Bend, OR (CNN/Money) - Among the eight largest metro regions tracked by real estate research firm Fiserv CSW, zip codes in and around Los Angeles and Boston saw home values increase the most between 1998 and 2003.
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On average, prices in the Los Angeles area shot up 80.9 percent over that time period. The 90802 zip code of Long Beach, Calif. saw the greatest gains, with prices up more than 142 percent.
In Boston, home prices were up 77.2 percent on average. Boston's 02124 zip code, near Dorchester, saw home prices increase 124 percent.
"The zips that did the best were right in the city or in the outlying areas," said CSW senior economist David Stiff. "People are being pushed into the inner city or out toward the suburbs."
To track housing performance, CSW researchers look at repeat sales data for a sample of houses in each zip code, a method they consider more accurate than simply looking at changes in an area's median home price.
The firm then looks at past performance (momentum counts for a lot), employment trends and interest-rate trends to devise a forecast for the coming year.
Since CSW began forecasting home prices in 23 metropolitan areas more than 5 years ago, its predictions and the actual change in home prices have been within 2 percentage points of each other, CSW says.
The firm's economists also make adjustments to individual areas to account for other factors that could influence an area's housing market.
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For example, in early 2001 CSW's forecasting model predicted that prices in the San Francisco Bay Area would increase 15 percent. "We considered this trend to be unsustainable because so many households were already priced out of the Bay Area market and the prospects for the local economy were not good, so we adjusted the forecast to 7.5 percent," said Stiff.
"Our intuition was correct, but we were too cautious in our adjustment," he added. "Actual prices ended up falling by 4 percent between April 2001 and April 2002."
CSW is predicting that prices in San Francisco, Oakland and San Jose will increase by an average of 3.9 percent in 2004.
"Things have also been slowing down a little in Boston," said Stiff. Prices in this area are expected to increase a modest 5.1 percent in 2004.
But, assuming the forecast is accurate, homeowners in Los Angeles, Miami and Washington D.C. metros can expect another strong year. Prices are expected to increase by an average of 13.3 percent, 10.9 percent and 11.2 percent respectively in these metros.
"These economies are doing well and weathered the recession well," said Stiff. "And in Miami and L.A. the housing booms happened later than other parts of the country."
Vacation spots are also booming. The shore town of Somers Point, N.J., for example, saw prices increases of 86 percent in 5 years. Next year, prices are expected to increase 16.6 percent.
"Zip codes in vacation areas seem to be doing well," said Stiff, noting that most of the top zip codes in the New York, New Jersey and Philadelphia areas are on the beach. "It follows the anecdotal evidence I've heard about vacation home buying."
That is, baby boomers have been looking toward retirement and buying vacation properties in lieu of stocks.
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