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.

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

Q1 2008: $143,550
Q4 2009: $150,730
Growth rate: 5.0 percent

Graceland aside, Memphis doesn't have many signature landmarks pumping up its property values. In fact, the city has been getting a bad rap because some real estate pros consider it one of the country's foreclosure capitals. But Memphis's housing market should hit bottom within the next few months, and the average home bought in 2003 still managed to sell for 12 percent more last year. Even better, prices have held steady this year, although the average number of days that homes sit on the market has grown larger. The PMI Risk Index, an econometric model developed by PMI Mortgage Insurance that predicts declines in home prices, consistently ranks Memphis as one of the nation's least vulnerable markets. And a survey by the forecasting firm Global Insight and National City Corp. has listed Memphis as one of the most undervalued markets in the United States for several years because of the low cost of housing relative to household income.

You can find some good values near Beale Street, the birthplace of America's blues scene, where a downtown condo-building craze has stranded a swath of empty units on the multiple listing service. But the best investment is one that taps into the collateral damage of the credit crunch. More couples and families will fail to qualify for mortgages and resort to renting single-family homes instead of buying them.

Dallas-Fort Worth

Indianapolis

New Orleans

Atlanta

Montgomery

Memphis

Mobile

Austin

Houston

St. Louis
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Where homes are affordable Residents who buy real estate in these 25 towns see their incomes go the furthest. (more)
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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 LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. 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.