You may be asking yourself, what the people in Anderson, SC, did to deserve the lowest rating of any metropolitan area in the country. Furthermore, and perhaps more intriguing, what did the Las Vegas people have going for them that we did not in our area? There is probably no one answer since many factors go into determining home value appreciation. If I had to settle on one, I would “place my bets” on the local economy. You probably could not help but notice the reference to gambling in the phrase addressing why Las Vegas is at the top of the heap. That was no accident. Gambling and the related economic effects that accommodate it was the engine that boosted the fortunes of those owning a home near the strip. Notice that Reno was not far behind its larger sister in our “Red Hot Areas.”

As for Anderson, SC, an overall sluggish economy in both Carolinas has contributed to the lackluster home appreciation. The area has been plagued with many factory closings in recent months. This can generally be attributed to competition from overseas in textiles and related industries.

Perhaps more analysis is in order to get a handle on the complete spectrum of housing value changes increases. It would not be accurate to portray a small area in Nevada and California as the only area of the country where substantial home value increases occurred during 2004. There were many areas that experienced value increases in excess of 20% within the past year. Nor would it be proper to imply that the Carolinas are the only places experiencing a near stagnant housing market. Listed below are a few additional geographic areas displaying both favorable and unfavorable housing appreciation statistics as further reported by the OFHEO.

• Hot Areas:

  • Palm Bay, FL 26%

  • Los Angeles, CA 25%

  • San Diego, CA 24%

  • West Palm Beach, FL 23%

  • Port St. Lucie, FL 23%
     

• Cool Areas:

  • Youngstown, PA 3%

  • Saginaw, MI 3%

  • Indianapolis, IN 3%

  • Toledo, OH 3%

  • Bolder, CO 3%

While much could be said for the reasons the above sampling of geographic areas have displayed hot or cool housing markets, a couple of key issues come to mind which should be addressed.

There is a common thread in the hot areas, not all of which is shown on the sampling above. It seems that our entire country is obsessed by water properties, both water front and near water. It is no accident that all five of the hot areas listed above are areas which benefit from their location on or very near the ocean, and that’s not all. Many other areas demonstrating rapid appreciation are water areas, including Virginia Beach, VA, Honolulu, HI, Hagerstown, MD, and Medford, OR, all of which had appreciation rates at or above 20% last year. Homes located in rich playgrounds, resort areas and areas of sunshine are also among the high appreciation areas. While much of the time these areas are also near water they are also basking in appreciation and usually frequented by those owing two or more homes.

Cool areas are somewhat harder to classify into one group but it is fair to say that most are in areas where the economy is sluggish due to plant closings, layoffs and a general lackluster economy. Some cities experiencing appreciation rates at or below 5% in 2004 include Nashville, TN, Detroit, MI, Fort Worth, TX, Pittsburgh, PA, Tulsa, OK, and Rochester, NY.

For those of us wanting to get into act of making money on our homes, a few points should be considered. Shy away from buying homes in areas of high unemployment, lower socioeconomic parts of town and areas experiencing slowdowns in economic growth. Areas demonstration aggressive technology expansion should be favored over those relying heavily on factory jobs, as many of these jobs are going overseas. Homes located in or near vacation areas, beaches, lakes, heavy growth, second homes, etc., are to be given prime consideration.

Having said all of this, it should be noted that some years are better than others, and, as with the stock market, a rising tide is an advantage to all boats. Having just come off a year with very high tide, caution is advised. It should be further noted that the OFHEO also reported that the last quarter of 2004 demonstrated the weakest quarter of the year representing a slowdown from the other quarters. With interest rates rising finding the appreciation niche in housing may be more difficult in 2005.