Things Aren’t Tough All Over

Even though U.S. home prices may have further to fall, plenty of cities are defying the subprime slump

by Jessica Silver-Greenberg, Paula Lehman and Jacob Stokes

John Beasley was nervous when he decided to sell his 100-year-old, three-bedroom home in Louisville this summer. The married father of three needed more space for his growing family. But with the U.S. housing market in the doldrums, he worried about hanging a for-sale sign on his house. To his surprise, Beasley, a public school teacher and guest lecturer at the University of Louisville, found a buyer in just two days and had to knock only $2,000 off his asking price. “I was incredibly relieved,” he says.

With the median home price down 14% nationwide in the past year and media reports predicting they have further to fall, it’s easy to forget that real estate is highly localized. And some cities are proving surprisingly resilient even as huge swaths of the country are slumping. According to research firm Fiserv (FISV), home prices rose over the past 12 months in roughly 40% of the 100 largest metropolitan areas. Fiserv expects prices to keep climbing in 23 of those cities through 2010.

Some places, such as Omaha, never experienced the highs of boom towns like Miami and Las Vegas, and therefore aren’t suffering the lows. Others, like oil-rich Houston, are faring well thanks to a strong local economy. “Real estate is a lot like the weather,” says Arthur Sterbcow, president of New Orleans real estate firm Latter & Blum. “There’s a local temperature, and that’s what you go by.”