How would you research a communitie's ability to survive a bubble?

[Mason V.]

sense it seems like I will be focusing on small cities and towns, I thought it may be a good idea to get an idea of how well a community could survive another financial upset. I am thinking that two prime indicators would be house sales/foreclosure and employment rates. Can you think of anything else?

[Robert Williams]

I think the best way to determine what may happen in a future market bubble in a particular community or neighborhood is to go back and look what happened there during the most recent bubble/bust cycle.  For example, in the area where I invest, Washington DC, property values declined much more significantly in the DC suburbs than they did within the city itself.  Within DC, certain neighborhoods actually maintained or had a very small decline, while others had a much bigger one.  

I would begin my research by selecting some targeted areas and then seeing how much property values declined in those areas between 2006-2010.  It's a good bet that the places that saw the biggest declines will still be the weakest come the next market decline unless they've had some major changes (neighborhood revitalization, new public transportation options, etc).