Assessing Home Buying Risks In Different Markets

While many people are ready and willing to buy real estate right now, due to the downturn in the housing market, there is quite a bit of hesitation over buying in certain areas. Investors are unsure of which properties are really worth it, which is why a new national “risk list” can help real estate buyers determine which investments they should purchase.

Risk Lists For Different Home Buying Markets

PMI Group, a private mortgage insurance company, recently released its quarterly risk list it uses in its home loan underwriting that lets investors and buyers in on the risks of buying and owning property in major U.S. markets. Short sales and pre-foreclosure deals only work well if the deal comes from one of the low risk regions.

Which Areas Are The Riskiest For Buying Homes?

According to the list, Texas is the state least likely to experience significant price declines in the next two years. As the state’s economy grows, Dallas, Houston, Austin, San Antonio and Fort Worth are all places where residential homes are moderately priced. Charlotte, Pittsburgh and Kansas City are other areas where housing is affordable and economic activity remains strong for the foreseeable future.

On the other hand, devalued housing prices in California, Nevada, Arizona and Florida are considered risky investments. While these states all attract new residents in droves, the housing boom of the past few years increased the supply significantly, thereby driving down the demand. Riverside County in California, Los Angeles, Las Vegas and Phoenix are likely to lose some of their value in the next 24 months.

Assessing Which Markets To Invest In Home Buying

For the investor looking to snag the best deal, there are some excellent buys in the riskiest states since the prices are bottoming out soon and there are more motivated sellers. However, conservative real estate buyers who are looking to live in an area or want a stronger investment should focus on places where the economy is holding steady and housing prices are within buying means. Just because a foreclosed home is a good deal does not mean it is the best investment, so investors need to stay on top of which areas are the best for long-term value.