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

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