Where the housing boom goes on

NEW YORK (CNNMoney.com) -- In the middle of a nationwide housing slump, a few markets have held their ground - and then some.

In Seattle, for example, the median home sale price was $380,200 during the first three months of 2007, according to the latest stats from the National Association of Realtors (NAR). That's a 12.3 percent year-over-year increase.

Ten other metro areas among the 156 markets covered by NAR also recorded double-digit, year-over-year price increases.

So what have they get that other markets don't?

The main ingredient is a set of positive fundamentals, including strong job and population growth, which then fuel demand for houses.

In Seattle, many residents can find high-paying work in the tech industry in an area with an unemployment rate recently under 4 percent. A hot job market has drawn workers from outside, adding to housing demand.

Other factors also got the double-digit markets percolating. In nearly all of the areas, prices never overheated, remaining relatively low through the boom years. It's easier to show outsized growth when you're starting from a low base.

Of the 11 metro areas that grew in double-digits, Seattle was the only market where single family houses priced well above the $212,300 national median before the latest numbers.

Salem, Oregon, had a 15.6 percent increase for the 12 months, which did bring it up to just over the national norm to $221,600, but all the other markets were substantially below it.

In Cumberland Maryland, which had the largest home-price increase in the nation by percentage (up 17.1 percent), the median home sold for just $100,000.

Another characteristic the double-digit performers shared was their relatively small size. Many were among the lowest in population of all the NAR's 156 areas.

Farmington, New Mexico, where home prices appreciated 12 percent, has a population of just 125,000 in its metro area, which is fewer than some small, central-city neighborhoods in New York or Chicago.

Even the biggest cities on the list, Seattle, San Antonio and Oklahoma City, ranked only 15th, 29th and 45th among U.S. metro areas in population. Cumberland is 341st, Farmington is 292nd and Beaumont, Texas, where prices rose 16.5 percent, is 130th.

Smaller places also tend to exhibit greater volatility - up or down - than do larger places. It's harder to turn around an aircraft carrier than a rowboat. Many of the worst performing markets, such as Elmira, New York (down 14.9 percent) and Reno, Nevada (-8.9 percent) were also small markets.

But even the strongest areas around the nation show hints of weakness that aren't covered by NAR statistics.

According to Lennox Scott, of the John L. Scott Realty Company, one of the largest home sellers in the Pacific Northwest, the hottest Seattle neighborhoods are those closest to job centers.

"We see double the demand close in," he said. "People don't want the commute."

Since the most expensive housing markets are the ones closest to the downtown core, that can make home prices appear higher when really it's just the mix of sold houses that has changed.

The recent subprime mortgage crisis has also significantly changed the types of homes being sold. Demand has fallen among credit-damaged and low-income buyers, who typically buy lower-priced houses.

And tougher lending standards also make it more difficult for marginal borrowers to purchase. In Seattle, Erik Hand, president of Response Mortgage Services, Scott's lending arm, said, "We're having a harder time getting first-time home buyers approved."

The result is that stats can still show double-digit price increases when, in reality, the market may have slowed substantially. It certainly seems that way to Lennox Scott.

"A year ago we were still in a frenzy and we had a shortage of listings, less than two months of inventory. Now the market is more normal and inventory is back up to 3.2 months in King County," he said. That compares with a nearly nine month supply in the nation as a whole.

Even though it's not as hot as it was, however, Scott characterizes the Seattle metro area as a balanced market, good for both buyers and sellers: For sellers because they can command more for a property than they paid and for buyers because they can expect to in the future.

Realtors from a lot of markets around the nation would like to be able to make that claim.