Can the Worst Places to Live be Smart Investment Opportunities?

Posted by Teresa on August 5, 2010 under Housing Trends | icon: commentBe the First to Comment

tenantscreeningblog.comPersonal finance news site reports today on the ten worst places to live in the U.S., based on (among other factors) the unemployment rate, climate, health data, crime rate and number of foreclosures.

And recently, shared how 24/7 Wall St. combined unemployment rates with foreclosure figures for the first half of 2010 to come up with the ten worst real estate markets in America.

How do the two lists compare? As expected, California has a number of entries on the “worst real estate market” list, but only two for the worst place to live list—taking the number one and number six spots.

In this town, even the cemetery is bankrupt
At the top of the “you don’t want to live here” list is El Centro , CA, because it has the highest unemployment rate in the country—at 27.5%, it’s just ahead of Yuma, AZ. Of course, the city’s location just over the Mexican border means the unemployed are mostly field laborers, with fluctuating employment rates typical for that sector.

Los Angeles made the list because of its terrible pollution, but is cited for its awful traffic problems too. Perhaps the two are related?

On the top ten worst real estate markets, California can boast numbers three through seven, with Modesto, Merced, Riverside, Stockton and Vellejo, respectively. But that’s not all—Bakersfield takes the number nine spot, too. Yes, California is a mess, with state budget cuts helping to drive unemployment rates in these cities to between 15.7% and 17.3%.

What doesn’t happen in Vegas? Jobs!
Las Vegas also shows up on both lists: it’s number one for worst real estate market, and number four for worst city to live. With neighborhoods standing completely empty and a 12% foreclosure rate for 2009, home prices continue to fall. Paired with an unemployment rate of 14.5 %, there’s not much happiness going around in Vegas.

Over on the east coast, Florida is represented on both lists; with Miami number nine in worst places to live; Cape Coral-Fort Myers and Port St. Lucie showing up as numbers two and ten for worst housing markets. Miami is right behind Detroit on Children’s Health magazine as worst place to raise a family, due to crime, education, economics, cultural attractions and health issues. On top of that, there have been nearly 40,000 foreclosures in Miami. Just up the road, Port St. Lucie’s high unemployment rate at 13.4% and foreclosures at 3.05% make for one tough real estate market.

Lists like these can work to a real estate investor’s advantage. Some experienced landlords (with nerves of steel) have experienced success by purchasing investment property in down markets. Reports of $10,000 homes in Detroit, MI (number three on the list of worst places to live) are common. And as the auto industry begins its rebound, the up-and-down cycle could be turning up again. Smart investors tread carefully into depressed markets, with eyes wide open, looking for deals.