New statistics released by the Office of Federal Housing Enterprise Oversight show that the price of the average American home has increased 4.8 percent in the last year and that states in New England generally have appreciated more rapidly than any other region in the country.

California, however, showed the highest single state increase -- with prices moving an average of 8.3 percent above what they were last year. According to the OFHEO, only homes in Hawaii slipped in price, fading an average of 0.6 percent.

Why is California hot, and Hawaii not?

"Companies are recruiting here like gangbusters," says Nancy Gardner, head of Buyer's Broker Realty in San Diego. "They are going crazy in Silicon Valley. Houses aren't on the market long enough to get them into the MLS. They're not even getting signs on them before they're sold."

Gardner also said another kind of homebuyer is out in California that hasn't been seen in years.

"We're starting to get inquiries again from people looking for vacation homes," she said. "That market had really dropped but now it's coming back too."

California had hit a recession in the early '90s when defense contractors underwent a series of downsizings and the high-tech industries hadn't quite revved up. Today, however, the state is in full economic reversal.

"Companies are hiring … and the people they are hiring are looking in the $300,000, $400,000 and even $500,000 range," Gardner said. "People who went through the recession the last several years are finding they now have a lot more equity in their homes, which is good for the move up buyer."

Over the past five years, homes in California have risen by 16.8 percent and, according to the OFHEO, since 1980 homes have appreciated 139.1 percent.

Ironically, over the long term, home prices in Hawaii have risen even more than in California -- 139.8 percent. It is only in the last several years that steady drops have been reported.

According to government statistics, over the past five years Hawaii prices have slipped 11.8 percent.

"Our economy has been very weak since in the 1990s, after the ‘Japanese bubble’ from ’87 to ’90," said Honolulu Board of Realtors economist Harvey Shapiro.

"From '87 to '90, home prices doubled here. Everyone agrees they got up way too high. You hear stories about people sitting at home having dinner and hearing the doorbell ring. Somebody with a suitcase full of cash would be there asking how much they wanted for their house.

"People would say, "I don't want to sell," and the guy would say, "That's not what I asked. I asked how much?". Those things really happened."

Since the Asian economic tailspin, however, Hawaii homes also have suffered.

"I think we're probably at the bottom of it now, though," said Shapiro. "Inventory is down by 20 percent. The number of sales per month has been going up now for 24 straight months. These are all pretty good signs the market is turning."

As a region, the OFHEO tags New England as the strongest in the nation, led by Massachusetts and New Hampshire.

Over the past year Massachusetts homes have appreciated at a rate of 7.9 percent and 23.3 percent over the past five years. Since 1980, the Commonwealth has seen home prices rise 257.9 percent.

In New Hampshire, third behind California and Hawaii in appreciation, prices increased by an average of 6.9 percent, 17.7 percent over five years and 134.1 percent since 1980.

Published: June 24, 1999

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