Real estate investors might want to take a page from Dorothy and Toto’s playbook in the The Wizard of Oz and set their sights on getting to Kansas.
That’s because the Sunflower State hosts three of the top five cities on HousingPredictor.com’s Best Investor Markets for 2012 study — all thanks to high produce prices making the area’s economy as sweet as its corn.
“Kansas is forecast to do very well because of higher crop prices,” HousingPredictor.com’s Mike Colpitts says. “The state has not done so well historically in terms of real estate values, [but] it is projected to do much better than most other places now because of better employment levels and a lower cost of living.”
Kansas is a rare bright spot this year in a generally dull housing sector. Colpitts says investors should shy away from most U.S. locales during 2012 because much of the nation’s housing market remains shaky.
“Prices are down [and] still dropping in most areas of the country,” he says. “Only some markets will be good to invest in, and they are limited. Things are still too risky in most places.”
To figure out which cities make sense for real estate investment this year, HousingPredictor.com recently analyzed some 230 locales for nearly 20 different factors, from market “velocity” to business growth and development.
Metro areas that top the rundown don’t necessarily have the largest expected 2012 price gains among U.S. cities. Rather, Colpitts says they offer a combination of good projected price increases and “a large enough supply of renters or vacationers [to] make them good investments.”
Here’s a look at the top five markets on HousingPredictor.com’s study, listed in order of projected average price gains for 2012.
Fifth-best market: Wichita, Kan.
Projected 2012 price gains: 4.1%
Booming crop prices are boosting housing prices and rents in the Sunflower State’s largest city.
“Wichita is seeing things improve mainly because of high prices paid for crops, which means there are more folks to buy homes,” Colpitts says.
The city also hosts so many aviation companies that it’s known as “The World’s Air Capital.”
Cessna, Hawker Beechcraft, Bombardier Learjet, Spirit AeroSystems) and other airplane and aviation-parts makers all have major operations in Wichita. (Boeing also has a plant in 630,000-population metro area, but recently announced plans to close the site next year.) Wichita also hosts two well-known privately held companies: camping-equipment maker Coleman and diversified conglomerate Koch Industries.
Additionally, the city is home to three large schools — the University of Wichita, Friends University and Newman University.
Fourth-best market: Charleston, W.Va.
Projected 2012 price gains: 4.5%
“Charleston is one of those rare places that has suffered for so long that it’s reviving because of retirees moving to the area for a lower cost of living,” Colpitts says. “That will boost the market for investors.”
West Virginia’s capital city hosts lots of state agencies, as well as Appalachian Power, Mountaineer Gas and other large companies.
The University of Charleston and West Virginia State University are also major employers in the 304,000-person metro area.
Third-best market: Topeka, Kan.
Projected 2012 price gains: 4.7%
Colpitts expects Topeka’s rental market to do well in 2012 because of the area’s high crop prices and low cost of living, “which makes [the city] more affordable for many folks.”
The capital of Kansas, 230,800-population Topeka has a diversified economy that revolves around agriculture, state government and other sectors.
Publicly traded companies that call the city home include Capitol Federal Savings Bank and Westar Energy
Footwear giant Collective Brands — which owns the Keds, Saucony, Stride-Rite and Sperry Top-sider brands — also has headquarters in Topeka. So does Collective’s Payless shoe-store subsidiary.
Goodyear Tire and other manufacturers also operate large factories in town, while Washburn University calls Topeka home.
Second-best market: Kansas City, Kan.
Projected 2012 price gains: 5.8%
“After experiencing one of the hardest-hit markets in the country in terms of foreclosures, Kansas City is recovering from its downturn in housing more quickly than most other areas of the country,” Colpitts says.
He says record-high prices for corn and other crops “are pushing home prices higher and are projected to sustain through 2012.”
Located across the state line from Kansas City, Mo., Kansas City, Kan., is home to Associated Wholesale Grocers and Kansas City Steak.
General Motors also operates its Fairfax Assembly Plant is in the 145,700-person city, cranking out Chevrolet Malibus and Buick LaCrosses.
No. 1 investor market: Miami
Projected 2012 price gains: 5.8%
Hard-hit by South Florida’s real estate bust, 2.5 million-population Greater Miami is recovering slowly as second-home sales boost property values.
“Miami tops the list with the highest forecast housing inflation for the year” among recommended cities, Colpitts says. “[That] makes the community a good bet for long-term real estate investors.”
Long a popular tourist spot and jumping-off point for Caribbean cruises, Florida’s largest city is home to Carnival Corp. and other travel firms.
Miami’s large Hispanic population and proximity to Latin America also make it a major center for Spanish-language music and TV programming. Univision, Telemundo and other Spanish-language media have headquarters or major operations there.
Other large companies based in Miami include home builder Lennar and restaurant chains Burger King and Benihana.
Colpitts says the city’s housing market still has an uncertain future.
“Prices aren’t expected to reach where they peaked in much of Florida for at least another 20 to 30 years,” he says.