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.

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.