Metropolitan Home Sales Not That Bad

I took a look under the hood of the NAR's Metropolitan Home Sales report today, and I came away with the belief that housing prices are hanging in pretty well throughout most of the country.

For the US as a whole, median sales prices fell -2.7% in 4Q06. But given the long, multi-year streak of double-digit gains, I view this as a modest pullback, or soft-landing if you will.

Here is a snapshot of five of the largest metro areas I follow, and how they fared in Q4:

• Los Angeles: +3.2%
• New York: +2.3%
• San Francisco: +2.0%
• Chicago: +0.9%
• Miami: -6.2%

4 out of 5 of these cities showed continued price gains, albeit at more modest growth rates. As a homeowner in LA, this suits me just fine.

In a very unscientific approach, I decided to highlight all of the metro areas showing double-digit moves. I counted 14 areas still experiencing double-digit growth (Atlantic City NJ, Baton Rouge LA, Cumberland MD, Portland OR, Farmington NM, Raleigh NC, Salt Lake City and Seattle to name a handful) and only 3 experiencing double-digit declines. And guess what? All 3 metro areas were in Florida (Cape Coral-Fort Myers, Palm Bay-Melbourne, and Sarasota-Venice). So I guess is you live in South Florida, its no wonder you're bearish on the housing market. Things don't sound good.

But some other formerly "overheated" areas are also experiencing more modest pullbacks: Las Vegas (-0.8%), Phoenix (-2.3%), Washington, DC (-2.6%), and San Diego (-4.5%). Overall, this report, like the ones that have preceded it in recent quarters, paints a picture of a housing market that is slowing, not collapsing. For many households that have seen a nice rise in home equity appreciation over the last several years, this is a welcomed scenario.