Housing Market 2013: Best and Worst Cities in the New Year

Happy New Year, and welcome to 2013! We're barely into the new year, and we're already thinking about what we can expect from the housing market in the next 12 months. Luckily, our friends at online real estate site Trulia were thinking the same thing.

They rounded up 13 of the healthiest markets in the U.S. going into 2013, and 13 of the least-healthy markets. In coming up with their lists, they took into account how local employment, foreclosures and home sales and prices are affecting each market. Click through the gallery below to see which real estate markets are off to a good start in 2013 and which are already down on their luck in the new year.

Healthiest and Least-Healthy Markets Going Into 2013
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Housing Market 2013: Best and Worst Cities in the New Year

Houston is one of several Texan cities on the rise this year. There are a handful more that number among the healthy markets that made this list. One major reason: job growth. Houston has seen an influx of jobs over the last year, and that will help drive demand for housing. Not that Houston needs it...

The number of homes for sale in the city was at a decade-low in October, with sales of condos and townhouses spiking 41.6 percent from the same period a year earlier, according to the Houston Chronicle. And online listing site RealtyPin.com wagered that, because Houston foreclosures have dwindled and jobs are more plentiful, the city's real estate market will likely be little affected by the fiscal cliff.

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The housing market in Detroit has had some wins lately -- home prices jumped 22% in November from a year earlier -- and the outlook was definitely looking bright toward the end of 2012. But here's the thing: Detroit was one of the hardest-hit cities in the nation during the housing bust. Home prices in the city fell so far that they still have a long road back to being healthy.

Detroit's home values lost close to 60% of their peak value around the worst of its decline. So despite recent gains -- which are encouraging enough for Forbes to question whether Detroit is a "comeback kid" in real estate -- the market is still incredibly fragile. Foreclosures, though down, are still rampant in Detroit, and the city still has a backlog of homes selling for as little as a $1.

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San Francisco has been riding high on the tail of a recent report from the Urban Land Institute, which predicted that the city's real estate market would be No. 1 for development, investment and homebuilding prospects in 2013. If all that development comes through, it will have a positive impact on further driving housing demand and prices.

San Francisco rents have also surged at the same time median home listing prices have, both surging more than 15 percent in June from a year earlier. At the same time, home inventory was down 40 percent, all those figures combining for a recipe for success. You know things are going good -- well, if you're not a buyer paying those prices -- when your city is voted the second-least-affordable market in the country.

An explosion of tech jobs doesn't hurt, either.

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Fort Lauderdale might have finally seen home prices bottom out in 2012 and begin to turn the corner upward, but, even in November, the state of Florida maintained the third-largest foreclosure inventory in the country. The number is edging down in Fort Lauderdale, but the oversupply is expected to continue to weigh on home a local real estate recovery next year.

There are encouraging signs for the city, though. Between September and November, home prices increased 20 percent from the same time period a year earlier, and home sales increased almost 14 percent. But Fort Lauderdale's recovery is in its infancy, and the market will be lucky to even be back to normal levels before the end of 2013.

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Strong job growth coupled with one of the lowest foreclosure inventories in the country makes the Bethesda area a promising market in 2013. The local vacancy rate was down to 1.2 percent in November and a foreclosure rate of 2.7 homes per 1,000 in October. The nearby Washington, D.C., market is also experiencing its own recovery, giving a boost to Bethesda.

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There's been talk of a possible real estate bubble in Miami, but look passed the hype. It's true that foreign buyers have been driving demand for luxury housing there -- accounting for notched-up home sale prices -- but that can't be sustained under Miami's desolate job market.

The city had the fourth-worst job market in April, and it made the top 10 list of worst job markets in 2011. The local unemployment rate of 8 percent in November was down from a rate 12.4 percent in December 2010, but it's still contributing to a steady rate of mortgage delinquencies and foreclosures. There are 24,725 homes in Miami in some stage of foreclosure, according to the latest Trulia overview of the market.

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San Antonio's housing recovery has outpaced some of the larger metros in Texas, such as Houston and Dallas. But even back in the midst of the real estate crash, San Antonio was better off than most other cities. In the earlier years of the downturn, while most cities were reeling, San Antonio was posting impressive home price increases. Ever since then, it has steadily gotten better every year, putting it in pretty good shape for 2013.

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One out of every 349 homes in West Palm Beach received a foreclosure notice in July, Consumer Affairs reported. That's pretty typical for that region, and it's a pretty good sign of a housing market still poisoned and dragged down by the housing crash.

The number of home sales has been a bright spot for the local market, as it has for Florida in general, but sales prices fluctuate rapidly. Between June and July, sales prices took a 15 percent dive. West Palm Beach can expect a lot of the same volatility in 2013.

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Home sales in Austin have been surging forward. November marked the 18th month in a row that home sales volume posted gains, and it was the strongest November for that measure since 2007.

It has also been reported that Austin is one of the strongest seller's markets in the nation, where homes priced at less than $200,000 often sell within three months -- far faster than many markets.

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While many U.S. cities report having seen solid signs of a recovery in 2012, Cape Coral's bounce back has been meager at best. The brightest sign is an influx of construction permits, which indicates building activity is on the verge of a sharp rise -- but no specific projects have been announced yet.

Foreclosures remain the biggest hurdle for the local housing market. Here's how bad it is: You can sign up for tours through foreclosure-ravaged neighborhoods in Cape Coral. The New York Times went on one and found homes with disturbingly large drops in value.

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Seattle was noted as the fifth-best market in Realtor.com's list of "turnaround towns" in the third quarter of 2012. A 13 percent rise in home prices and a 40 percent reduction in housing inventory drove the city's recovery.

Those trends, along with Seattle's low foreclosure rate (1 in every 1,149 housing units in the third quarter), should make the city a strong market in 2013. It's worth noting that Seattle's foreclosure rate experienced an uptick toward the end of 2012, but it still remained well below the Washington State and national averages.

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The National Association of Home Builders eyed the Palm Bay-area market as one that is on the cusp of improvement, pointing to increased tourism as a big source of an upswing.

But median home sale prices have remained very low: It was only $78,000 between September and  November. Forbes also named Palm Bay the No. 1 "foreclosure capital" in the country in July, with a year-over-year foreclosure filing increase of 231 percent.

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Home prices have actually stumbled recently in Omaha, down nearly 14 percent between September to November compared to the same time period a year earlier. But there are other things that make this market a good prospect for 2013: It has a low vacancy rate and a stronger-than-average job market.

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Chicago recently topped Zillow's list of the best markets for buyers in the country -- but that's not good news for local real estate.

It means that homes stay on the market longer in Chicago, relative to the rest of the country, and sellers often have to cut their prices to the point where they're selling homes for less than they bought them.

In October, Chicago's foreclosure rate posted an 18 percent increase from a year earlier. In the neighborhood of Ashburn, the hardest hit in the city, 1 in 137 homes were in some stage of foreclosure, according to RealtyTrac. None of this bodes well for Chicago's ability to see meaningful recovery in 2013.

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The median home asking price and sale price in Peabody has outpaced larger metro areas -- save for the closest one, Boston. A low vacancy rate of 2.4 percent and steady job growth make for a powerful mix and a pretty bright housing outlook for Peabody in 2013.

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In Orlando, this is what's considered good news: The number of homes worth less than what the homeowners paid for them dipped below 50 percent for the first time in years in November.

Foreclosures remain high in Orlando, and home prices and home sales are dicey, though on a very slow incline. Upward progress is expected to remain slow through 2013.

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Most real estate measures were positive for Fort Worth in 2012: Home sales in the Dallas-Fort Worth area jumped 29 percent in October from the same period a year earlier and foreclosure filings dropped 10 percent to the lowest level in a decade.

But there's more: Solid job growth has brought more people to Fort Worth, increasing demand for all types of housing. More than 20,000 apartment building are reportedly under construction as rental costs rise, a new office building was recently purchased for $120 million and the number of houses on the market is at the lowest point in a decade. Sounds like Fort Worth is worth a lot!

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Tampa was a driving force behind the jump in foreclosure filings across Florida in November. In Tampa, foreclosure filings were up 40 percent over the same period a year earlier: there were 2,000 new foreclosure cases and 1,000 new bank repossessions.

However, Tampa led Florida in job creation in 2012 and was a bright spot for low unemployment. That could temper further struggles in the local housing market, but the affects of the fiscal cliff have people worried that it could hit housing in Tampa hard.

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An uptick in manufacturing jobs is behind the bright real estate outlook in Louisville. In the first 10 months of 2012, the city saw a 2.7 percent rate of job growth, according to 24/7 Wall St.

Louisville also saw mild losses during the housing crisis: home prices only dropped 4.7 percent from their pre-recession peak, putting the city at a much greater advantage over the rest of the country. New construction, however, remains slow.

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As part of the Chicago metropolitan area, the same problem overwhelming the Chicago market is afflicting Lake County: Foreclosures.

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Even in 2009, as the housing bust was near the height of its horror, Little Rock was named by Forbes as one of the 25 strongest housing markets. That's primarily because home prices in the city never reached the outrageous highs that they did elsewhere in the country -- so they didn't have as far to fall.

But the needle hasn't moved much since then. Very modest gains in home prices have been made each year. In 2012, Little Rock home prices edged up by single-digit percentages. On the brighter side, unemployment in Little Rock dipped to 6.3 percent in October, comfortably below the state's 7.2 percent and the nation's 7.7 percent.

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While many metros in Florida saw an upswing in home prices in 2012, Jacksonville was on the opposite track. Jacksonville home prices dropped slightly more than 3 percent over the course of 2012, the Jacksonville Business Journal reported. That made Jacksonville's housing price index the third-worst in the country.

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Middlesex County has benefited from strong growth in the Boston market. Job growth has brought flocks of people to Boston, and they, in turn, have fueled housing demand in the suburbs and other areas of Middlesex County. Prices in the area have been making a comeback, too. Click through to read more about the Boston market's strength.

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There have been many positive signs for the Las Vegas housing market: List prices climbed 12.4 percent in October from the same period a year earlier, single-family home sales increased 11.9 percent and inventory is tight. But there are two major catches: unemployment and foreclosures.

Though slowly edging down, the Las Vegas unemployment rate stood at 10.4 percent in November, much higher than the national rate. Nevada's overall unemployment rate was at 10.8 percent.

And a bill passed last year that slowed banks' repossession efforts in Nevada may be rolled back by lawmakers in 2013. If that happens, foreclosures could spike again in Las Vegas -- to the tune of 3,000 to 4,000 a month, experts say.

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Boston's housing market made strides in 2012: In June, the region's home appreciation rate ranked fifth-highest in the nation, according to the Case-Shiller Home Price Index, with prices rising 2.5 percent month-over-month.

By December, home inventory in the city had dropped 22 percent from the same period a year earlier, and rental prices are among the highest in the nation. The local job market is also one of the best: Monster.com named it the third-hottest job market in 2011, and the unemployment rate was 5.9 percent in September.

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Some regions are experiencing recovery at a snail's pace, and Tucson is one of them. Home prices are clawing back incredibly slowly, but the local market can also be unpredictable. Home sales in September posted an unexpected -- and large -- drop of 20.4 percent from August.

The jobs situation in Tucson is also troubling: Though the unemployment rate has been edging down (it was 6.6 percent in November), Inside Tucson Business reported in August that the number of residents in the workforce and the number who actually have jobs is falling, too.

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