The real estate slump could get worse before it gets better. Business 2.0 Magazine, in its November 2006 issue, identifies 10 markets that offer great opportunities for those who have the patience to buy and hold.
1. Panama City, FL
A small city needs one of two things to jack up housing demand: more people or wealthier people. Unlike the rest of Florida, Panama City hasn't really attracted either, mainly because it's isolated on Florida's panhandle.
72% Projected gain in home prices (5-year)
2. Vero Beach, FL
Balmy weather, low property taxes, and a cost of living 3% lower than that of nearby West Palm Beach make this coastal town an affordable alternative, with sandy shores and the best surfing on the East Coast.
"Vero Beach is at high risk in the short term but will move up in the long term," Cochrane says.
64% Projected gain in home prices (5-year)
3. Bridgeport, CT
The last place you'd expect to find undervalued real estate is in tony Fairfield County, home to ultra-exclusive towns like Greenwich and Darien, where the Masters of the Universe retreat after a tough day on Wall Street. But a mere 20 miles up the coast lies the hardscrabble city of Bridgeport, which has long suffered from sleazy politics and urban decay but is finally cleaning up its act.
63% Projected gain in home prices (5-year)
4. Lakeland, FL
Aside from the panhandle and Vero Beach, few places in Florida scream out "buy now" like Lakeland. A house goes for a fifth less than the national median of $227,500, and Lakeland is just 30 minutes from Tampa, a juggernaut of 2.7 million people that's projected to add almost 210,000 more residents over the next five years.
59% Projected gain in home prices (5-year)
5. McAllen, TX
A Hispanic baby boom is working its way through the regional economy, and families will soon be trading up their digs. McAllen is already 85% Latino, and the average age of those households is two decades younger than that of non-Hispanic ones.
57% Projected gain in home prices (5-year)
6. San Luis Obispo, CA
SLO-Town, as the locals call it, is on the development fast track. It's in the middle of the last semi-rural stretch of central California coastline, and it's also home to the state's rising star of wine production, Paso Robles, where even French vintners are buying property.
40% Projected gain in home prices (5-year)
7. Wilmington, NC
Nestled between the Cape Fear River and North Carolina's Inner Bank beaches, Wilmington has great golf, mild weather, natural beauty, and a relatively cheap cost of living, all of which make it popular with both permanent residents and second-home vacationers.
37% Projected gain in home prices (5-year)
8. Manchester, NH
New Hampshire's financial appeal is readily apparent: It has no income or sales tax, and it's within commuting distance of Boston, one of the most expensive housing markets in the country. Manchester, a former textile mill town, is the largest city in northern New England; neighboring Nashua, which twice has won honors as Money Magazine's "best place to live" in America, shares a border with Massachusetts, which has been losing population since 2004.
35% Projected gain in home prices (5-year)
9. Fort Collins, CO
Fort Collins appears time and again on the media's "best" lists - best place to live, best place to retire, best place to raise a family, best "dream" town, even the best place to "reinvent your life." "Great schools, low crime, good jobs in a high-tech economy," Money Magazine crowed earlier this year when it named Fort Collins its No. 1 small city.
28% Projected gain in home prices (5-year)
10. Atlanta, GA
Sure, the projected price gain is only a third that of top-ranked Panama City. But it's dramatic for a metro region with a population of more than 5 million people. Andrew Schiller, founder of NeighborhoodScout, notes Atlanta's strategic importance as the primary "growth pole" for the entire Southeast, and Bruce Katz, head of the urban development program at the Brookings Institution, says Atlanta is "sprawl on steroids."
24% Projected gain in home prices (5-year)
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