With home prices at the national level down a painful 32 percent from their 2006 peaks, it's easy to overlook real estate's benefits as a long-term investment. But the truth is, despite the ongoing housing bust, the overwhelming majority of America's real estate markets will appreciate over the next 10 years—although some more handsomely than others. "In the long run—subtracting from the ups and downs of the business cycle—house prices should grow at the rate of household income," says Mark Zandi, chief economist at Moody's Economy.com. "If people's incomes are rising, then they will buy more housing and house prices will rise." Income growth, in turn, is linked to the strength of the area's economy. Moody's Economy.com sifted through employment and population data and analyzed geographic and industry trends to generate 10-year home price projections for each of the nation's 384 distinct metropolitan statistical areas—everywhere from Abilene, Texas, to Yuma, Ariz. Using these data, U.S. News compiled a list of the top 10 housing markets for the next 10 years.
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The neighboring cities of Bremerton and Silverdale, Wash., are located on the Kitsap Peninsula, a slip of land surrounded by more than 300 miles of coastline in lovely Puget Sound. Although the Pacific Northwest greenery is enticing, it's the cities' stable economies that should drive home price gains in the coming years. A large military presence—of the U.S. Navy in particular—helps insulate the local economies from volatility. Meanwhile, the nearby cities of Tacoma, Wash., and Seattle provide additional employment to the area's roughly 240,000 residents. "About a third of the community works [in either Tacoma or Seattle]," says Silvia Klatman, executive director of the Bremerton Area Chamber of Commerce. "And a little bit more than that actually work...for the military." Silverdale's 2008 median home sale price was $266,500. Moody's Economy.com expects home prices in the Bremerton/Silverdale area to increase by an average of 5.2 percent annually from the fourth quarter of 2008 through the same period of 2018.
At the foot of the Adirondack Mountains of New York you'll find Glens Falls. With attractions like beautiful Lake George just a short drive away, tourism has long played a key role in the local economy. But the area, which has about 130,000 residents, is also considered "the catheter valley" on account of its thriving medical device manufacturing industry. Companies like Covidien, AngioDynamics, and C. R. Bard have outposts in the area, which has also become a popular lower-cost alternative to nearby Saratoga County, N.Y., and a bedroom community for the state capital of Albany. In recent years, downtown Glens Falls has attracted an impressive amount of private-sector investment, says Todd Shimkus, president and chief executive of the Adirondack Regional Chamber of Commerce. "It is staggering to see $65 million for a new wing of a hospital, $17 million for new library, $25 million for a downtown townhouse project, $4 million for a corporate headquarters for Barton Mines, $3.5 million for a theater downtown, [and] $500,000 for a downtown park," he says. The 2008 median home sale price was $185,000 for Warren County, where Glens Falls is located. Home prices in the area will increase an average of 4.7 percent a year over the next 10 years, Moody's Economy.com projects.
Not far from Colorado's breathtaking Rocky Mountain National Park are the neighboring cities of Fort Collins and Loveland. Thanks to university research, local support, and private investment, this area of roughly 300,000 residents is evolving into a leading center for traditional and renewable energy, says Brian Willms, the president and CEO of the Loveland Chamber of Commerce. "We have this fantastic wind corridor to produce wind energy, over 300 days of sunshine a year—so it's a great place for solar energy—and we have some of the most productive natural gas reserves in the country," he says. "And with all of the research and development taking place here, it's a perfect culmination for a new energy economy." Fort Collins's 2008 median home sale price was $212,000. Home prices in the Fort Collins/Loveland area should rise an average of 4.1 percent annually over the next 10 years, Moody's Economy.com projects.