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America's Most Stable Housing Markets

This article is more than 10 years old.

The news on the housing front continues to be bleak. U.S. home prices declined 2% in the third quarter, according to the latest S&P/Case-Shiller Home Price Index data released last week. Prices were down in September in 18 of the 20 metro areas covered by the index. Houses continue to sit unsold on the market as well, with the number of homes sold down 2.9% so far in 2010, according to the National Association of Realtors. "The housing market continues to suffer from broad macroeconomic conditions," says Stan Humphries, chief economist at Zillow.com.

However, there are bright spots scattered across the country. Looking at the numbers on a national, statewide or even metro-area basis misses some standouts. Prices in the Cleveland metro area were down 3% in September according to the Case-Shiller Index, the biggest decline nationwide. Yet home values in the Cleveland suburb of Westlake have increased for three straight quarters, with a healthy slate of sales and almost no foreclosures, according to Zillow. All real estate is local, as the saying goes. The typical home in Westlake is worth $199,700, up 2.2% in 2010.

In Pictures: America's 20 Most Stable Housing Markets

In search of America's most stable housing markets, we turned to online real estate marketplace Zillow.com, which has compiled information on 93 million homes nationwide. Zillow looked at the largest metro areas and focused on identifying a city in each where home values had appreciated for at least three straight quarters, the rate of home sales was healthy and foreclosure rates were lower than in the metro area.

Zillow limited the results to cities with more than 10,000 residents. In some large metro areas, including Phoenix, Ariz.; Portland, Ore.; and Seattle, Wash.; there were not any cities of at least 10,000 where housing prices have moved up with turnover and foreclosures at a healthy level.

Prices in cities with lower-priced homes have been on a rollercoaster ride thanks to the $8,000 homebuyer tax credit for first-time purchasers, which expired in April. The first month after the credit expired, new home sales declined 33% across the country. Since the homebuyer credit was introduced in 2008, 3.3 million homeowners have claimed credits worth $23.5 billion. The numbers will increase as people file their 2010 taxes.

Most of the cities on our list are filled with homes worth more than those in their respective metro areas. The prices in our stable housing markets were not artificially propped up by the homebuyer credit, as prices are often too high in these areas for many first-time buyers--an $8,000 credit is not as likely to drive a sale for a $400,000 home as much as for one that costs $125,000.

Take the Atlanta metro area, where the typical home is worth $136,900, down 3.8% in 2010, according to Zillow. The home value decline has accelerated since the tax credit expired in April. Yet in Sandy Springs, an affluent suburb north of Atlanta, home prices are up 2.5% this year, and the gains have accelerated since the credit expired. Sandy Springs is the corporate home of United Parcel Service and Newell Rubbermaid . The median home there is worth $335,800.

California has been among the states hardest hit by the collapse of the housing bubble. In 2005 and 2006, 30% of mortgage originations in the Los Angeles area were considered subprime, according to Moody's Economy.com. In Riverside 38% of mortgages were subprime. Foreclosures have been rampant statewide in the years that followed; in the third quarter this year 40% of California home sales were foreclosure-related, according to RealtyTrac.



There are exceptions in the Golden State. Manhattan Beach, Calif., ranks as the most stable housing market in the Los Angeles metro area. It is the priciest city to make our list: The median home is worth $1.2 million, almost three times the typical home in the Los Angeles metro area. The foreclosure rate in Manhattan Beach is almost non-existent, with only one in 5,376 homes facing foreclosure.


Another California locale that makes the cut is Cupertino, home to Apple and its more than 20,000 employees in the area. Cupertino homes are worth $1.05 million, up 2.3% on average in 2010 compared with the San Jose metro overall, where the typical home is worth $576,700, up a scant 0.7% this year.

Home values across the country are still well below their 2006 peak. Zillow figures the average U.S. home is worth $178,000, which is 26% below the high of $240,000. Zillow's Humphries thinks prices are likely to fall another 5% to 7% nationally and bottom out in the middle of 2011 due to excess inventory, high rates of negative equity and high unemployment. Stable housing markets are out there though. You just have to know where to look.

In Pictures: America's 20 Most Stable Housing Markets