inventory and sales are restrained; and low foreclosure inventory (RealtyTrac), since foreclosures tend to hold back recovery.

But why, you might ask, aren’t rising prices included as part of our definition of healthy local housing markets? Because many of the markets with the largest price gains in 2012 were rebounding from huge price declines during the bust, but they still have weak fundamentals, such as high vacancy rates, large foreclosure inventories, or slow job growth. For instance, Las Vegas and Phoenix both have high vacancy rates and large foreclosure inventories going into 2013, despite having year-over-year asking-price increases of 14 percent and 27 percent respectively, according to the November Trulia Price Monitor.

Detroit has a sky-high vacancy rate and is suffering job losses, even though asking prices in Detroit rose 10 percent year-over-year. Just as losing lots of weight might be part of an unhealthy cycle of yo-yo dieting, big price gains aren’t necessarily a sign of a healthy housing market if they’re being driven by a post-crash rebound, rather than solid fundamentals. That’s why Las Vegas, Phoenix, and Detroit aren’t on the healthiest-markets list for 2013.

The envelope, please:

The 10 Healthiest Metros for Housing in 2013 (Among the 100 largest metros.)

1. Houston, Texas
2. San Francisco, Califonia
3. Bethesda-Rockville-Frederick, Maryland
4. San Antonio, Texas
5. Austin, Texas
6. Seattle, Washington
7. Omaha, Nebraska
8. Peabody, Massachussetts*
9. Fort Worth, Texas
10. Louisville, Kentucky

* Note that Peabody MA refers to the Essex County metropolitan division, which includes the suburbs north of Boston, with a population of 740,000.

 

Of these 10, four are in Texas (Houston, San Antonio, Austin, and Fort Worth); two are on the West Coast (San Francisco and Seattle); two are northeastern suburban metros (Bethesda, next to Washington DC; and Peabody MA, north of Boston); and Omaha and Louisville round out the list. These aren’t necessarily the markets with huge price gains going into 2013, but they have strong fundamentals. For instance:

These 10 markets should set the pace as the national housing market continues to return to health next year. Here’s to a healthy 2013.

This post originally appeared on Trulia.

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