The housing market went up and now the housing market is going down. Where should you invest in real estate? What areas will see appreciation?

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.

Real estate has been an incredibly hot investment over the last several years. The number one subject that I speak the most on is Real Estate. Working in a real estate investment firm, I am immersed in the market. Over the last few years, I’ve seen people succeed and I’ve seen people burn in real estate investing.

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.