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Biggest Metros With the Best Long-Term Real Estate

  1. Best Performers
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    Best Performers

    For many U.S. residents burned by the housing bust, the notion that real estate can not only tread water but actually increase in value might seem a fairy tale. It's not. A Businessweek.com analysis of home sales data from the National Association of Realtors shows that in 18 of the nation's 25 biggest metro areas, home prices grew in value between 1990 and 2010. In one area the change in real dollar price was as much as 85 percent, a return applying only to those who bought homes as a long-term investment, not for easy money flipping real estate. Seven of these metros lost value—generally the result of overbuilding during the real estate boom. Despite recent housing woes, real estate remains one of the best investments the average American can make. And unlike a stock certificate, it provides a place to live.

    Click here to see, from lowest to highest, which metros have been good long-term investments—and which have experienced price drops to below 1990 levels in inflation-adjusted dollars.
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  2. No. 25 Best-Performing Big Metro: Atlanta-Sandy Springs-Marietta, Ga.
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    No. 25 Best-Performing Big Metro: Atlanta-Sandy Springs-Marietta, Ga.

    1990 price: $144,290 ($86,400* in 1990 dollars)
    2010 price: $113,500*
    Change in real dollars: -21.3 percent

    Population: 5,475,213**
    Year home prices peaked: 2007*

    Although home sale prices in metro Atlanta did not jump as much as they did in other areas during the housing boom, they have declined significantly over the last three years. Since reaching a peak price of $181,205 (in 2010 dollars) in 2007—about 25.6 percent above 1990 prices in real terms—Atlanta home prices have fallen 37.4 percent. In third-quarter 2010, prices were down 12.3 percent year-on-year and the foreclosure rate, according to RealtyTrac, was 1.38 percent.

    *On all slides, annual 1990 and third-quarter 2010 median home sale prices, peak prices, and other price data are based on figures from the National Association of Realtors, unless otherwise noted. The 1990 prices are adjusted for inflation, based on the Consumer Price Index; $1 in 1990 is equal to about $1.67 in 2010 dollars.

    **2009 population estimates from the U.S. Census Bureau


  3. No. 24 Best-Performing Big Metro: Sacramento-Arden-Arcade-Roseville, Calif.
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    No. 24 Best-Performing Big Metro: Sacramento-Arden-Arcade-Roseville, Calif.

    1990 price: $229,630 ($137,500 in 1990 dollars)
    2010 price: $185,000
    Change in real dollars: -19.4 percent

    Population: 2,127,355
    Year home prices peaked: 2005

    Sacramento's median home price rose quickly in this century's first decade. It was close to the U.S. median for most of the 1990s, but by 2005 had surpassed the national level by 76 percent, states a 2006 paper by the Fisher Center for Real Estate and Urban Economics at the University of California-Berkeley, citing data from the California Association of Realtors. Prices peaked at $420,437 (in 2010 dollars) in 2005. In the subsequent five years, the median home price dropped by more than 50 percent, falling below 1990 levels in inflation-adjusted dollars. The biggest annual drop occurred in 2008, when nominal prices fell by 36.8 percent year-on-year, according to figures from the National Association of Realtors.
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  4. No. 23 Best-Performing Big Metro: Riverside-San Bernardino-Ontario, Calif.
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    No. 23 Best-Performing Big Metro: Riverside-San Bernardino-Ontario, Calif.

    <strong>1990 price:</strong> $220,610 ($132,100 in 1990 dollars)<br> <strong>2010 price:</strong> $190,100<br> <strong>Change in real dollars:</strong> -13.8 percent<br> <br> <strong>Population:</strong> 4,143,113<br> <strong>Year home prices peaked:</strong> 2006<br> <br> Home prices shot up in the 1980s in Riverside, then California's fastest-growing county, according to the web site of Alma Jill Dizon, an area agent. The local economy slowed in the 1990s, with prices picking up again in the early 2000s. After years of steep increases—nominal prices shot up 25 percent in 2003, 34 percent in 2004, and 26 percent in 2005—prices peaked in 2006 at $434,169 (in 2010 dollars). Prices fell dramatically thereafter: In 2008 nominal prices dropped by 38 percent, and in 2009 by nearly 28 percent. By third-quarter 2010, real home prices were 13.8 percent lower than in 1990. Recovery is expected to be shaky in the area, which has the nation's sixth-highest metro foreclosure rate, at 2.46 percent, according to the third-quarter report from foreclosure tracker <a href="http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=10545547">RealtyTrac</a>.<br>
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  5. No. 22 Best-Performing Big Metro: Detroit, Mich.*
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    No. 22 Best-Performing Big Metro: Detroit, Mich.*

    1990 price: $93,520 ($56,000* in 1990 dollars)
    2010 price: $84,600*
    Change in real dollars: -9.5 percent

    Population: 4,403,437
    Year home prices peaked: 2005

    According to a market report by financial services company PNC, "Detroit's housing market was bid up more than demographic trends would support in the 1990s in response to robust auto industry trends. Now that this most vital of industries in Detroit is struggling to find traction, the housing market has lost a key demand driver." The unemployment rate in the Detroit-Livonia-Dearborn area was 11.2 percent in 1991, fell to 4.3 in 2000, and stood at an estimated 14.4 percent in September, according to data from the U.S. Bureau of Labor Statistics. Data from John Burns Real Estate Consulting shows that prices peaked in July 2005 at $137,396 (in 2010 dollars) and have since fallen by 38.4 percent in real terms.

    *Although the Detroit MSA—which refers to Detroit-Warren-Livonia—is the 11th-largest metro area, with 4.4 million people, recent price data for this area was not available from the National Association of Realtors. The price and peak price data above refer to the Detroit-Livonia-Dearborn metropolitan division, a part of the MSA with a population of 1.9 million, and was provided by John Burns Real Estate Consulting.
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  6. No. 21 Best-Performing Big Metro: Cincinnati-Middletown, Ohio-Ky.-Ind.
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    No. 21 Best-Performing Big Metro: Cincinnati-Middletown, Ohio-Ky.-Ind.

    1990 price: $133,270 ($79,800 in 1990 dollars)
    2010 price: $129,300
    Change in real dollars: -3.0 percent

    Population: 2,171,896
    Year home prices peaked: 2005

    In 2005, prices in the Cincinnati area peaked at $163,186 (in 2010 dollars). They have since dropped by about 20.8 percent. The housing market in greater Cincinnati has historically experienced a 3 percent to 4 percent annual rate of appreciation, but the past four years have been an exception, according to real estate website viewcincinnati.com. The median sale price of homes had fallen slightly below 1990 levels in inflation-adjusted dollars as of this year's third quarter.
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  7. No. 20 Best-Performing Big Metro: Phoenix-Mesa-Scottsdale, Ariz.
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    No. 20 Best-Performing Big Metro: Phoenix-Mesa-Scottsdale, Ariz.

    1990 price: $140,280 ($84,000 in 1990 dollars)
    2010 price: $138,000
    Change in real dollars: -1.6 percent

    Population: 4,364,094
    Year home prices peaked: 2006

    Having fallen 52.5 percent from 2006 peak levels in inflation-adjusted dollars, Phoenix housing prices are now just below 1990 levels. The area saw the biggest price jump in 2005, when nominal prices vaulted 46 percent, NAR data show. Prices peaked at $290,602 (in 2010 dollars) in 2006 but have fallen rapidly in the last four years because of foreclosures and oversupply. The area had the eighth-highest metro foreclosure rate, 2.28 percent, in the third quarter, according to RealtyTrac.
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  8. No. 19 Best-Performing Big Metro: Los Angeles-Long Beach-Santa Ana, Calif.
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    No. 19 Best-Performing Big Metro: Los Angeles-Long Beach-Santa Ana, Calif.

    1990 price: $354,210 ($212,100 in 1990 dollars)
    2010 price: $350,000
    Change in real dollars: -1.2 percent

    Population: 12,874,797
    Year home prices peaked: 2007

    Los Angeles home prices grew rapidly in the first half of this decade, particularly from 2002 to 2004, when annual growth rates exceeded 20 percent. By 2007, prices had peaked at $625,370 (in 2010 dollars). Nominal prices then came down rapidly, falling by 32.3 percent year-on-year in 2008 and by nearly 17 percent in 2009. The median sale price is now slightly below 1990 levels in inflation-adjusted dollars. L.A.'s foreclosure rate was 1.1 percent in the third quarter, according to RealtyTrac. Brookfield (Wisc.)-based financial services industry information company Fiserv (FISV) and Moody's Economy.com expect prices in the area to bottom during second-quarter 2011.
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  9. No. 18 Best-Performing Big Metro: Pittsburgh
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    No. 18 Best-Performing Big Metro: Pittsburgh

    1990 price: $117,570 ($70,400* in 1990 dollars)
    2010 price: $122,300*
    Change in real dollars: +4 percent

    Population: 2,354,957
    Year home prices peaked: 2007

    Home prices in Pittsburgh climbed through 2007 and have since fallen only slightly. Sales in the area have been sluggish following the expiration of the first-time home buyer tax credit earlier this year, reported the Pittsburgh Business Times, but prices have held up. Strong demand for lower-priced homes has helped stabilize the market, according to housingpredictor.com.

    *Pittsburgh MSA 1990 and October 2010 prices from John Burns Real Estate Consulting. Peak price year from National Association of Realtors.

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  10. No. 17 Best-Performing Big Metro: St. Louis, Mo.-Ill.
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    No. 17 Best-Performing Big Metro: St. Louis, Mo.-Ill.

    1990 price: $129,930 ($77,800 in 1990 dollars)
    2010 price: $135,400
    Change in real dollars: +4.2 percent

    Population: 2,828,990
    Year home prices peaked: 2006

    The St. Louis market did not get swept away in the housing bubble. Unlike many other metros, the area never saw double-digit price growth in the early 2000s, show NAR data. Prices peaked at $160,795 (in 2010 dollars) in 2006 and have since declined by 15.8 percent in real terms. The median home price, adjusted for inflation, remains slightly higher today than 20 years ago. A recent survey by the Brookings Institution and the London School of Economics and Political Science ranks the St. Louis metropolitan area 54th of 150 places internationally for economic performance after the recession, reported stltoday.com.
  11. No. 16 Best-Performing Big Metro: Chicago-Naperville-Joliet, Ill.-Ind.-Wisc.
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    No. 16 Best-Performing Big Metro: Chicago-Naperville-Joliet, Ill.-Ind.-Wisc.

    1990 price: $181,030 ($108,400 in 1990 dollars)
    2010 price: $196,600
    Change in real dollars: +8.6 percent

    Year home prices peaked: 2007
    Population: 9,580,567

    Chicago home prices have fallen 32.5 percent in real terms from 2007 peak levels, but have retained some of the gains made over the last two decades. Still, the area's foreclosure rate—1.18 percent in the third quarter—is higher than the U.S. average and the Illinois Association of Realtors expects median prices to decline through early 2011 in both Chicago and Illinois.
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  12. No. 15 Best-Performing Big Metro: Tampa-St. Petersburg-Clearwater, Fla.
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    No. 15 Best-Performing Big Metro: Tampa-St. Petersburg-Clearwater, Fla.

    1990 price: $119,240 ($71,400 in 1990 dollars)
    2010 price: $131,300
    Change in real dollars: +10.1 percent

    Population: 2,747,272
    Year home prices peaked: 2006

    Nominal prices in Tampa jumped by 15.6 percent year-on-year in 2004 and by 28.6 percent in 2005, according to data from the NAR. Adjusted for inflation, prices more than doubled between 1990 and 2006. Since reaching a peak in 2006 of $248,019 (in 2010 dollars), prices have fallen by nearly half. The Tampa metro foreclosure rate was 1.46 percent in the third quarter, compared to a U.S. average of 0.72 percent, according to RealtyTrac.

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  13. No. 14 Best-Performing Big Metro: Dallas-Fort Worth-Arlington, Tex.
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    No. 14 Best-Performing Big Metro: Dallas-Fort Worth-Arlington, Tex.

    1990 price: $149,470 ($89,500 in 1990 dollars)
    2010 price: $171,500
    Change in real dollars: +14.7 percent

    Population: 6,447,615
    Year home prices peaked: 2007

    Like the Houston metro area, Dallas' home prices have been more stable than the national average. During their peak in 2007, real home prices were up by a mere 6.4 percent over 1990 levels. In a recent report by the Brookings Institute and the London School of Economics and Political Science, Dallas ranked fourth in the country and 39th in the world for economic performance since the recession.

  14. No. 13 Best-Performing Big Metro: Minneapolis-St. Paul-Bloomington, Minn.-Wisc.
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    No. 13 Best-Performing Big Metro: Minneapolis-St. Paul-Bloomington, Minn.-Wisc.

    1990 price: $148,130 ($88,700 in 1990 dollars)
    2010 price: $171,400
    Change in real dollars: +15.7 percent

    Population: 3,269,814
    Year home prices peaked: 2005

    Housing prices in the Twin Cities area grew rapidly in the late 1990s. According to a Star Tribune article, during the five years ending in the first quarter of 2002, the median sale price increased by an average of more than 9 percent per year. Prices peaked at $262,619 (in 2010 dollars) in 2005, and have since fallen about 34.7 percent in real terms.

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  15. No. 12 Best-Performing Big Metro: San Diego-Carlsbad-San Marcos, Calif.
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    No. 12 Best-Performing Big Metro: San Diego-Carlsbad-San Marcos, Calif.

    1990 price: $305,940 ($183,200 in 1990 dollars)
    2010 price: $387,600
    Change in real dollars: +26.7 percent

    Population: 3,053,793
    Year home prices peaked: 2005

    The median home price in San Diego surged in the early 2000s. The median sale price grew by double digits for years and jumped the most in 2004, when it shot up by nearly 29.8 percent, show NAR data. By the time prices peaked in 2005 at $675,897 (in 2010 dollars), they were 120.9 percent above 1990 levels in real terms. Prices fell rapidly in 2008 and are now 42.7 percent below peak levels in real dollars.
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  16. No. 11 Best-Performing Big Metro: Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.
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    No. 11 Best-Performing Big Metro: Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.

    1990 price: $177,520 ($106,300 in 1990 dollars)
    2010 price: $231,000
    Change in real dollars: +30.1 percent

    Population: 5,968,252
    Year home prices peaked: 2007

    Philadelphia housing prices did not appreciate for most of the 1990s. In inflation-adjusted dollars, the median home sale price in 2000 was 12.4 percent below that of 1990. Along with the national trend, prices started appreciating quickly in the early 2000s, peaking at $247,470 (in 2010 dollars) in 2007. They have since dropped about 6.7 percent in real terms.

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  17. No. 10 Best-Performing Big Metro: Houston-Sugar Land-Baytown, Tex.
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    No. 10 Best-Performing Big Metro: Houston-Sugar Land-Baytown, Tex.

    1990 price: $118,070 ($70,700 in 1990 dollars)
    2010 price: $158,900
    Change in real dollars: +34.6 percent

    Population: 5,867,489
    Year home prices peaked: 2007

    While home prices shot up and then plunged over the last decade in most parts of the country, the Houston market has been stable: The greatest fluctuation in the last decade was an 8.5 percent year-on-year nominal price increase in 2002. A recent survey by the Brookings Institution and the London School of Economics and Political Science ranks Houston fifteenth among U.S. metros for recovery from the recession, reported the Houston Chronicle.
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  18. No. 9 Best-Performing Big Metro: San Francisco-Oakland-Fremont, Calif.
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    No. 9 Best-Performing Big Metro: San Francisco-Oakland-Fremont, Calif.

    1990 price: $433,030 ($259,300 in 1990 dollars)
    2010 price: $588,900
    Change in real dollars: +36 percent

    Population: 4,317,853
    Year home prices peaked: 2007

    San Francisco housing prices rose in the 1990s during the tech boom. In the past decade, the fastest growth occurred in 2004 and 2005, when nominal prices increased by 15 percent and 11.5 percent, respectively. In 2007, prices peaked at $847,873 (in 2010 dollars). While prices are now 30.5 percent below peak, they remain well above 1990 rates and have been increasing recently. In third-quarter 2010, the nominal median sale price was up 9.4 percent year-on-year, according to data from the NAR.
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  19. No. 8 Best-Performing Big Metro: Boston-Cambridge-Quincy, Mass.-N.H.
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    No. 8 Best-Performing Big Metro: Boston-Cambridge-Quincy, Mass.-N.H.

    1990 price: $267,030 ($159,900 in 1990 dollars)
    2010 price: $366,500
    Change in real dollars: +37.2 percent

    Population: 4,588,680
    Year home prices peaked: 2005

    "Metro Boston's housing market was affected by the real estate bubble earlier—and less severely— than other metro areas around the country" and sale price declines have brought homes to historic affordability levels, according to a 2009 paper by the Concord Group, a real estate consultancy. Prices peaked in 2005 at $462,160 (in 2010 dollars) and have since dropped a total of 20.7 percent. Despite the fall, home sale prices have still increased in real dollars over the last 20 years.

  20. No. 7 Best-Performing Big Metro: Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.
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    No. 7 Best-Performing Big Metro: Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.

    1990 price: $246,160 ($147,400 in 1990 dollars)
    2010 price: $338,600
    Change in real dollars: +37.6 percent

    Population: 5,476,241
    Year home prices peaked: 2006

    Washington area home sale prices grew by nearly 90 percent in real terms between 1990 and 2006, when they peaked at $467,000 (in 2010 dollars). They have since fallen 27.5 percent and Fiserv and Moody's Economy.com expect continued decreases in 2011. Still, the area remains one of the country's strongest metro economies because government staffing demand keeps unemployment low.

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  21. No. 6 Best-Performing Big Metro: Miami-Fort Lauderdale-Pompano Beach, Fla.
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    No. 6 Best-Performing Big Metro: Miami-Fort Lauderdale-Pompano Beach, Fla.

    1990 price: $152,140 ($91,100 in 1990 dollars)
    2010 price: $214,800
    Change in real dollars: +41.2 percent

    Population: 5,547,051
    Year home prices peaked: 2006

    Metro Miami home sale prices soared for years, growing by 164.4 percent from 1990 through 2006 in real dollars. In recent years, however, nominal prices dropped quickly, coming down 22 percent year-on-year in 2008 and 25.9 percent in 2009. In third-quarter 2010, Miami had the country's seventh-highest metro foreclosure rate, at 2.42, according to RealtyTrac. Fiserv and Moody's Economy.com do not expect the Miami market to reach its trough until 2012.
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  22. No. 5 Best-Performing Big Metro: New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.
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    No. 5 Best-Performing Big Metro: New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.

    1990 price: $285,070 ($170,700 in 1990 dollars)
    2010 price: $404,100
    Change in real dollars: +41.8 percent

    Population: 19,069,796
    Year home prices peaked: 2007

    Inflation-adjusted home prices in metro New York were stable through most of the 1990s and started rising rapidly in the early 2000s. The median sale price peaked in 2007 at $494,840 (in 2010 dollars)—about 73.6 percent above 1990 levels in real terms—and has since dropped by about 18.3 percent. Fiserv and Moody's Economy.com expect prices in the area to bottom in 2011.

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  23. No. 4 Best-Performing Big Metro: Seattle-Tacoma-Bellevue, Wash.
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    No. 4 Best-Performing Big Metro: Seattle-Tacoma-Bellevue, Wash.

    1990 price: $204,240 ($122,300 in 1990 dollars)
    2010 price: $308,200
    Change in real dollars: +50.9 percent

    Population: 3,407,848
    Year home prices peaked: 2007

    Home prices in Seattle have grown significantly over the last 20 years. The metro area's housing market exploded in the late 1990s as the population grew. Nominal price increases slowed in 2002 and 2003, but jumped to 19 percent in 2004, 11 percent in 2005, and 14 percent in 2006, show NAR data. Prices peaked in 2007 at $407,607 (in 2010 dollars). Adjusted for inflation, prices are now about 24.4 percent below that level.
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  24. No. 3 Best-Performing Big Metro: Denver-Aurora-Broomfield, Colo.
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    No. 3 Best-Performing Big Metro: Denver-Aurora-Broomfield, Colo.

    1990 price: $144,290 ($86,400 in 1990 dollars)
    2010 price: $238,500
    Change in real dollars: +65.3 percent

    Population: 2,552,195
    Year home prices peaked: 2006

    Metro Denver housing prices grew fastest from 1999 through 2001, when nominal prices increased at double-digit rates, according to a report by the Metro Denver Economic Development Corp., a regional economic development group. Since reaching a peak in 2006 at $270,340 (in 2010 dollars), the median home price has fallen nearly 11.8 percent in real terms. Moody's Economy.com and Fiserv expect prices in Denver to reach a trough in third-quarter 2011.

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  25. No. 2 Best-Performing Big Metro: Baltimore-Towson, Md.
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    No. 2 Best-Performing Big Metro: Baltimore-Towson, Md.

    1990 price: $152,300 ($91,200 in 1990 dollars)
    2010 price: $257,100
    Change in real dollars: +68.8 percent

    Population: 2,690,886
    Year home prices peaked: 2007

    From 2000 through 2005, Baltimore area home prices skyrocketed. The growth rate in nominal prices increased from 3.4 percent year-on-year in 2001 to 20.6 percent in 2004 and 22.3 percent in 2005, according to price data from the National Association of Realtors. In 2007, the median home price peaked at $301,412 (in 2010 dollars). Since then, prices have fallen about 14.7 percent. While well above 1990 levels, prices are expected to continue falling and should bottom in third-quarter 2011, predict Fiserv and Moody's Economy.com.

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  26. No. 1 Best-Performing Big Metro: Portland-Vancouver-Beaverton, Ore.-Wash.
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    No. 1 Best-Performing Big Metro: Portland-Vancouver-Beaverton, Ore.-Wash.

    1990 price: $130,590 ($78,200 in 1990 dollars)
    2010 price: $242,100
    Change in real dollars: +85.4 percent

    Population: 2,241,841
    Year home prices peaked: 2007

    Notwithstanding recent declines, Portland area home prices (adjusted for inflation) remain significantly higher than 1990 levels. The median price rose quickly from 2004 through 2007, peaked at about $311,000 (in 2010 dollars) in 2007, and has since dropped by about 22 percent. Moody's Economy.com and Fiserv predict prices will reach their trough in fourth-quarter 2011.
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