According to Azam Meo, the hottest U.S. real estate market in 2005 was Mesa, AZ, which experienced a 42% increase in property values…in just one year.

In my previous job (inside sales), I talked to 15-18 different real estate investors (nationwide) on a daily basis. One of the best parts of the job was the information I learned from talking to these people. I "met" a guy who has developed an incredible system for managing rental properties, another investor who's focusing on condo conversions in the Tampa area, and another investor who's buying up land in the Southwest. Along the way, I've gained some interesting insights…

High Likelihood For Property Appreciation in The Dalles, and the Columbia River Gorge Area:

Google is building a technology center in The Dalles, Oregon and will be employing individuals to run the facility. (Apparently, California is getting too expensive for a large number of businesses.) According to a real estate investor who lives in The Dalles, developers have already begun building shopping centers and subdivisions. The individual I spoke to said the value of his home had already risen, just 10 months after Google's announcement.

For real estate speculators, this might not be a bad strategy…focus on areas where businesses are relocating to, using the premise that business growth will drive population growth and thus property appreciation.

Large Emigration from California to Oregon, and "Sunshine States" such as Arizona, New Mexico, and Nevada:

I talked to another RE investor in Gold Beach, Oregon who had relocated from Northern California to escape the high cost of living. He said there is a large outpouring of Californians relocating to Oregon and parts of the Southwest (Nevada, New Mexico, Arizona).

The Southwest Oregon coast (Brookings, Banden, Coos Bay, Gold Beach, Port Orford, Smith River) and north-central Oregon (The Dalles area) seem likely candidates for future price appreciation. Another investor in Bend, Oregon claims that Bend is experiencing significant growth.

Bubble Markets:

California, Florida (Boca Raton, Naples, Miami, Tampa) and Las Vegas are the most expensive areas, the so-called "bubble markets." No big surprise there, but it was confirmed over and over again by investors living in those areas.

Undervalued Real Estate Markets:

Land in El Paso, Texas is 18% below value, according to one investor who runs property calculations nationwide. College Station is also another good pick if you're interested in Texas property; the weather is nice, and it's close to technological talent from A & M University (Think: population growth and new business growth as an offshoot from the university).

According to analysts, Texas has 9 out of the 10 most undervalued housing markets in the U.S. More information on Undervalued Real Estate Markets