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Real Estate: Is the party over?
Exclusive forecasts for the 100 largest markets.
December 16, 2005
By Ellen Florian Kratz, FORTUNE
FORTUNE

Living in a bubble? 4 Questions
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NEW YORK (FORTUNE) -- Everybody from Los Angeles to Boston -- your mom, your doctor, your dry cleaner -- is puzzling over which way the nation's real estate market is headed. Up or down? Bubble or not?

It's a debate that's been raging for years, and recently that there have been clear signs of a slowdown. It's unlikely, however, that the housing market will come to a screeching halt.

To get a clearer picture of how things may play out, FORTUNE turned to Moody's Economy.com and home property-valuation service Fiserv CSW.

The researchers crunched numbers on the 100 largest metropolitan regions in the country, and the results of their analysis appear in the table below.

Nationally, the overall outlook seems reasonable: 7 percent appreciation for 2006 and flat for 2007. But markets that have seen the greatest appreciation over the past five years appear to be vulnerable.

Indeed, at some point in the next two years, according to the forecast, a third of the nation's 100 largest metro areas (accounting for 60 percent of the U.S. population) are expected to see modestly falling house prices.

Real estate bear markets often come in the form of steady declines over many years, rather than sudden sharp drops.

As inflation gradually gnaws away at the value of nominal home prices, regular folks might not take much notice. But in the long run the loss of wealth becomes all too real. From 1989 to 1997, for instance, Los Angeles residential real estate dropped more than 40 percent in inflation-adjusted terms.

The nation's most perilous regional market, according to the forecast data: Las Vegas, a speculator-infested hot spot. Prices there are projected to deflate by 7.9 percent next year, the year after by another 5 percent. For newcomers to the market and those with low-money-down deals who may have overleveraged themselves with adjustable-rate mortgages, even a modest downturn could mean financial jeopardy.
Rank Metro Area State Median
home price
Projected
growth 2006
Projected
growth 2007
4 Little Rock-North Little Rock AR $115,700 7.80% 7.20%
3 El Paso TX $107,100 8.10% 7.10%
1 San Antonio TX $129,900 8.30% 7.00%
38 Rochester NY $111,200 5.30% 6.80%
8 Nashville-Davidson-Newport News TN $157,300 7.10% 6.70%
37 New Orleans-Metairie-Kenner LA $149,100 5.40% 6.60%
24 Cincinnati-Middletown OH $146,200 6.00% 6.60%
9 Houston-Sugar Land-Baytown TX $139,800 7.00% 6.60%
10 Memphis TN $147,600 7.00% 6.50%
26 Dallas-Plano-Irving TX $155,500 5.90% 6.30%
19 McAllen-Edinburg-Mission TX $71,000 6.10% 6.20%
22 Tulsa OK $116,600 6.10% 6.20%
14 Albuquerque NM $166,700 6.50% 6.10%
12 Oklahoma City OK $116,900 6.90% 6.00%
33 Columbus OH $150,700 5.50% 6.00%
18 Dayton OH $116,500 6.10% 5.60%
45 Greensboro-High Point NC $145,100 4.80% 5.50%
41 Charlotte-Gastonia-Concord NC $172,800 5.10% 5.50%
17 Syracuse NY $109,400 6.20% 5.40%
13 Birmingham-Hoover AL $152,500 6.90% 5.40%
15 Columbia SC $133,200 6.40% 5.40%
31 Indianapolis IN $121,700 5.60% 5.40%
48 Youngstown-Warren-Boardman OH $83,400 4.50% 5.30%
34 Akron OH $117,600 5.40% 5.30%
35 Buffalo-Niagara Falls NY $96,400 5.40% 5.30%
36 Knoxville TN $140,100 5.40% 5.20%
50 Cleveland-Elyria-Mentor OH $142,800 4.30% 5.10%
39 Raleigh-Cary NC $183,100 5.20% 5.10%
29 Greenville SC $141,300 5.70% 5.00%
16 Fort Worth-Arlington TX $125,700 6.30% 5.00%
23 Pittsburgh PA $113,000 6.00% 5.00%
21 Austin-Round Rock TX $161,800 6.10% 5.00%
28 Toledo OH $116,400 5.70% 5.00%
32 Wichita KS $107,200 5.50% 4.80%
42 Louisville KY $134,800 5.00% 4.60%
25 Albany-Schenectady-Troy NY $176,700 6.00% 4.50%
27 St. Louis MO $134,900 5.80% 4.10%
46 Kansas City MO/KS $154,600 4.70% 4.10%
51 Omaha-Council Bluffs NE $136,100 4.30% 4.10%
53 Atlanta-Sandy Springs-Marietta GA $165,300 4.20% 4.00%
5 Baton Rouge LA $133,800 7.60% 3.80%
20 Salt Lake City UT $165,700 6.10% 3.40%
49 Gary IN $127,300 4.40% 3.40%
6 Richmond VA $191,800 7.40% 3.30%
56 Grand Rapids MI $137,300 3.60% 2.90%
63 Denver-Aurora CO $244,800 2.60% 2.50%
43 Milwaukee-Waukesha-West Allis WI $210,900 4.80% 2.50%
2 Jacksonville FL $164,700 8.10% 2.50%
73 Detroit-Livonia-Dearborn MI $120,100 1.60% 2.00%
52 Lake County, Kenosha County IL/WI $259,100 4.20% 1.90%
64 Wilmington DE $231,000 2.50% 1.70%
58 Springfield MA $197,900 3.00% 1.20%
11 Allentown-Bethlehem-Easton PA $247,400 6.90% 1.20%
7 Virginia Beach-Norfolk-Newport News VA $193,100 7.30% 1.00%
65 Seattle-Bellevue-Everett WA $335,500 2.50% 1.00%
69 Warren-Farmington Hills-Troy MI $196,000 1.90% 0.80%
47 Poughkeepsie-Newburgh-Middletown NY $265,000 4.60% 0.80%
62 Camden NJ $210,800 2.70% 0.80%
80 Minneapolis-St. Paul-Bloomington MN $234,600 0.70% 0.70%
66 Tacoma WA $222,700 2.30% 0.60%
75 New Haven-Milford CT $280,300 1.40% 0.60%
71 Hartford-West Hartford-East Hartford CT $257,600 1.80% 0.60%
40 Philadelphia PA $199,400 5.10% 0.50%
78 Chicago-Naperville-Joliet IL $264,900 1.10% 0.20%
79 Cambridge-Newton-Framingham MA $448,800 0.80% 0.00%
76 Worcester MA $287,800 1.30% -0.30%
55 Orlando-Kissimmee FL $226,400 3.80% -0.50%
44 Tampa-St. Petersburg-Clearwater FL $193,700 4.80% -0.50%
84 Bethesda-Gaithersburg-Frederick MD $444,500 0.00% -0.50%
86 Essex County MA $380,600 -0.20% -0.70%
59 Portland-Beaverton-Vancouver OR/WA $234,600 3.00% -0.70%
60 Baltimore-Towson MD $249,100 2.90% -0.80%
54 Honolulu HI $570,400 4.00% -1.00%
81 Bridgeport-Stamford-Norwalk CT $472,500 0.40% -1.30%
85 Boston-Quincy MA $422,900 -0.10% -1.40%
74 Newark-Union NJ $407,000 1.50% -1.80%
93 Providence-Fall River-New Bedford RI/MA $292,800 -1.10% -2.20%
91 Fresno CA $340,800 -0.80% -2.80%
77 Edison NJ $387,900 1.20% -2.90%
83 San Francisco-San Mateo-Redwood City CA $766,000 0.10% -2.90%
92 Bakersfield CA $286,300 -0.80% -3.00%
70 Washington-Arlington-Alexandria DC/VA $404,900 1.80% -3.40%
82 New York City-White Plains-Wayne NY/NJ $504,800 0.10% -3.50%
30 Sarasota-Bradenton-Venice FL $314,300 5.60% -3.60%
68 Phoenix-Mesa-Scottsdale AZ $238,100 2.00% -3.70%
88 San Jose-Sunnyvale-Santa Clara CA $720,900 -0.40% -3.90%
67 W. Palm Beach-Boca Raton-Boynton Beach FL $386,200 2.10% -3.90%
61 Tucson AZ $220,900 2.90% -4.00%
96 Nassau-Suffolk counties NY $461,300 -2.00% -4.20%
90 Oakland-Fremont-Hayward CA $651,300 -0.70% -4.40%
57 Fort Lauderdale-Pompano Beach-Deerfield Beach FL $356,600 3.10% -4.50%
89 Oxnard-Thousand Oaks-Ventura CA $480,300 -0.70% -5.00%
100 Las Vegas-Paradise NV $296,000 -7.90% -5.00%
94 Sacramento-Arden-Arcade-Roseville CA $372,900 -1.20% -5.10%
72 Miami-Miami Beach-Kendall FL $343,700 1.80% -5.50%
99 San Diego-Carlsbad-San Marcos CA $598,700 -3.40% -5.70%
87 Stockton CA $423,100 -0.30% -5.90%
98 Santa Ana-Anaheim-Irvine CA $682,300 -3.10% -6.10%
95 Los Angeles-Long Beach-Glendale CA $412,900 -1.60% -6.30%
97 Riverside-San Bernardino-Ontario CA $362,800 -2.60% -6.80%

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