Hottest Housing Markets for 2010

(March 31) -- The housing market remains anemic at best, but metro areas with the greatest potential for home equity growth and real estate investment returns are emerging.

Look for the South to rise again and expect big moves from Texas, according to Hanley Wood, a leader in construction industry research and publishing.

Hanley Wood's Builder Market Health Index shows that while these markets appear healthier than others, they are not housing-boom strong, simply heads above the rest, and bear close watching for buyers and investors looking for hot spots.

The findings, ultimately the "Top 100 Healthiest Housing Markets for 2010," are based on projections of new household formations, resale values, job and income growth, and housing and economic data from Moody's Economy.com. From the bottom up, here are the Top 10 Healthiest Housing Markets for 2010:

10. Eugene-Springfield, Ore. -- Eugene has struggled in recent years and home prices may fall again this year, but only at half of last year's rate. Unemployment has been as high as 14 percent, but dropped to 11.3 percent in February. Home building permit activity is expected to double.

9. Durham-Chapel Hill, N.C. -- This is one of only two markets on Hanley Wood's list that escaped the national pattern of home price deflation. Median home prices rose 2.7 percent last year. Nearly half a million people live in the renowned Research Triangle area, which houses the University of North Carolina and Duke University. Those institutions crank out highly skilled workers by the thousands.

8. Washington, D.C.-Arlington, Va.-Alexandria, Va.-Maryland suburbs -- The nation's capital had the second lowest unemployment rate last year (6.75 percent) on Hanley Wood's list of the 20 healthiest housing markets. The District of Columbia is expensive, but the area's median income is nearly $85,000. Home prices took their licks early in the bust and may have a way to go down, but the worst is over.

7. Huntsville, Ala. -- One of the smallest metros on the list has a median home price of about $120,000. Home to several military installations, including NASA's Marshall Space Flight Center and the U.S. Army Aviation and Missile Command, this town is poised to launch.

6. Denver-Aurora-Broomfield, Colo. -- The only true West town on the Top 10 list may be short on oxygen and home price growth, but there's room for employment growth and household formations. Hanley Wood says median home prices could continue to slip this year, but population growth should help building permit activity exceed 2009 levels.

5. Charleston-North Charleston-Summerville, S.C. -- Steeped in history, Charleston is the fastest-growing city in South Carolina. That's because underlying economic strength was its antidote to housing ills -- military bases and the health sector are the area's largest employers. In the fourth quarter, building permits rose a whopping 27 percent. Home prices slipped only 4.2 percent last year.

4. San Antonio, Texas -- Military installations also have their boots on the ground here, and that's helped keep the region's unemployment rate around 7 percent. A 2.3 percent increase in jobs is projected. And just ask the tourists: What's not to like about San Antonio? Riverwalk, the Alamo, the Spurs. It's a party town.

3. Charlotte-Gastonia-Concord, N.C. -- Last year housing prices in this financial center (Wachovia and Bank of America) were already stable, incomes were up and new household formation was among the highest in the nation. With an unemployment rate around 5 percent, the area is projected to add 2 percent more jobs this year.

2. Raleigh-Cary, N.C. -- Raleigh is a high-tech mecca with Triangle Park and multiple universities to churn out a highly skilled workforce. An urban revitalization effort is in the works. Housing permits were up 46 percent in the fourth quarter year over year last year.

1. Austin, Texas -- Austin space is the place. Texas' capital largely avoided the brunt of the recession because there was no home appreciation bubble to burst. At about 4 percent, the city enjoys one of the lowest unemployment rates in the nation, it was the second fastest growing metro area in the nation in 2008, and Portfolio.com recently named Austin the most attractive location for young professionals out of 67 metro areas studied. A division of Electronic Arts is relocating there from California's Silicon Valley.