Houston Missed the Boom, but now it is payback time

This sprawling city missed the real-estate boom that sent home prices soaring on the East and West coasts. Now, with much of the nation's housing market in retreat, it has yet to feel even a tremor.

In September, local sales of single-family homes and condominiums were up 17.7% from a year earlier, logging their 32nd straight month of increase, according to the Houston Association of Realtors. The median price of an existing single-family home: $143,400, up 3%.

By contrast, nationwide sales of residential real estate fell 14.2% in September, according to the National Association of Realtors. Home prices nationally were down 2.2%, retreating in such former hot spots such as Washington, Boston and San Francisco. The national median sales price for September for existing single-family homes was $219,800, according to the Houston Association of Realtors.

Houston's gains are nothing like those seen in the past decade in the Northeast and California, but that may be the secret to Houston's success and the reason a bubble is unlikely to develop here. Land here is abundant, and the city has some of the least-restrictive land-use and construction rules in the nation. Those factors help supply to keep pace with demand and keep prices within reach of a broad range of potential buyers.

For more on Houston's greater potential for growth click on the title above.

The most affordable U.S. housing markets

The Midwest has the most affordable housing. California has the least.

The housing slump has its benefits; affordability improved in many metro areas across the nation during the first three months of this year.
According to a report from Wells Fargo Bank and the National Association of Home Builders (NAHB), about 44 percent of all homes sold in the United States during the first three months of the year were affordable to families earning the median household income for the area they lived in.

Los Angeles: The nation's least affordable housing market.

NAHB President Brian Catalde, said, "This is up from 41.6 percent of homes sold in the final quarter of 2006, and is likely the result of lower house prices as well as the very favorable financing conditions that existed at the beginning of this year."

Home prices from the National Association of Realtors

The Indianapolis area, where the median home cost $116,000, was the most affordable major U.S. market for the period, but joining it at number one this time was the Youngstown, Ohio metro area ($78,000). In both places, the index judged affordable 89.0 percent of the homes sold.
A smaller market area, Kokomo, Indiana ($93,000), led all cities; 93.5 percent of all homes sold there could be bought by median income households. Also highly affordable were Lansing, Michigan ($100,000, 91.1 percent) and Lima, Ohio ($78,000, 90.4 percent).
The top 13 markets were all located in the Midwest region. Cumberland, Maryland ($81,000, 86.8 percent), representing the South, was the highest ranked city in the rest of the United States. Elmira, New York ($69,000, 86.7 percent) was close behind. The most affordable western city was Pueblo, Colorado ($115,000, 76.3 percent).

For more on nation-wide housing affordability click on title above.

Stocks vs. Real Estate

Real estate has packed quite a punch of late, appreciating 12.4% annually between 2001 and 2006, according to the S&P/Case-Shiller U.S. Home Price index. That clobbered stock prices, which gained only 4.3% a year as measured by the S&P 500.

But over the long run stocks win easily. A new study by Jack Clark Francis, a finance and economics professor at Baruch College in New York City, and Yale's Roger G. Ibbotson compared the annual returns of real estate from 1978 to 2004 compared with those of 15 different "paper" investments, including stocks, bonds, commodities futures, mortgage securities and real estate investment trusts (REITs). The results? Housing delivered a solid but unimpressive annualized return of 8.6%. Commercial property did better at 9.5%. The S&P, however, delivered a crushing 13.4%.

To see the matchup please click on the title above.

The 258 fastest growing U.S. cities

Here's the stats on all 258 cities listed by the Census Bureau
June 27 2007: 4:26 PM EDT

To see where the market is headed click on title above.