In some housing markets, homes aren't only retaining value -- they're gaining
By Amy Hoak, MarketWatch
Last update: 7:37 p.m. EDT April 21, 2008

CHICAGO (MarketWatch) -- Challenging real estate markets can be found across the U.S. as home prices decline, sales fall and foreclosures rise. But in some places the biggest challenge has been convincing would-be buyers and sellers that local conditions don't resemble the national trends.

It's a challenge that Randy Jeffers, chairman of the Texas Association of Realtors, faces all the time.
While the number of sales has fallen somewhat, he still regards his market of Amarillo, Texas, as a seller's market right now. The median price of an existing single-family home in Amarillo was up an annualized 11% in the fourth quarter, according to the National Association of Realtors.

"Often they're surprised about what is going on locally or statewide," he said of his clients. As the country's collective housing ills land bold headlines, locals incorrectly extrapolate the information to their own markets, Jeffers added.

The housing problems largely aren't national but regional in nature, said Susan Wachter, a real estate professor at the University of Pennsylvania's Wharton School.

"The interesting thing is that there are parts of the country where housing prices are doing fine, thank you," she said. In fact, only five states are in what she would consider a housing recession: California, Arizona, Nevada, Florida and Michigan.

In the fourth quarter of 2007, 73 out of 150 metropolitan areas showed an increase in the median existing single-family home price compared with the same quarter in 2006, according to statistics from the national Realtors group.

That isn't to say these markets are immune from some national trends.

For one, stricter lending standards put in place in the wake of poor mortgage performance in many parts of the country are affecting people regardless of where they live. Requirements of larger down payments and higher credit scores are keeping some people from buying homes, especially first-time buyers, and are often driving down the volume of sales.

If the job picture weakens as a result of a slowing economy, that could also affect some of the most stable markets.

Recently, however, the places where homes seem to be holding the most value are those where prices didn't surge during the boom years and where economies are staying strong. In large cities, it's often the areas that are located closest to the city's core.

Places the boom forgot

Single-digit appreciation may have looked meager in the years of the boom, when red-hot markets experienced bidding wars and high investor interest. Now, as some markets experience steep price drops, those rates aren't looking so bad after all.

Areas in upstate New York, Texas, some Rocky Mountain states and the Carolinas are faring better than the rest of the country in terms of price appreciation these days, said Lawrence Yun, chief economist for the National Association of Realtors.

In general, there weren't caravans of speculators in these areas driving up prices. Plus -- unlike some trouble spots in the Midwest such as Detroit -- many of the local economies in these markets remained stable.

Utah -- where home prices rose 9.27% in the fourth quarter of 2007 compared with the fourth quarter of 2006 -- was the state with the highest appreciation rate, according to the Office of Federal Housing Enterprise Oversight. Utah was followed by Wyoming, where prices rose 8.27% over the year, North Dakota, where prices rose 7.87%, and Montana, where prices rose 6.90%.

Still, in Billings, Mont., buyers often say they're waiting for prices to come down, said Dan Wagner, president of the Montana State Association of Realtors. But because they never soared during the boom years, prices likely aren't in need of a correction, he said.

Where the jobs are

The strong employment picture in Seattle caused home prices there to rise after other major cities reached their peaks. Appreciation there in the fourth quarter was just over 1%, according to NAR, but it is believed that the city's employment landscape is keeping Seattle housing from losing value.

A similar situation is shaping up in other markets.

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