New Rules of Real Estate 2007

How to play the real estate bounce-back

The housing market may be melting down, but Business 2.0 worked with Moody's Economy.com to identify 10 cities that have just about hit rock bottom - and offer opportunities for savvy investors to get in while the getting's good.

Atlanta
Atlanta
Projected median sales prices for single-family homes:

Q1 2008: $177,750
Q4 2009: $187,640
Growth: 5.6 percent

Half a million dollars probably won't buy you a home in one of Atlanta's Martha Stewart-style neighborhoods. And that's a good thing, argues Dan Forsman, CEO of Prudential Atlanta. Forsman says the smart money here will move upmarket, in exactly the opposite direction of where it will go in New Orleans. A contrarian by nature, he sees the biggest arbitrage in properties priced at $750,000 in high-end communities northeast of the city - suburbs like Druid Hills, Duluth, Johns Creek, and Suwanee. The construction cost of a home in those pockets is $260 a square foot; right now, you can pick one off for $180.

Boding well for the local economy, "Hotlanta" boasts one of the highest rates of job growth in so-called creative-class occupations in the country. Why? It's the top destination in America for young professionals, a transportation hub (Atlanta's airport is the busiest in the world), and a place where most Fortune 500 companies maintain a regional presence. Projections by researchers at the U.S. Census Bureau and Virginia Tech place Atlanta at the center of a "megapolitan" cluster of urban sprawl that will develop over the next quarter-century, encompassing 7 million people.

This points to another niche real estate play: As buildable land around the city disappears, downtown neighborhoods on the brink of transformation are ripe for investment.

Dallas-Fort Worth

Indianapolis

New Orleans

Atlanta

Montgomery

Memphis

Mobile

Austin

Houston

St. Louis
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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.