It's hot, hot, hot, and we're not talking about the weather in Phoenix or the salsa that startled your in-laws at the family cookout on the Fourth of July. It's the real estate market across the United States, which is inducing sticker shock in some new areas while providing unprecedented opportunities in others to realize the American dream of home ownership.
In the Seattle area, builders are so confident of the potential for high-priced sales there (partially fueled by the newly wealthy employees at Microsoft) that they're building million dollar-plus homes "on spec," meaning they won't start looking for a buyer until the carpet is laid and the landscaping done. In San Francisco, where the median home price stands at $335,000, record numbers of renters are being evicted as landlords jump on the housing-price escalator and sell out. And in Salt Lake City, which used to be one of the most-affordable markets in the country, the US Census Bureau is conducting a special housing survey because prices there have doubled in the past six years.
It's not just the usual suspects - big cities with high-paying employers or fantastic weather - where house prices are hot.
The National Association of Home Builders recently put out its annual list of the most- and least-affordable areas, which combines housing prices with median incomes. There, only slightly better than least-affordable San Francisco, was the Eugene-Springfield area in Oregon (where it rains much of the time).
Towns here in the Rogue Valley of southern Oregon (which is 300 miles from a major metropolitan area) are even less affordable than Los Angeles, San Diego, or Honolulu - all of which also made the home builders association's "25 least affordable" list. Many "equity emigres" - retirees or young families escaping the urban rat race - are moving in from California.
WHAT'S going on? It's pretty much Economics 101 stuff: A booming economy, relatively low mortgage interest rates, the accumulation of on-paper wealth tied to Wall Street's dare-devil ride, high consumer confidence.
"It's the confluence of all those good things the likes of which has seldom been seen before," says Brian Bragg, editor of US Housing Markets, a newsletter and research journal.
And it's not just those in high-tech towns like Seattle where "dink" couples (dual incomes, no kids) are buying up those cool Victorians and craftsmen-style bungalows approaching for a half-mil - some paying cash.
"The gains in homeownership are broadly based, with young adults making up much of the ground they lost during the 1980s, and minority and moderate-income households purchasing homes in record numbers," reports the Joint Center for Housing Studies at Harvard University.
"Between 1994 and 1997, the net addition of 4 million households to the ranks of homeowners set a three-year record."
There's a cautionary note in the Harvard study, however:
"Even under these unusually favorable conditions ... many young and low-income households are still unable to progress up the housing ladder. Nearly half of today's 25-to-34-year-olds have only a high-school education, seriously limiting their earning power in the new global economy.
These workers in particular are finding it more and more difficult to save enough for a downpayment on a home and to earn enough to cover the monthly costs of ownership."
This is certainly true in the Seattle area, where the average price of a single-family home is now nearly $258,000 - $40,000 more than a year ago. Many other cities have seen noticeable increases in home prices over a year ago, says Fred Flick, vice president for economic research at the National Association of Realtors.
As a region, the Midwest has seen nearly the same rate of increase over a year ago (about 8 percent) as the West. Mr. Flick notes Akron, Ohio; Des Moines, Iowa; Omaha, Neb.; and Sioux Falls, S.D., as places where median house prices are going up at or near double-digit rates.
Still, when compared with regional or local incomes, the Midwest remains the most affordable.
For five quarters, Kokomo, Ind., has topped the National Association of Home Builders' "housing opportunity index" with a score of 93. This means families earning the Kokomo area's median income of $50,800 could afford to buy 93 percent of the houses sold there. Thirteen of the 25 "most affordable metro areas" on this list are in the Midwest.
The West, on the other hand, accounts for 19 of the 25 "least affordable metro areas." Even though the median family income in San Francisco is a relatively high $68,600, for example, only about 25 percent of houses in that market were affordable to those earning the median income.
Despite the price jumps, the means to buy new homes is just as strong. The Commerce Department reports that the seasonally adjusted annual rate of new-home sales (890,000) is the highest it's been since such figures were first tracked 35 years ago.