San Jose, CA, the capital of Silicon Valley, is home of the nation's fastest growing home prices, a title it's held for at least the last five years.

While Massachusetts holds the same five-year title for greatest statewide home price appreciation, metropolitan areas in California dominate the Top 20 List of Highest Rates of Home Price Appreciation, according to the Office of Federal Housing Enterprise Oversight's (OFHEO) Third Quarter 2000 House Price Index.

The Golden State posted 10 hot markets on the Top 20 list, including the Top 7 -- San Jose, Santa Rosa, San Francisco, Santa Cruz-Watsonville, Oakland, Salinas, and the Vallejo-Fairfield-Napa market. The San Luis Obispo-Atascadero-Paso Robles market, Yolo county and San Diego were also among the Top 20, according to the report.

What's sure to provide fodder for the real estate industry's lobbying efforts to designate California a "high cost area" for conforming mortgage loan purposes, Alaska's homes yielded zero appreciation from the third quarter last year to the third quarter this year. Hawaii's homes appreciated only 3.8 percent, compared to 12.6 percent statewide for California, 25.5 percent in San Jose, and 7.3 percent nationwide, according to OFHEO, safety and soundness regulator for Fannie Mae and Freddie Mac.

Under Fannie Mae and Freddie Mac charters Alaska and Hawaii, along with Guam and the Virgin Islands are designated high cost areas granting them conforming loan levels 50 percent higher than the rest of the U.S. -- including California.

Freddie Mac and Fannie Mae recently set next year's conforming loan level at $275,000, $412,500 for the four high cost areas.

The conforming loan level is the largest loan Freddie Mac and Fannie Mae will buy from lenders, but more important to consumers, conforming mortgage loans cost less to finance than non-conforming or larger "jumbo" loans.

The average jumbo loan was more than half a percentage point higher than conforming loans Dec. 11, according to Bankrate.com.

The National Association of Realtors and the California Association of Realtors are planning legislation this year to give buyers in California and other expensive markets greater access to cheaper loans by extending high cost area status to additional markets. Successful legislation is required to change Freddie Mac's and Fannie Mae's charters.

All faster appreciating markets than Alaska and Hawaii, the other Top 20 fastest appreciating home price hot spots were, Austin-San Marcos, TX, Barnstable-Yarmouth, MA, Nassau-Suffolk, NY, Boston, MA-NH, Nashua, NH, Stamford-Norwalk, CT, Boulder-Longmont, CO, Brockton, MA, Lawrence, MA-NH and Denver, CO, according to OFHEO. In all areas, homes appreciated at a rate of 14 percent or better during the last year, from third quarter to third quarter.

Home price appreciation isn't the only consideration for granting high cost area designation, but housing does comprise a large chuck of the cost of living in any area.

OFHEO's index, is a weighted repeat sales (of single-family homes) index, measuring the average price changes in repeat sales or refinancings on the same properties. The agency reviews repeat mortgage transactions involving single-family properties with mortgages purchased or securitized by Fannie Mae or Freddie Mac since January, 1975.