America's 25 Strongest Housing Markets

Jan. 19, 2009— -- The housing boom passed right over Little Rock, Ark.

So has the bust.

This quiet mountain metropolis of just over 675,000 saw none of the wild speculation of former boomtowns like Las Vegas or Miami, nor the ruined fortunes that followed. Of course, Little Rock isn't completely isolated from the recent housing downturn. There are 200 foreclosures in the works, according to Trulia.com, an online real estate data provider. Developers are scrapping new housing projects, and sales activity froze in the third quarter.

But housing prices in Little Rock don't look likely to fall by more than about 1 percent by the middle of next year. That's because they never climbed like they did in the rest of the country. In fact, 1 percent is about how much they have risen in the last year.

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It's the same story for McAllen, Texas, Syracuse, N.Y., Pittsburgh, Buffalo, N.Y., and El Paso, Texas. They top the list of the country's strongest real estate markets, in part because, like Little Rock, "none ... participated in the housing boom," says Mark Zandi, chief economist for Moody's Economy.com. "Some are down just because the economy is bad."

Behind the Numbers

To compile this list, we asked Moody's Economy.com to compile a list of the country's real estate markets that are nearest to recovery. Moody's looked at the country's Census-defined metro areas--including metropolitan and micropolitan statistical areas--with populations over 500,000, and prepared forecasts through 2011. They then compared them to prices in the second quarter of 2008, which are the latest figures available, to calculate how far prices will likely fall before reaching bottom.

Not one metro area will see prices increase before the end of this year, according to Zandi's forecasts. The strongest metro areas will be flat at best--but that's better than the 15 percent drop Moody's expects on average in the U.S. Prices won't start to pick up again until late this year or sometime next year even in the strongest markets.