Some small towns escape dreaded housing slump
Some smaller towns are bucking the national housing slump with double-digit home appreciation.
SALEM, Ore. — Aside from being Oregon’s capital city, Salem doesn’t have much to boast about. Most downtown restaurants close by 7:00 p.m. and Lefty’s — the only cool bar in town, according to local college students — is known for its karaoke fundraisers.
But the real estate market here is buzzing. The community of 150,000 or so is a prime example of an overlooked phenomenon in the country’s overheated housing market: While demand for homes has nose-dived from Florida to California, some smaller metropolitan pockets continue to thrive.
Sleepy towns like Salem, Ore.; Wenatchee, Wash.; and Provo-Orem, Utah may lack glamour but they are among the few places in the country where housing prices are growing at double-digit rates, according to a study by the Office of Federal Housing Enterprise Oversight.
Experts say population growth and job growth are one reason. Local factors — like proximity to ski slopes, mountain bike trails or nearby cities — are also helping some Western markets escape one of the nation’s worst housing downturns in years. And most of these small-to-mid-size cities weren’t a part of the original housing boom and speculation, so many of them are still playing catch-up.
”The Pacific Northwest was a little bit late coming to the party,” said Andrew Leventis, an economist with a federal housing agency. “The extreme appreciation over the past five or six years in the country only just began in the Northwest a few years ago.”
In Wenatchee, Wash., a 30,000-resident town east of the Cascade Mountains, homes appreciated an average of 25 percent between the first quarter of 2006 and the first quarter of 2007.
But it’s not just the Pacific Northwest that’s seeing double-digit home appreciation. While some of the worst hit housing markets include cities in California, Nevada and Arizona, many of the remaining strong markets are also clustered west of the Rocky Mountains.
Fifteen out of 20 metropolitan areas with the highest rates of home appreciation in the country were in Washington, Idaho, Utah, Oregon, Colorado or New Mexico, according to the federal study.
Between the first quarters of 2006 and 2007, homes in Salem appreciated 13.4 percent, 14.5 in Boise City-Nampa, Idaho, and 16.8 percent in Grand Junction, Colo.
Nationwide house prices, based on sales and refinancing data, rose only 0.5 percent the first quarter of this year above the fourth quarter of last year — the lowest rate in the past decade, according to the federal study. Meanwhile, Oregon had 10.77 percent growth in home price appreciation over the past year.
”Our corner of the world has really held up pretty well,” said John Mitchell, an economist for U.S. Bancorp, based in Portland. “We’ve got very strong population growth, we’ve got good employment growth and we didn’t have the kind of speculation you saw elsewhere.”
AARON CLARK, Associated Press