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We use 4 criteria to assess markets for investors and home-buyers:  (1) housing supply vs. demand (essentially absorption), (2) pricing trends, (3) rent-vs.-buy dynamics, and (4) fundamental economics of the region.  We use four proxies for these criteria:  housing inventory/capita, statistical evaluation of appreciation rates, affordability of buying vs. renting, and jobs growth in the area.  We use these criteria to pick cities that appear to be poised for growth in demand and pricing.

Major centers of creativity, financial and political power are well-positioned:  San Francisco, Boston, and New York City.  We also continue to like the mid-Atlantic:  selected cities in Virginia, West Virginia, Pennsylvania, Ohio and New York.  We like Texas in general and have liked McAllen for many years.  There are a number of cities in the Plains (North Dakota and Nebraska) and the three I’s (Indiana, Illinois, and Iowa) that appear to be stable candidates for investment.  Finally, we like Alaska due to jobs growth and low inventories. 

Below is our pick of cities for this quarter, in alphabetical order by state. This list is only a starting point based on high level factors. Investors must perform their own due diligence regarding local market conditions and the viability of any specific investment.  

• AK: Anchorage
• AK: Fairbanks
• CA: San Francisco-San Mateo-Redwood City
• FL: Gainesville
• IA: Ames
• IA: Cedar Rapids
• IA: Des Moines-West Des Moines
• IA: Waterloo-Cedar Falls
• IL: Bloomington-Norma
• IL: Champaign-Urbana
• IN: Lafayette, MA: Boston-Quincy
• MA: Cambridge-Newton-Framingham
• ND: Fargo
• ND: Grand Forks
• NE: Lincoln
• NH: Manchester-Nashua
• NY: Elmira
• NY: Ithaca
• NY: New York-White Plains-Wayne
• OH: Columbus
• OK: Lawton
• PA: Lancaster
• PA: State College
• PA: Williamsport
• SD: Sioux Falls
• TX: Killeen-Temple-Fort Hood
• TX: Laredo
• TX: McAllen-Edinburg-Mission
• TX: Texarkana
• TX: Waco
• UT: Logan
• VA: Blacksburg-Christiansburg-Radford
• VA: Virginia Beach-Norfolk-Newport News
• WA: Kennewick-Richland-Pasco
• WV: Morgantown.