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The New Economy

Home prices at record highs in six US cities

By / August 12, 2009

A house for sale was listed as 'contract pending' last month in Arlington, Va. Prices there fell 14 percent in the last quarter compared to the same period a year, according to a new report. But in 26 US metro areas, prices went up.

Richard Clement/Reuters/File

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The future of America's housing market is already happening far from the big-city limelight.

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It's occurring in places like Amarillo, Texas, and Buffalo, N.Y., where prices are not only rising, they're moving to record highs, according to a new report.

That's right. People are buying homes there because they believe that housing prices will continue to go up. It seems like a quaint notion today, but it was established fact for generations of Americans from World War II to 2007.

Sometimes, the price rise is tied to the fortunes of local industries – oil in the case of Beaumont, Texas, and healthcare and the military in the case of Shreveport, La. Mostly, though, it's happening in cities like Bismarck, N.D., which never saw the huge run-up in housing prices that engulfed much of America.

"They did not encounter a bubble so there was nothing to pop," says Lawrence Yun, chief economist of the National Association of Realtors, which released Wednesday its quarterly report of housing trends in 155 metropolitan areas. "These are the areas of the market that are highly affordable."

In the second quarter, 26 of the 155 metro areas saw price gains from the same quarter a year ago. Davenport, Iowa, saw a 31 percent rise to a $113,200 median price. Cumberland, Md., was up 22 percent to $123,500.

Averaging the last four quarters of prices, median home prices in Cumberland and five other metro areas now stand at their highest levels ever. The other five are Amarillo ($125,000), Beaumont ($132,500), Bismarck ($155,500), Buffalo ($108,700), and Shreveport ($140,600).

America's housing recovery will begin when that buyer confidence spreads to markets that have plunged so far that they're ripe for a rebound, Mr. Yun says in a telephone interview.

It may be happening already. In places like Cape Coral, Fla., (down 53 percent in the second quarter compared with a year ago), homes are selling quickly and multiple bidders are vying for great deals.

This time next year, Yun predicts, home prices in hard-hit Las Vegas will be up 10 percent.

And we can begin to put America's housing bust behind us.
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