Homes appreciating nicely in many areas of country California hot again, but values dip 0.3% in Baltimore market

Nation's Housing

November 29, 1998|By Kenneth R. Harney

IF YOU OWN a home, the odds are that you've been quietly racking up nice gains in equity value on your home this fall. And the odds are even stronger that you've done better -- probably a lot better -- than the inflation rate in the economy.

Consider the latest numbers from a national study that monitored resale value changes affecting more than 20 million homes in 150 metropolitan markets from the third quarter of 1997 through the third quarter of 1998. Bear in mind that all these gains have occurred in a national economic environment in which the annualized rate of inflation for all goods and services, as measured by the Consumer Price Index, has hovered in the range of 2 percent to 2.2 percent.

* California home appreciation rates are beginning to look like they did in the heady, go-go days of the late 1970s and early 1980s. Seven of the top 10 highest-return home resale markets are in California. All of them are well into double-digit gains for the past 12 months. Houses in the two hottest markets in the country -- San Diego and Orange County -- grew an average 18.8 and 23.2 percent in resale value, respectively, during the past year.

* Homeowners in 19 major markets have gained an average of 10 percent or more in real estate resale value during the same period. The cities range from the surprising -- Jersey City, N.J., up 14 percent -- to the more predictable: Boston, up 14.6 percent; San Jose, Calif., up 13.8 percent; Santa Rosa, Calif., up 12.9 percent; San Francisco, up 11.9 percent; Seattle-Everett, Wash., up 11 percent; and Los Angeles, up 10.6 percent.

* Large numbers of markets that had yielded just moderate returns earlier in the 1990s continue to pick up steam. These include metropolitan Denver, up 10.3 percent for the year; Tallahassee, Fla., up 12.2 percent; Charleston, S.C., up 14.4 percent; Naples, Fla., up 9 percent; Miami, up 7.9 percent; Minneapolis-St. Paul, up 7.2 percent; Sarasota and Ocala, Fla., up 6 percent each; Tulsa, Okla., up 6.6 percent; Tampa-St. Petersburg, up 5.6 percent; West Palm Beach, Fla., up 5.3 percent; and Charlotte, N.C., up 4.8 percent.

* Good news for the northern reaches o f the East Coast, especially New England and some of the once stubbornly sluggish markets of the mid-Atlantic, such as metropolitan Washington, up 5.6 percent on average; Philadelphia, up 6.7 percent; Trenton, N.J., up 7.1 percent; metropolitan New York, up 8.7 percent; Stamford and Hartford, Conn., up 8.3 percent and 7.3 percent, respectively; and Atlantic City-southern New Jersey, up 5 percent.

* Good news, too, for some markets in the Midwest that historically have not been above-average performers. Houses in all of these markets produced gains during the past year that were at least double the national inflation rate: Detroit, up 7.8 percent; Canton, Ohio, up 6.2 percent; Lexington, Ky., up 6 percent; Cleveland, up 5.3 percent; Omaha, Neb., up 5 percent; Chicago, up 4.6 percent; Cincinnati, up 4.3 percent; and Columbus, Ohio, up 4.2 percent.

* Not every market jumped in the new home appreciation study. Cities formerly with above-average appreciation included Portland, Ore., up 2.5 percent; Raleigh, N.C., up 3.6 percent; and Las Vegas, up 3.2 percent. They are still beating the inflation rate. But they've cooled off in the past year.

* At the soft end of the real estate spectrum, several markets slipped below the national inflation rate. These include Atlanta, 1.9 percent average gain; Allentown-Bethlehem, Pa., up 1.9 percent; Tucson, Ariz., up 1.8 percent; Oklahoma City, up 1.7 percent; the Norfolk-Virginia Beach-Newport News area, up 1.4 percent; Fresno, Calif., up 1 percent; Syracuse, N.Y., up 0.5 percent; Baltimore, down 0.3 percent; and Buffalo, down 2.9 percent.

The worst-performing real estate market in the country during the past 12 months was Pittsfield, Mass., where the average house lost 4.3 percent of its value.

The new national appreciation study was conducted by First American Real Estate Solutions, a property-research firm based in Anaheim, Calif. First American tracks the changes in values recorded on more than 20 million homes that have been sold at least twice.

Where are values headed in 1999? Both the research project director for First American, Nima Nattagh, and the top researcher for the National Association of Realtors, Fred Flick, say that as long as the national economy stays on its present course, most homeowners can continue to look for better-than-inflation performance from their real estate.

Time to do a little asset-reallocation, moving out of mutual funds and into real estate? Check out your local market. There may be better investment returns in housing than you think.

Kenneth R. Harney is a syndicated columnist. Send letters in care of the Washington Post Writers Group, 1150 15th St. N.W., Washington, D.C. 20071.

Pub Date: 11/29/98

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