Being in the business of real estate investing, I am constantly immersed in the state of the housing market. I love real estate and I love following its trends. One thing I’ve been watching are the predicted hot areas for 2007.

Overall the healthiest markets are in the southwest, home to 4 of the top 10. Another area of interest is upstate New York, home to 2 predicted hot markets in 2007.

I’ll admit that I’ve struggled a bit with publishing this article. Over the last several weeks I’ve been back and forth on whether I should publish it or not. As you can see, I’ve decided to go ahead and put it up. I don’t have all of the answers on this one, I’m just sharing the information that I have.

That being said, here’s the 10 Hottest Real Estate Markets in 2007:

10th Hottest Housing Market – Birmingham, Ala.

We start out in the deep south. The 234,000 people in this bustling metropolis should see an average appreciation of 4.4%

#9 – Fort Worth-Arlington

With a low median home price and an increase of available jobs, families are gravitating towards the Dallas-Fort Worth area. Increased demand for homes should move 2007′s appreciation rate to 4.4%

#8 – Baton Rouge

This has been a hot place in the past. In 2004 the median housing price jumped a staggering 13.9%. In 2007 look for housing prices to grow 4.5%

#7 – Rochester, N.Y.

Compared to the national average Rochester has a below average median income, however, as a percentage of the median home price it is very high. This unique combination will push housing prices up by about 4.5%

#6 – San Antonio

San Antonio has been a hot spot in the past and it will continue to be a hot spot in 2007. Look for appreciation rates in the neighborhood of 4.8%

#5 – Syracuse, N.Y.

Syracuse is similar to Rochester in the fact that the median income is very high in comparison to the median home price. Look for appreciation rates to hover around 4.8% this year.

#4 – Salt Lake City

This area was a surprise for me. Salt Lake City’s median income is very low in correlation to its median home price which could indicate that housing is overpriced. In addition, the crime rate is much higher that the other areas on the list. However, it is still predicted to have an appreciation rate of 5.4% .

#3 – Albuquerque

Albuquerque is another interesting place. With a predicted appreciation rate of 5.9% you would expect something special there. This spot has been hot in the past though.

#2 – El-Paso

I like El-Paso. For the most part, it is a good place to live. The crime rate is reasonable low and the public school system isn’t half bad either. The rest of the country seems to agree as the population continues to grow. This increased population has brought a demand for housing driving home prices up. I won’t be surprised at all to see a 7.1% appreciation rate this year.

The #1 Hottest Housing Market in 2007- McAllen, Tx

With a projected growth rate 8.5%, McAllen is the big winner. McAllen has been underrated for years and only recently has it been moving into the spotlight. People are beginning to see a future on this small border town. I think that McAllen, Texas will be the hottest housing market in 2007.

For more information check out CNN Money.

Unfortunately, you can’t always find the deals before they go into foreclosure. Some investors try to purchase foreclosed properties at real estate auctions or sheriff’s sales. I tend to avoid those. When purchasing a home at an auction there are several factors that can work against you such as very tight time constraints and a limited ability to inspect the property.

If a property doesn’t sell at auction then the mortgage holder, usually a bank, is stuck with the property. The property is now known an REO, or Real Estate Owned. I found a great article that I’d like to share about “The Advantages of Buying REO Properties – Real Estate Owned Properties.”

Here’s what the Author has to say:

• All liens against the property are removed once it becomes an REO, and taxes are paid.
• Unlike properties at foreclosure auction, REOs can be inspected prior to contract, and are listed with real estate agents.
• While many foreclosures are often in deplorable condition, REOs are typically restored to at least a readily salable condition by the lending bank.
• The bank or lending institution that owns the property will often offer financing with better deals then they would offer on traditional properties.
• The bank or lender that owns the property will often provide an allowance for certain repairs.
• You can save money in your title search if you use the same title company that the lender used during foreclosure. They will often discount the cost up to as much as 100%!
• REO properties are usually listed on your local MLS (multiple listing service), or can be located by going directly to your local REO bank’s website.
• REOs will often times include appliances
• While in hot markets, you may not see a difference in price between an REO and a typical property, during slower markets, you can pick up an REO at discounts to the property’s actual value.

Checkout the rest of the article here.

Why Has It Been So Hot?
With the housing market boom over the last several years, people have seen incredible returns in their real estate portfolio. The cable channels are flooded with shows about ‘flipping houses.’ We see every day people making six figures with what seems like minimal work.

Because of all this, real estate looks to be a safe, secure investment. We see people like Carleton Sheets and Robert Kiyosaki that have supposedly made millions from real estate. Everywhere we turn, we see people making money in real estate.

What’s The Truth?
We constantly hear reports of people making ridiculous returns on their investments, however, what we don’t hear is how many people have lost their shirts playing the same game. Real estate investing can be incredibly risky unless you are very well informed. People like Carleton Sheets make more money selling their programs than from actually practicing what they preach. Everyone may be in real estate, but everyone isn’t making money.

Try This With Your Stock Broker
What would your stock broker say if you brought him $10,000 and wanted to buy $100,000 in Google. Even with an aggressive margin account, that would never be happen! Here the great thing about real estate, that same scenario happens every day! In fact putting only 10%-20% down on a property is the norm. In real estate, you get the benefit or using other people’s money.

Real Estate Is Tangible
One reason many people prefer to invest in real estate over equity markets is that real estate is tangible. You can touch it. If you own shares of XYZ company, the best that you can get is a quote on your screen. I like being able to drive to a house and say that I own it. It makes me feel more secure. I feel like I have more control when I can reach out and touch something physical.

Less Risk = Greater Return
When done correctly, you can achieve much better returns in real estate than you can on wall street without additional risk. In fact, I would argue that you can achieve better returns with less risk. Try getting insurance on your stock portfolio. It will never happen because insurance companies know that real estate is a much safer investment.

It’s Not Rocket Science
The last and the best advantage of all is that you don’t have to be a Warren Buffet to make good money in this ring. When trying to make money in the stock market, you need to understand technical and fundamental analysis techniques. You need to understand things like inventory turnover, daily sales ratios, bollinger bands, and historic trends.

In real estate, it’s a much simpler process. If you have a good real estate agent and you can understand a basic financial sheet, then you are set. A good Realtor can help you with everything else.

Get Rich Quick (or not…)
Real estate can be a very good investment if done properly. But here’s the caveat: real estate is a long term investment. That doesn’t mean that you have to hold the same property for 60 years, but it does mean that you shouldn’t go into it expecting to make a small fortune overnight. The majority of the time, people that are making serious cash in real estate either had a lot of money to start with or they’ve been systematically investing for many years. Real estate is not a get rich quick game.

Enter 2007.

The Housing Market Will Normalize – Some areas will see growth, some will see prices come back down to where they should be. According to the article “Best and Worst Real Estate Markets” there will some spots that are hot and some that are not.

If you happen to live in the northeast, your market looks to be fairly steady with a few hot spots and a few cool spots, ranging from a projected 4.8% growth in Syracuse, N.Y. to a -3.6% drop in Poughkeepsie, N.Y.

If you reside in the south, congratulations, you are home 12 of the 20 hot spots for 2007. The big winner is the area around McAllen, TX with a predicted growth rate of 8.5%. However, if you happen to be in Florida, watch out. You could see housing prices fall by as much as 5%.

How about the midwest? Well, it’s about as exciting there as it was in the boom market last year. It doesn’t really have any losers, just a pretty steady growth rate around 2.5%-3%.

And finally, the big boys, the west coast. You’ve had your fun over the last few years seeing enormous growth and over inflation of housing prices. Now, it’s time to pay the piper. You could see housing prices deflate by as much as 6%. In short, if it was hot last year, it won’t be this year.

The Equity Markets Will See Steady Growth – BusinessWeek believes that Optimism Reigns in 2007. Companies have shown tremendous growth over the last several quarters. We’ve seen double digit growth out of some giant blue chip companies. We’ve seen nearly 13% growth out of the S&P 500 in 2006.

Is this growth sustainable? Well, in the short term, we may see the markets decline as earnings normalize and the slumping housing market starts to take effect on the economy. However, by mid-year 2007 I see a very normal growth rate returning to the market. Consumers are optimistic, incomes have been growing while inflation has been relatively low. This leads to more disposable income. Some of which will be pumped back into the economy.

Don’t look for recored setting growth, but do expect to earn a respectable return on your investments.

2007, I believe, will be a brighter year. Markets will begin to normalize and the economy will continue to level off. Crime rates will drop, crooks will repent, the rain forest will re-grow and the ozone layer will improve…alright, maybe that’s a little too optimistic. But seriously, 2007 will be a better year.

When you are looking for investment advice you go to an established broker. You go to one that has a good reputation and one that has experience. If that is true for people’s equity investments, then why don’t they put as much time into researching the one that will market and sell one of their largest assets, their home? In this article I want to look at how to pick a Realtor in a slow housing market.

In 2005 the National Association of Realtors (NAR) took a survey that revealed over half of its members have four years or less of experience under their belts. This slump that we’re seeing in the housing market is the first in 11 years. That means that more than half of the Realtors in the United States have never seen a slow housing market! So what do you look for in picking an agent? Well, I think you already know my first point – Look for a Realtor with experience.

Why is that important? It’s important because there is a big difference in a market where houses sell in a matter of days with offers higher than the asking price (like we’ve seen over the past several years) and a market where homes may sit for months before any offer is submitted (the market that inexperienced Realtors have never seen.) In this market a buyer can literally look and look and look until he finally goes home and says, “Forget it! I’m not moving. There’s too many homes to choose from.” (No kidding I actually heard that this week.) You need a representative that knows how to market your home. That skill comes with experience.

That leads me to my second point. Look for is an agent that uses effective marketing channels. At Realty 1 (the real estate investment firm that I am involved with) we advertise above and beyond the local Multiple Listing Service (MLS). For instance, we advertise all of our homes on 14 different websites, we have a 24-hour 1-800 number dedicated to each property, we send out flyers, we have open houses, we hold brokers opens, and we send our listings to several relocation services around the country. We track all of our advertising channels and we know what works. Find an agent that knows how to market.

Finally, look for a Realtor that has a good personality. This seems so simple, but so many people miss it. They look for the guy that is flashy; the guy that says things like “I can get you top dollar on your house.” When you’re interviewing your next prospective Realtor look at how your conversation is going. Does he seem warm and friendly? Does he seem genuine? Does he have your interests at heart? If he makes you feel uncomfortable, think about how prospective buyers will feel that come to look at your home. Don’t fall for the slick Realtor that uses flashy words and phrases that put dollar signs in your eyes. Look for the one that you can work with and the one that you think will make your buyers feel at home in your old house.