Where home values have risen most Utah has been hot, so has Michigan

Nation's Housing

Maryland strong over time

December 21, 1997|By Kenneth R. Harney

WHERE has home-value appreciation been the strongest for the longest stretch of years? Or, put another way, where have home buyers reaped the highest gains on their housing investments?

A new national statistical report suggests that the answer depends very much on what period of time you choose to measure your profits. If you're looking at appreciation over the past five years, the answer is unequivocal: Utah. The average home in Utah has gained 74.4 percent in resale value during the past 60 months, according to the study, an appreciation rate more than four times faster than the national average of 17.1 percent since 1992.

Utah is hot. But over the past 12 months alone, average home resale gains in Michigan have been even hotter, up by 7.2 percent vs. Utah's 7.1 percent.

Shift your time frame to the last quarter for which home value information is available -- the three-month period ending Sept. 30 -- and you come up with very different winners: Alabama, where average home gains jumped by 2.9 percent, an 11.6 percent annualized rate; and California, which rebounded out of its long slump with a 2.6 percent third-quarter gain, a 10.4 percent annualized rate.

But what about value gains over the long haul? The study found that since 1980, the most profitable place to have bought and owned a home is Massachusetts.

Despite some tough, deflationary years early in the 1990s, Bay State homeowners have racked up a 227.4 percent increase in the average resale value of their properties in the past 17 years.

Massachusetts owners are also experiencing a miniboom this year, with an average 5.6 percent gain in resale value from September 1996 to September 1997 -- enough to rank seventh in the nation for those 12 months.

All these statistical nuggets come from a federal agency that monitors the largest database of mortgage transaction information in the country. The agency, the Office of Federal Housing Enterprise Oversight, studies the periodic changes in appraised valuations on more than 7.6 million "repeat" resales and refinancings of homes whose mortgages are owned or contained in mortgage securities issued by the giant investors Fannie Mae and Freddie Mac.

Home value increases generally reflect what's happening in local and regional economies. The stronger the population, employment and income growth, the stronger the demand -- and upward pressure on prices -- for houses.

Based on performance during the past year, the most profitable places to have purchased a home besides Michigan and Utah, according to the new study, were Oregon (up 6.6 percent), Colorado (up 5.9 percent), Georgia and Louisiana (both up 5.8 percent), Massachusetts (up 5.6 percent), Washington (up 5.5 percent), and Minnesota and South Carolina (both up 5.4 percent).

Worst home-value performances over the past year came in Hawaii (down 4.2 percent), Alaska (down 1.9 percent), Wyoming (up 0.7 percent), Vermont (up 1.4 percent) and the District of Columbia (up 1.7 percent).

California's performance during the past 12 months was the most striking in the entire study. After years of decline and softness, California home values have taken an abrupt U-turn.

Home appreciation was up an average 4.7 percent for the full year. And the third quarter's 2.6 percent increase hints at even faster appreciation in the months just ahead.

Solid returns in the Midwestern states are also prominent in the new study. Besides Michigan, increases well above the national home appreciation average were turned in this year in Nebraska and Indiana (both 5.1 percent), Wisconsin (up 4.8 percent) and Ohio (up 4.7 percent).

As a region, the mid-Atlantic continued to lag over the short term, but it still represents the highest-performing section of the country over the past 17 years. New York homes, for instance, grew in resale value by just 2.3 percent last year, according to the study. That's well below the national average rate of 4.5 percent. But since 1980, New York homes have increased in value by an average 191.3 percent -- second highest in the country, and far above the 108.7 percent national average.

The same holds for Maryland (up 2.9 percent last year, but 121.5 percent since 1980), Pennsylvania (up 2.6 percent last year, 122 percent since 1980), Connecticut (2.9 percent last year, 141 percent over 17 years), Virginia (up 3.3 percent for the year, 113 percent since 1980), and Rhode Island (up 3.7 percent last year, 156 percent since 1980).

Pub Date: 12/21/97

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