America’s Ten Worst Housing Markets Poised to Recover

Nationwide, the housing market is still reeling from one of the worst crashes in history. Still, over the next two years, some areas are expected to start recovering. 24/7 Wall St. has identified the ten metropolitan areas where home prices are projected to increase the most by next year. However, since most of those markets have experienced exceptionally large drops in home prices, the revival is bittersweet.

Six of the ten metropolitan areas that are projected to have the largest home prices increase from the second quarter of 2011 to the second quarter of 2012 are also among the top 50 areas that experienced the worst housing prices declines from the second quarter of 2008 to the second quarter of 2011. The housing markets in these areas were so decimated by their real estate bubble burst that they are considered to be at their bottom with no room to get even worse. Such bottoms tend to draw in investors. The inflow of new money causes these markets to bounce back, driving home prices back up.

Of course, there are many large cities, such as Las Vegas, Nev., and Riverside, Calif., that were also hit exceptionally hard by the housing crisis that are not expected to recover in the coming year. The difference between these cities and those on this list is their size. The metro areas that are projected to recover have slightly more than 100,000 residents, for the most part. Carson City, where home prices are expected to increase by 15.5%, has fewer than 55,000 residents. As a result, housing inventories are much smaller. It is much easier to turn around a housing market on this scale than on a much larger one.

24/7 Wall St. used data from Fiserv for 384 metropolitan areas to compile this list of the ten cities where home prices are expected to increase the most from the second quarter of 2011 to the second quarter of 2012. We also included future projected price increases, population, when the metropolitan areas reached their price peaks, and unemployment rates, all provided by Fiserv.

These are the cities where home prices are expected to increase the most by next year.