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Where Home Prices are Hot Now Despite the Housing Slowdown
The housing news isn't all grim. Even as prices sag nationwide, there are several cities in the country where home values are climbing smartly.

Portland, Ore., Boise, Idaho, Seattle, Salt Lake City, Houston, Austin, and Charlotte and Raleigh, N.C., are among the cities bucking the national trend. Homes' appreciation there between the fourth quarters of 2005 and 2006 far exceeded the national average of 5.9%, according to the Office of Federal Housing Enterprise Oversight. In some markets, like Boise and Seattle, the appreciation jumped well into the double digits.

"All real estate is local, despite the headlines," says Lawrence Yun, the senior economist for the National Association of Realtors. Nationwide, the median existing-home price fell 1.3%, to $212,800 in February from $215,700 in February 2006, according to preliminary NAR statistics.

There's no single secret of these cities' apparent success, but many of them missed the housing boom of the past five years. From 2001 to 2005, annual appreciation in these cities was between 2% and 5%, far slower than the 7% to 12% national average, according to the Office of Federal Housing Enterprise Oversight. (OFHEO calculates appreciation based on repeat sales or refinancings of the same single-family properties.) Now, prices are playing catch-up.

Most of the cities also have one or more strong industries to drive their economies -- colleges and technology in Raleigh, banks in Charlotte, energy in Houston and aerospace in Seattle. And all have education levels above the national average.

These cities emerged from the last recession later than most of the country for various reasons, including the lagging technology, aviation and energy industries, says Mark Zandi, CEO of Moody's Economy.com. Now, their economies are strong and housing prices are still perceived as affordable, luring buyers into the market. For instance, the median sales price for a single-family home in the area of Austin-Round Rock, Texas, is $173,700, according to the National Association of Realtors, compared with $371,200 in the Miami-Fort Lauderdale-Miami Beach area.

Today's declining prices nationwide are in part the result of an earlier explosion of short-term investors in Florida, California and other booming markets. Recently, both investors and long-term homeowners have been cashing in or cutting losses in formerly hot markets and settling in areas that avoided the boom, such as the Carolinas, parts of Georgia and Tennessee, areas of Texas, the Western mountain states and the Pacific Northwest.

The growth of Portland, Salt Lake City, Boise and Seattle can be attributed in part to an influx of former Californians and people opting out of slumping Las Vegas or Phoenix. The trend may have created smaller echo booms -- especially in Boise and Salt Lake City -- which have slowed in the past several months, with each city experiencing a slow winter. Other areas, too, have experienced faster-than-average appreciation, including the New York City borough of Manhattan and New Orleans.

While some worry that a new group of cities could face a boom-and-bust cycle, local real-estate agents and economists predict stable growth for the near future. Since the cities have strong economies and builders, lenders and investors are increasingly cautious, homes are less likely to become extremely overvalued than in booming markets in the first half of the decade.

Mr. Yun of the National Association of Realtors predicts prices nationally will bottom out sometime this summer. Mr. Zandi, of Moody's Economy.com, isn't so sanguine. "I'd be shocked if prices stop depreciating this summer; it's more likely next summer," he says.

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