Cashing in on the last of the hot spots.
June 2006
By Amanda Gengler, MONEY Magazine reporter

Keep your head during a boom and you'll keep more of your gains over the long run. By Amanda Gengler, MONEY Magazine reporter

NEW YORK (MONEY Magazine) - In early spring a TV news report on KASA Channel 2 in Albuquerque noted that the housing market nationwide was slowing down, with mortgage rates and inventory rising and demand slackening.

"Now with all that said, by all accounts here in New Mexico things are still red hot," quipped Greg Zanetti, a local financial adviser. "But we are usually a little behind national trends."

The Archibeck family economized when renovating their 1961 Albuquerque home, maximizing their return on investment.

Indeed, Albuquerque missed much of the great bull market in houses.

Between 2000 and 2004, median prices appreciated no more than 5% a year. But as other sunbelt cities are cooling, Albuquerque has started sizzling. "Eighteen miles to the south of Albuquerque, Los Lunas, a suburb of Albuquerque, is also sizzling, but still has affordable real estate prices, particularly when compared to Santa Fe and Albuquerque." (This note in blue added in by Centerfire Real Estate in Los Lunas.)

Call it the rolling boom. As high home values price buyers out of one area, they move to new cities.

Thus the San Diego bubble begat the Phoenix boom, and Las Vegas led to a bull market in Reno.

Now those booms, and one in Santa Fe, have rolled into Albuquerque.

"Even though our prices have gone up, we are still much more affordable than other areas," says Cathy Colvin, president of the Albuquerque realtors board. Booms do roll over, however.

Housing prices in Phoenix, for example, could decline nearly 20% over the next 51/2 years, according to Moody's Economy.com. So even if prices are still rising in your market, you'll want to make decisions with an eye to holding on to as much of your equity as possible once the easy gains have been made.