Simmering in the cultures of the American Southwest, Native America and Mexico, Yuma, AZ is often considered Arizona's best kept secret as a nice place to call home.

Bordering both California and Mexico, the small town of some 100,000 residents may also be the nation's best-kept secret as a booming housing market.

For the second quarter in a row, Yuma's home prices grew faster than any other city in the nation among the hundreds -- "ranked" and unranked" -- tracked by Office of Federal Housing Enterprise Oversight's (OFHEO) Home Price Index (HPI).

Fueled, in part, by emigrating agricultural workers and often by speculative investors fleeing higher priced housing costs in California and elsewhere in Arizona, Yuma's prices soared 35.71 percent in the third quarter this year, compared to the third quarter of 2004. In the second quarter this year, the increase was 35.98 percent, according to OFHEO.

Nationwide, home prices increased 12 percent during the third quarter this year, according to the latest HPI released Dec. 1.

"We've had some subdivisions with prices that have grown by 80 percent and 100 percent," said Shelley Ostrowski, president of the Yuma Association of Realtors.

Yet, even with home price growth as hot as a mid-summer day in Yuma, home prices remain in the low $200,000s for a 1,500- to 1,700-square-foot, three- to four-bedroom home that's only a few years old. In most cases, newer homes cost more, older homes cost less, but not a lot more or less.

Third quarter statistics released now, near the end of the fourth quarter, however, can be misleading because they don't indicate what is happening now.

"Our area within the last year has undergone tremendous growth. We have seen a large interest from out of area homeowners and investors looking to secure property in our city. Our local property values have nearly double within this period, Carl Nevels an agent with Nevels & Nevels - Keller Williams reported to RealtyTimes Market Conditions for Yuma.

Sandra Nevels added, "Recently we have experienced a slight cooling down in what we feel has been a very market. Homes that were on the market hardly one day are two- to three-week turnovers."

That's due, in part, to Yuma's inventory which is up to 500 single-family homes for sale. That's near normal levels. Three months ago, there were less than 200 homes for sale, according to Ostrowski.

"What happened? We don't have the investors here any more. They can't turn them as fast, but now we are able to offer more to those who live here on a full-time basis. We aren't going to continue to see huge increase in prices, but it's still a good market," Ostrowski said.

Like any housing market that flames Super Nova, Yuma can't sustain the out-of-this world heat and a more down-to-earth correction has begun to follow.

"It's a correction because it was going so fast and so furious it finally got to a point where all the sellers jumped in and now it's like a teeter-totter," said Ostrowski, also an associate broker with Century-21 Action Group in Yuma.

Yuma's boom had its roots in the California housing market which became unaffordable to Yuma's population of agricultural workers. For years, farm workers made their summer homes in the Golden State's crop growing regions, but took up temporary residence in the Yuma area during its winter growing season.

The migratory-level commute to work continues, but to a lesser degree. Many farm workers now call Yuma home and the new trend takes, well, a lot of lettuce -- in more ways than one.

"We are the worlds No. 1 supplier of lettuce. We've always had agriculture here. So they come here for the winter-growing season. Agricultural people are finding they can't afford to buy in California. So instead of Salinas (CA), they buy here because it's more affordable. We are now seeing some people who bought here are not leaving and going back," Ostrowski said.

The area is also populated by military families who count on military and civilian work at the U.S. Army's Yuma Proving Grounds and the U.S. Marines' Air Corp Station for their bread and butter.

Retail growth has followed the growing number of home-buying farm workers and others moving to the region.

"There's also the border patrol. I think we aren't going to see a huge increase in prices now, but prices are not going down. You just have to be more competitive when you sell. It can't go for top dollar any more because you are not the only house on the block for sale," Ostrowski said.

Yuma's boom helped catapult Arizona, to the top of the home price-growth list. Arizona's prices soared 30.33 percent in the third quarter 2005 compared to the same period in 2004, according to OFHEO.

Following Arizona were Florida (25.18 percent), the boom market anchor in the South; Hawaii (21.33 percent), the nation's tropical resort and a second home mecca; Washington, D.C. (20.53 percent), the nation's capital and headquarters for political shmoozing; Maryland (19.29 percent), thanks to D.C.'s market influence; California (19.26 percent), the home price stronghold in the West; Virginia (18.66 percent), thanks again to the D.C. influence; Nevada (17.59 percent); Oregon (16.92 percent) and Washington (15.64 percent). The last three, like Arizona, also enjoy the same Golden State housing market glow that shines on Arizona.

Yuma, was tops in the nation in home price growth among all cities and tops among so-called "unranked" Metropolitan Statistical Areas (MSAs) which have smaller statistical samples of homes sold.

Among "ranked" MSAs, with larger, and therefore more statistically sound samples, another Arizona area, the Phoenix-Mesa-Scottdale MSA, was tops in the third quarter with a 34.37 percent increase in home-price growth.

Following the Phoenix-area MSA were Cape Coral-Fort Myers, FL (33.16 percent); Naples-Marco Island, FL (32.35 percent); St. George, UT (31.57 percent); Sarasota-Bradenton-Venice, FL (30.35 percent); Merced, CA (30.27 percent); Coeur d'Alene, ID (29.88 percent); Pensacola-Ferry Pass-Brent, FL (29.80 percent); Visalia-Porterville, CA (28.46 percent) and Palm Bay-Melbourne-Titusville, FL (28.36 percent), OFHEO reported.

Published: December 6, 2005

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.