Magazines Consider National Real Estate Market

That stubborn real-estate bubble everyone keeps talking about has yet to burst — and homeowners everywhere hold their breath a little longer. Two magazines assess the situation, listing the best places to live and the riskiest housing markets, as well as when to cash out and where you can still buy cheap.

Of course, a home is more than an investment. Buyers want a great rate of return, but they also want job opportunities, safe streets, good schools and fun things to do. Money publishes its annual "Best Places to Live" rankings in the August issue. Moorestown,  New Jersey, "with a Main Street made for the cover of the Saturday Evening Post," topped the list. Bainbridge Island, Washington — "a 28-square-mile haven that's a 35-minute ferry ride from downtown Seattle "— came in second. The number-three spot went to Naperville, Illinois for combining the best of small-town and big-city living. Vienna, Virginia and Louisville, Colorado were ranked fourth and fifth.

But no matter how nice your town, the magazine also tells readers they'd be "nuts not to ask the question" posed by writer Jon Birger in the article "Should You Cash Out While You Can?"

Birger profiles the "small cadre of homeowners choosing to cash out rather than risk losing their paper profits to a housing crash. And who could blame them? With prices soaring and condo-flipping all the rage among the get-rich-quick crowd, homes have become the new tech stocks. We all know how that boom turned out." He looks at the risks and rewards of four scenarios — cash out and sit it out, cash out and invest, cash out and downsize, and cash out and stay put (through a reverse mortgage).

How do you know if your home price is ripe for a fall? Kiplinger's Personal Finance magazine lists the 13 riskiest housing markets in the U.S. " Because of the localized nature of real estate, it's hard to argue that there is a national real estate bubble," author Dave Lindorff writes. But "these communities are candidates for a drop in real estate prices. If your hometown is on this list, the value of your house may be in jeopardy."

Part of the problem in these areas is the growing number of homes bought as investments. " Markets with a high proportion of investor-owners tend to be risky because investors often have little or no equity in their properties, and they're quick to sell at any hint of a downturn in property values."

Boston takes the number-one spot, with New York City, Fort Lauderdale, Washington D.C., and Detroit (risky because of job loss rather than soaring prices) rounding out the top five.

But if you're still looking to get into real estate at this late stage of the game, writer Patricia Mertz Esswein looks at "three enticing locales where the price is right" for vacation homes in "At Home Abroad." You just have to go a little further out of the way to get away. She profiles three families who found bargain retreats in Nova Scotia, Honduras, and the Etruscan region of Italy and lays out the basics of how to buy abroad.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism