Which cities have the best real estate bargains? Which are overvalued?

[CaliNative]

Most of coastal California (and maybe Oregon & Washington also) seems greatly overvalued, maybe even in "bubble" territory--SF, LA, SD of course. NYC seems overvalued--especially Manhattan condos. Some of the Midwest cities look like relative bargains. Detroit, Milwaukee, Pittsburgh. K.C., Cincy, Columbus, Cleveland, St. Louis etc. In Texas, are Austin & San Antonio still bargains? Discussion open to Canadian & European bargain cities as well--is Liverpool still depressed, or is it coming back? Manchester? Prague? Warsaw? Athens? How about Australian cities? Asia? South America? I hear a lot of good things about Buenos Aires and Montevideo. Discussion can include the cities themselves, or suburbs. Specific info about the cost of homes & apartments (average quality) would be useful.

I'm completely disgusted with the cost of homes and apartments in California, and looking for new experiences. CA weather can get boring, and always the threat of quakes (I hate earthquakes--worse than tornados which can be predicted! Went through Sylmar in '71 as a kid, and Northridge in '94. Never again!). Rents are unbelievably high. California only works for rich people.

What are the best city real estate bargains today (in relation to quality of living, low crime, things to do, etc.), and which are the most overvalued? I would rule out any city with a high crime rate as a place to live, especially violent crime. So, low real estate prices, low rents, high quality of life & low crime is the filter. I would rule out most southern U.S. cities & some Midwest cities because of high crime.

[dave8721]

^^Crime is almost always neighborhood based. Even in most "high crime" cities, the vast majority of that crime is contained to just a couple of neighborhoods.

[Double L]

Austin is expensive from a Texas perspective but it is affordable compared to California or from a nationwide perspective. The rest of Texas remains pretty affordable, especially San Antonio.

[Leo the Dog]

SD is ridiculous.

The median price of homes currently listed in San Diego is $619,000. The median rent price in San Diego is $2,400.
zillow


Median incomes aren't that high. For a family of 4, median household income is only $68,000. Having an unlimited source of cheap labor on your doorstep (Tijuana) suppresses wages compared to the rest of CA. If your family of 4 is spending nearly $30,000/year in rent alone, not too much left over for other expenses/savings.

Due to state overregulation and the NIMBY element, it is nearly impossible to build anything anywhere especially in the coastal zone making it basically impossible to meet demand.

[Centropolis]

the cities im most familar with:

chicago is pretty freakin' cheap for a large city, and has plenty to do, but is somewhat removed from large natural areas except for the beaches of western michigan and southern wisco. philadelphia is probably still pretty affordable, too. the weather is hotter in philly in summer, and chicago is noticeably colder in winter...pick your poison.

minneapolis, st. louis, kansas city, cincinnati are of course all "deeper" into the continent but more affordable yet. they all have relatively low traffic (minneapolis is worst) and built out infrastructure and decent amounts of historic architecture although st. louis and cincy are older and have way way more prewar suburban stuff. cincinnati is the least isolated city of those and has tons of weekend options, while kansas city is probably the most isolated feeling. st. louis is probably the cheapest, although both cincy and st. louis also have the largest variety of architecture and have the most historic architecture. minneapolis large enough to overcome its isolation, and has some cool nature in the state, and is the most rapidly regenerating.

theres the inland sunbelt stuff like nashville, atlanta. i personally like inner atlanta the best...its on a plateau, heavy tree canopy, some cool stuff in town and nearby. however both nashville and atlanta have an obnoxious amount of traffic/sprawl/exurbia and if you go suburban, you are setting yourself up for misery. historic central neighborhoods are actually becoming expensive due to the small supply. however both atlanta and nashville are near low mountains, and atlanta is also nearish the beach and historic coastal cities.

i know less about texas...but have spent a lot of time in traffic in that state!

[Crawford]

Originally Posted by CaliNative

Most of coastal California (and maybe Oregon & Washington also) seems greatly overvalued, maybe even in "bubble" territory--SF, LA, SD of course. NYC seems overvalued--especially Manhattan condos. Some of the Midwest cities look like relative bargains.

Expensive doesn't mean "overvalued". I would much rather bet long-term on Coastal CA real estate than on Indianapolis and Columbus real estate. I don't get why people are always conflating cost and valuation.

To me, Coastal CA, along with Manhattan and environs, are about as safe a property investment as one can find, anywhere on the planet. Unless the U.S. turns to crap these are the most desirable locales in the wealthiest, most powerful nation in global history.

Of course if you want cheap real estate, and don't care about long-term valuation, these are terrible locations.

[Gantz]

Originally Posted by Crawford

Expensive doesn't mean "overvalued". I would much rather bet long-term on Coastal CA real estate than on Indianapolis and Columbus real estate. I don't get why people are always conflating cost and valuation.

I agree with you in that expensive doesn't mean overvalued, but I just came back from the Bay area and there is no way their real estate is not overvalued. Even by NYC standards, the Bay area is very expensive. There is no way some of those houses should cost as much as they do, but the Bay area is experiencing huge job growth coupled with very restricted zoning and lack of supply coming in. Those houses are not backed up by real estate fundamentals.

At least in other expensive areas around the country you get what you pay for, e. g. good location, low crime neighborhood, access to amenities, urban setting, good infrastructure, good schools. In the Bay area in a lot of cases you get none of those things and still pay over $1mil for a house just because its literally the only house you can buy (developers are not allowed to build more) if you want to live because you got a job in the area.

[Crawford]

Originally Posted by Gantz

I agree with you in that expensive doesn't mean overvalued, but I just came back from the Bay area and there is no way their real estate is not overvalued. Even by NYC standards, the Bay area is very expensive. There is no way some of those houses should cost as much as they do, but the Bay area is experiencing huge job growth coupled with very restricted zoning and lack of supply coming in. Those houses are not backed up by real estate fundamentals.

Well I was talking about Coastal CA, not the Bay Area. I agree that $1.2 million ticky-tack homes in the outer East Bay are probably overvalued and highly vulnerable to a tech downturn. SF proper is probably a much safer investment, and doesn't seem that outrageously expensive to me. Apples-to-apples it's much cheaper than core NYC.

The crazy thing about the Bay Area isn't the relative cost in the core, but rather the surprising costs in very generic, medicore suburbs. That's the real jaw-dropper. Paying a million bucks for a crapbox in Concord or Fremont.

I think the CA coast is a very safe investment, though. I have family with coastal RE in Southern CA and I very much envy them. What is safer than panoramic Pacific views?

[Gantz]

Originally Posted by Crawford

Well I was talking about Coastal CA, not the Bay Area. I agree that $1.2 million ticky-tack homes in the outer East Bay are probably overvalued and highly vulnerable to a tech downturn. SF proper is probably a much safer investment, and doesn't seem that outrageously expensive to me. Apples-to-apples it's much cheaper than core NYC.

I agree about SF proper. Although I think areas south of Glen Park might be getting into that "overvalued" territory.

[mousquet]

Seeing the rough data there:

http://www.meilleursagents.com/prix-immobilier/

You could say that generally speaking, anything in France outside Central Paris and its western inner suburbs seems to be a fair deal, but of course things get much more complicated when you look at it in details.

The Mediterranean coast, especially the east side of it called Riviera, that comprises Nice and Monaco for instance, and Corsica can be overpriced too.

So as far as I'm concerned, I find Bordeaux, Lyon and Nantes are the current best deals in there. Not necessarily the cheapest, but development is fairly steady over these 3, especially in Bordeaux whose mayor might be the next president over here, and in Nantes that's doing much better than the rest of the country as a whole.

Many in Paris like Toulouse too, and would willingly move over there if they got an opportunity, but I think it sprawls a lot. Don't think they like urban density so much over there. They like their single-family homes with their pools in their yards when they can afford something comfortable.

Marseille and Lille might go up on everyone's list sometime soon, cause some interesting developments are starting to be implemented out there as well.

Even though I'm a local, I wouldn't particularly recommend Greater Paris for now. It's obviously and by far the largest, most famous, most urban and cosmopolitan, but often tends to be a little exhausting when you're no millionaire or when you ain't used to it enough. Dense cheaper areas are often rough here. And France is usually "nicer" anywhere else, especially at foreigners.

[Crawford]

Originally Posted by Gantz

I agree about SF proper. Although I think areas south of Glen Park might be getting into that "overvalued" territory.

Yeah, i don't know all the SF proper particulars, but I have friends who have bought in nice SF neighborhoods like Noe Valley and the Marina, and while very pricey areas, they doesn't seem that outrageous compared to other global cities.

But I don't think SF gets a lot of "global expat" types. It's probably just local money; high earning SF professionals. You don't get the minor Saudi royalty, the random Swedish playboys, the Russian money launderers and the like. They prefer NYC, Miami, LA, London, South of France. And I would bet the vast majority of Bay Area tech money is living in Silicon Valley rather than in SF.

[The North One]

Originally Posted by dave8721

^^Crime is almost always neighborhood based. Even in most "high crime" cities, the vast majority of that crime is contained to just a couple of neighborhoods.

Basically this, it's really stupid when people rule out entire cities or make generalizations. It's hilarious how you rule Detroit "still depressed" but Cleveland is nothing but revitalized urban heaven? You're asking for emerging markets but then rule out everything but the coastal cities with established and expensive markets. Even cities like St. Louis have great neighborhoods that offer some of the best value with beautiful old homes that would cost millions on the Coasts but you're willing to discredit the whole thing based on perceptions.

There are plenty of safe and beautiful bikeable neighborhoods within Detroit city proper but if you don't feel like taking the chance (I would argue it's not even a chance because the urban migration trend is obvious and will continue) there are plenty of semi-urban walkable options in the suburbs of Detroit, Ferndale, Royal Oak, Ann Arbor, etc. that are hot markets but still offer pretty good deals. Honestly, the hottest market right now is Midtown, but midwestern cities are too dangerous for you, so stay away!

[memph]

I wonder how much the rise in housing prices in expensive cities can be self-perpetuating. If housing prices double but the value of your own house also doubles, your ability to afford housing hasn't gone down much. It only hurts new homebuyers, and if your parents own real-estate in the area, you can benefit from help from them/inheritance. So it's only newcomers that really get the shaft, but if there's relatively few of them, or if they're wealthy foreign investors, or if they're brought in by high paying jobs, that can explain how prices are able to continue to rise.

[Crawford]

Originally Posted by memph

I wonder how much the rise in housing prices in expensive cities can be self-perpetuating. If housing prices double but the value of your own house also doubles, your ability to afford housing hasn't gone down much. It only hurts new homebuyers, and if your parents own real-estate in the area, you can benefit from help from them/inheritance.

Yeah, I've alluded to this argument. Relative prices generally only matter for newcomers and renters.

For locals who already own (the majority of the population in every U.S. metro) it makes no difference. For those who have parents who are owners, the potential long-term benefits are enormous, especially if you want to take those profits and go to a cheaper market.

[The North One]

Originally Posted by memph

I wonder how much the rise in housing prices in expensive cities can be self-perpetuating. If housing prices double but the value of your own house also doubles, your ability to afford housing hasn't gone down much. It only hurts new homebuyers, and if your parents own real-estate in the area, you can benefit from help from them/inheritance. So it's only newcomers that really get the shaft, but if there's relatively few of them, or if they're wealthy foreign investors, or if they're brought in by high paying jobs, that can explain how prices are able to continue to rise.

You're excluding an entire class of people who rent in their home cities and the new generations who can't afford their own homes even if their parents own property. Being a college graduate with debt and then trying to find a home or rent in an expensive city is a major disadvantage, their ability to afford a home has plummeted and so more affordable cities are a huge draw to them. Waiting for your parents to die so you can inherit that cold hard cash isn't a real solution and likely won't happen until late adulthood.

[dc_denizen]

Detroit is the most undervalued:

http://detroit.curbed.com/2016/10/11...-home-for-sale

When we see big houses listing for over $300K in the city, we generally think they’ll be in Indian Village, Boston Edison, Palmer Woods, or Sherwood Forest. So we were a bit surprised to see a North Rosedale Park address on this one. No doubt, there are some great houses in that area,but that price ... It’s all move in ready (except appliances) and listing for $349,000.

[The North One]

Originally Posted by Crawford

For locals who already own (the majority of the population in every U.S. metro) it makes no difference. For those who have parents who are owners, the potential long-term benefits are enormous, especially if you want to take those profits and go to a cheaper market.

It's only beneficial if they liquidate their assets in a peak market. And if parents do that while still alive, where do you expect them to live? Split their earnings and buy two houses in the same overpriced market so they and their children can have a home? That wouldn't be any different if the market were less expensive. Unless you get a circumstance where your parents die in a peak market, sell the home and get out with the cash and buy in a more affordable city.

It's a lateral move no matter what if you plan on buying and living in the same city unless you invest in a transitional neighborhood or start buying investment properties, investors only see the benefits because they buy when the market is down and sell when things get good.

Edit: I realized we're essentially agreeing.

[CaliNative]

Originally Posted by Crawford

Yeah, i don't know all the SF proper particulars, but I have friends who have bought in nice SF neighborhoods like Noe Valley and the Marina, and while very pricey areas, they doesn't seem that outrageous compared to other global cities.

But I don't think SF gets a lot of "global expat" types. It's probably just local money; high earning SF professionals. You don't get the minor Saudi royalty, the random Swedish playboys, the Russian money launderers and the like. They prefer NYC, Miami, LA, London, South of France. And I would bet the vast majority of Bay Area tech money is living in Silicon Valley rather than in SF.

If I can get affordable real estate in the south of France, I'm there in a minute. CA is over for me. Been there, done that. The California dream is over for those without 7 figure bank balances, unless you want to live in Fresno or Moreno Valley.

[CaliNative]

Originally Posted by dc_denizen

Detroit is the most undervalued:

http://detroit.curbed.com/2016/10/11...-home-for-sale

That looks like a very nice house. A house like that would sell for well over $2 million in CA. Maybe Detroit & suburbs is just fine. Ann Arbor seems great.

[CaliNative]

[QUOTE=The North One;7600893]Basically this, it's really stupid when people rule out entire cities or make generalizations. It's hilarious how you rule Detroit "still depressed" but Cleveland is nothing but revitalized urban heaven? You're asking for emerging markets but then rule out everything but the coastal cities with established and expensive markets. Even cities like St. Louis have great neighborhoods that offer some of the best value with beautiful old homes that would cost millions on the Coasts but you're willing to discredit the whole thing based on perceptions.

There are plenty of safe and beautiful bikeable neighborhoods within Detroit city proper but if you don't feel like taking the chance (I would argue it's not even a chance because the urban migration trend is obvious and will continue) there are plenty of semi-urban walkable options in the suburbs of Detroit, Ferndale, Royal Oak, Ann Arbor, etc. that are hot markets but still offer pretty good deals. Honestly, the hottest market right now is Midtown, but midwestern cities are too dangerous for you, so stay away!

I was hasty to rule out Detroit and other cities like St. Louis. CA cities can be "edgy" too. I'll take a look at Detroit & suburbs, and St. Louis. I hear downtown Detroit is coming back in a very good way, with the new Tiger Stadium etc. Maybe Buffalo NY is a good place to look at too. Many real estate bargains and a short drive to spectacular Niagara Falls & Toronto & finger lakes wine country. Heading over to Detroit area real estate listings right now. Peace.