Home Price Appreciation: Who’s on Top?

What the federal government calls its most comprehensive survey ever of home price appreciation patterns has turned up some intriguing findings on what’s hot and what’s not, and where housing values have gained the most over the last 15 years.

What’s hot--at least for the 1990s--has been residential real estate in Utah, Oregon, Colorado, Wyoming and West Virginia. All five states not only racked up the highest resale price appreciation rates during 1995, but have been near or at the top for the last five years.

But take a longer view of where resale values of houses have surged nationwide and you come up with a very different group of winners. Total price appreciation since 1980--even netting out property value declines suffered during regional recessions--have been greatest in Massachusetts, Hawaii, New York, Rhode Island and New Jersey.

Put another way: If you bought a house in Massachusetts in 1980 and held onto it, the odds are its resale value today is nearly 206% higher than when you first purchased it. During that 16-year holding period, of course, you’ve ridden a roller coaster. Your home’s value has rocketed at times at double-digit annual rates and dropped just as fast during the recession of 1990-’92.

On a nationwide basis from 1980 through 1995, no other state turned in a higher net increase in resale value than Massachusetts’ 206% gain. In second place--chalking up a 180.3% net rise in home values--was Hawaii, another roller coaster. New York ranked third (179.6%), Rhode Island fourth (153.1%) and New Jersey fifth (141.4%).

California--the turbocharged appreciation market of the 1970s--performed better than the national average of 97.2% gain during 1980-1995, with a 108.7% average jump in resale value. But for the short term, California has been lackluster. For the five years ending last Dec. 31, California homes lost nearly 9% of their resale value. During 1995, however, values turned around, increasing by an average 2.8%.

The new study, conducted by the Office of Housing Enterprise Oversight, is based on a sample of nearly 7 million homes that were purchased or refinanced more than once from January 1975, through last December. The houses are located in all 50 states plus the District of Columbia. Valuation data came from the two mortgage giants that either financed or own the loans on the properties--the Federal National Mortgage Assn. (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac).

By tracking average price changes in repeat sales or refinancing on the same properties in such a huge sample, the study allows researchers to pinpoint changes in the values of single-family houses in the United States as a whole, region by region, and state by state.

So where has appreciation sizzled in recent years? In 1995, Utah repeat-sale properties jumped at an average 11% rate, but showed signs of slipping late in the year, with a 2% gain for the final quarter. West Virginia homes, by contrast, jumped at an average 10.3% for the year and were absolutely smoking in the final quarter--nearly 4%.

Other top 1995 performers: Alaska (up 9.5%), Oregon (9.2%), Colorado (7.7%), Michigan (7.1%) and Arizona (6.8%). Also registering gains above the 1995 national average of 4.9% were North Carolina (6.6%); Georgia (6.1%); Minnesota (5.7%); Iowa, the District of Columbia, Kentucky and Massachusetts (all 5.5%); and Ohio (5.2%).

Recent underachievers that nonetheless outstripped the country as a whole in aggregate value gains from 1980 through 1995 include Connecticut (up 134.6%), Delaware (130%), Washington (123.7%), Maine (123%), Pennsylvania (120.6%), Maryland (116%), Virginia (107.6%) and Illinois (104.4%). Oklahoma, which suffered grievously during the 1980s, looks like it has turned around as well. In the last five years, Oklahoma houses have gained 24% in resale value--1% alone in the last quarter of 1995--versus the national five-year average of 14.7%.

What’s the significance of price-gain numbers like these to you if you own or plan to buy a home? For starters, don’t assume that what’s hot--or not--today will perform the same in the coming years. The study documents the utter cyclicality of appreciation patterns across the nation. In 1990, who could have correctly named West Virginia and Utah as the two top gainers in capital values for 1995? Who would have forecast that Massachusetts--wracked by recession--would rebound by mid-decade to post a 5.5% annual gain?

Who’s next up? Based on quarterly data, keep your eyes on Pennsylvania, South Dakota and Missouri. And don’t forget, even North Dakota can still get hot: For the last five years, average resale gains there were 28%--nearly double the national average.

Distributed by the Washington Post Writers Group.