5. Worcester, Mass.: Worcester, which has about 180,000 residents, saw its home prices fall by roughly 23 percent from their peaks through the first quarter of 2009. But Timothy Warren, CEO of the Warren Group, a New England real estate information and data provider, points to two key industries that can help drive home price appreciation. With a number of colleges and universities located there—such as the College of the Holy Cross and Clark University—higher education is an important component of Worcester's local economy. And its university-linked healthcare sector is another key provider of jobs. "Because of the medical schools, there are teaching hospitals out there as well and a lot of research that gets done," Warren says. Moody's Economy.com projects that home prices in Worcester will rise about 6 percent by the first quarter of 2012 and 21 percent by the first quarter of 2014.
6. Warren, Mich.: Like nearby Detroit, Warren's economy has been hammered by the auto industry's woes, Chen says. Home prices in Warren fell 37 percent from their peaks through the first quarter of 2009. But going forward, Moody's Economy.com projects that home prices in Warren will rise about 5 percent by the first quarter of 2012 and 21 percent by the first quarter of 2014. These rates of appreciation may look encouraging, but they aren't exactly what they seem, says Chen. Warren, like the rest of the country, will indeed see some job growth as the economy pulls out of the recession, she says. And home prices will eventually fall far enough to attract buyers. But Moody's projection for healthy home price appreciation says more about the depth of Warren's real estate decline than anything else, Chen says. "Because prices are going to pick up off of such a low base, even a small increase in the actual dollar value of homes will look like a very strong growth rate," Chen says. Warren's long-term economic outlook remains unfavorable, she adds.
7. Boston: Home prices in Boston fell 18 percent from their peaks through the first quarter of 2009. But Timothy Warren says the city's robust higher education and healthcare sectors should help support higher home prices in the future. In addition, "the financial services sector has been hit hard recently, but it is still a strength of the Boston area," he says. "They have been hit [harder] than other industries, but I think they will probably come back." Moody's Economy.com projects home prices in Boston will rise about 3 percent by the first quarter of 2012 and 18 percent by the first quarter of 2014.
8. Lansing, Mich.: Like Warren's, Lansing's economy is struggling. Home prices there fell 28 percent from their peaks through the first quarter of 2009. Moody's Economy.com projects that home prices in Lansing will rise about 2 percent by the first quarter of 2012 and 15 percent by the first quarter of 2014. However, these increases are largely attributable to the extremely low base that real estate prices will come off of, Chen says.
9. Chicago: Home prices in Chicago fell 28 percent from their peaks through the first quarter of 2009. But David Hanna, president of the Chicago Association of Realtors, says the city's diverse economy and pleasant quality of life can help drive property values higher in the future. "The city is clean [and] it's functional," Hanna says. "The last two decades of revitalization here has spread out not only through the city but into many of the other surrounding communities." Moody's Economy.com projects that home prices in Chicago will rise about 2 percent by the first quarter of 2012 and 16 percent by the first quarter of 2014.
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