Where Home Prices Are Hot Now

9 May 2007

Where Home Prices Are Hot Now is an article in the Wall Street Journal.

A few quotes below.

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.

Why? How could prices be rising in a number of US markets if the headlines all say that US house prices are falling?

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.

When looking to invest look at the local conditions. Ignore the national headlines. Then improve the possible deals by find a motivate seller. You are much less likely to have problems when you are buying below the market.

The national headlines are there to influence the unsophisticated property buyers and sellers. Savvy investors are not investing based on the headlines and what the masses are doing.

A national US house price crash (HPC)? A great way to sell newspapers.

Oh, remember this works in the other direction. During the ‘boom’ years there were a number of US property markets that did not see a boom. Much of the Midwest down to Texas and some other regions.