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

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