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

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