Las Vegas No. 1 'Hot' Housing Market 3d Time in Row

For the third year in a row, Las Vegas tops the charts in expected growth of loans for home purchases, according to the Mortgage Bankers Association of America.

The association's annual Hot Mortgage Market Index forecasts which U.S. cities can expect the largest long-term gains in purchase loans.

Many in the top 10 will have purchase origination rates of two to three times the national average, said David Lereah, chief economist at the association.

Las Vegas continues to benefit from the popularity of gambling, as well as from an influx of financial services support operations and light manufacturing, economists say.

"Our market has been really strong, and it's been the gaming that's done that," said Don Sherer, a Century 21 Realtor there. But competition is fierce, he said, in part because of all the publicity Las Vegas' housing market has received.

Dallas ranks right behind Las Vegas, bumping Phoenix from the No. 2 spot, according to the association.

San Jose, Calif., jumped three notches, to the No. 7 spot, and Salt Lake City climbed three places, to ninth. Both moved up because of the strength of high-tech businesses, said Mark Zandi, economist for Regional Financial Associates, West Chester, Pa.

Salt Lake City can also expect to see housing growth as the city gears up for the Winter Olympics in 2002, Mr. Zandi said.

Atlanta was ranked No. 6 in the association's survey, down from No. 5. Although the city has an economy that continues to do well, tight labor markets there have made it difficult for companies to expand, Mr. Zandi said. In past years, Atlanta also benefited from migration from the economically weak Northeast, Mr. Zandi said, but this movement has slowed.

The booming housing business in Houston-which is expected to be the fifth-hottest housing market in 1998, up from No. 7 in 1997-can be attributed to the strength of oil and gas markets in the past two years, said Bill Gilmer, senior economist at the Houston Federal Reserve Bank.

Gas and oil prices have weakened this year, but that only adds to profit margins at the city's petrochemical companies.

Housing inventories continue to be low, Mr. Gilmer said, despite frantic building activity. "They are putting houses up left and right, but there's a 'sold' sign on every one," he said. "Everyone can run full out for the rest of the year, just based on what they have lined up," without inflating the housing inventory, he noted.

Last year's rainy weather, tight labor markets, and a cement shortage contributed to a low housing inventory, Mr. Gilmer said.

Fort Worth experienced the biggest slip, falling from sixth to No. 10 this year.

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