Bubble-Proof Markets
Business 2.0 magazine has its own list of the top five "bubble-proof" markets -- areas where annual appreciation outpaces the national average by at least 30 percent. These perennially healthy markets will come as no surprise to anyone:


San Francisco
Los Angeles
Seattle
Boston
New York

The trick is finding markets with similar traits and investing in them before they become boom markets themselves.

Here are some of the keys to locating bubble-proof markets:


Income growth. Prices will continue to appreciate in markets where people are continually competing for a shrinking share of higher-end homes. The five markets cited by Business 2.0 are rich cities. Look for regions where the demographic data suggest a steady increase in personal income (you can find such information at the Commerce Department's Bureau of Economic Analysis website, www.bea.gov); greater activity in the move-up housing market is likely to follow.
Limited housing stock. One of the reasons markets like Boston and San Francisco are so inflated is that there's little land to build new homes. Look for regions where either physical constraints or political concerns -- a strong environmental lobby, for instance -- have prevented large-scale construction of new housing or infill.

Denver's geographic building limitations, for example, may bode well for market recovery and value stability in the future. At one time, Las Vegas's governmental land holds helped jumpstart the market's growth and staggering 50-percent-plus annual appreciation in 2005. This is simple supply and demand: The fewer homes, the higher the prices. Avoid areas where massive new residential construction has flooded the market.


Job growth. New companies moving into an area or expanding are an excellent harbinger of future real estate demand. Watch the news media covering regions of interest to you and look for stories about medium to large employers moving into the area, or about companies that are hiring.
Migration to a region. Some places have attributes that will always keep demand for residences high unless the economy tanks. Oceanfront areas are always hot, but are often priced beyond the means of most buyers. Other factors that can bring a steady flow of new residents to a place are great schools, a world-class university, spectacular weather, national parks or a thriving arts scene.