Projected median price gain: 8.5% Like the phoenix of Greek mythology, the Phoenix housing market is rising back to life from its ashes. Median home values in Arizona's capital city fell 56% after peaking at $282,600 in early 2006, but have been rebounding strongly since August 2011. Prices have risen 27.3% in a little over a year to reach $157,800, but are still nearly 50% below the market's peak. So Zillow expects home values to add another 8.5% in 2013. Humphries attributes the turnaround to huge buyer demand amid little available supply. He says more than 40% of local homeowners are underwater, making it tough for them to sell. Underwater consumers must either convince banks to approve "short sales" -- a difficult process -- or pay cash out of pocket to make up the difference between their unpaid mortgage balances and their homes' current values. The result: a listing shortage just as investors have begun snapping up Phoenix's bargain properties. Retirees and second-home buyers, particularly those from chilly Western Canada just three hours away by air, are also buying up houses and condo in the sun-drenched city, Humphries says. "Demand is returning to the Phoenix market while supply levels are tight -- which is helping prices," he says.