New hot spots have fastest appreciation in houses

Nation's Housing

September 22, 1996|By Kenneth B. Harney

A NEW FEDERAL study has found that some of the fastest-appreciating homes on average during the past year have been in parts of the country that traditionally have never been thought of as real estate hot spots.

Michigan, Louisiana, Tennessee, Mississippi, Indiana, Nebraska and the Dakotas are all experiencing appreciation rates this year that are not only outpacing national consumer price inflation, but also exceed the gains on home values in most other states.

The new data come from the Office of Federal Housing Enterprise Oversight, which tracks millions of single-family homes whose mortgages are purchased or put into securities by the two giants of real estate finance -- Fannie Mae and Freddie Mac.

Although Midwestern states trailed the Rocky Mountain states as a group in average appreciation between mid-1995 and mid-1996 (a 6.6 percent increase compared to 7.1 percent), their very presence near the top of the ladder represents a radical departure from the 1970s and 1980s.

During those go-go years -- when the East and West coasts sizzled with double-digit annual jumps in resale values -- the Midwest was the tortoise in the race, often not even keeping up with annual increases in the Consumer Price Index (CPI). But now home value gains in the region are nearly double the rate of inflation -- thanks in part to reviving local job markets and moderate, affordable housing costs.

Michigan values increased an average 8.4 percent during the last 12 months. Indiana houses were up an average 6.9 percent, Ohio 6.3 percent, South Dakota 6 percent, Nebraska and Minnesota 5.9 percent, North Dakota and Wisconsin 5.8 percent, Missouri and Kansas 5.3 percent and Iowa 5.2 percent.

Another group of states where home-value appreciation rates are raising economists' eyebrows consists of Kentucky, Tennessee, Mississippi and Alabama.

Home real estate in Tennessee surged 7.1 percent in value last year, followed by Mississippi (6.9 percent) and Alabama (6.2 percent). Kentucky homes racked up average 5.3 percent gains in the same period. These states also have low to moderate housing costs and expanding employment bases -- a sure-fire recipe for healthy gains in home values.

Utah again had the top gain in the nation, with an average home jumping 11.4 percent in market resale value -- just under 1 percent appreciation per month. Oregon was second, with an average 9.1 percent gain.

States along the Eastern Seaboard generally turned in appreciation rates near or slightly below the national average of 4.7 percent last year. The District of Columbia's home values gained 4.7 percent, Virginia's 3.6 percent and Maryland's rose 3.1 percent.

Pub Date: 9/22/96

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.