Twenty-eight metro areas saw double-digit drops in median house prices in the 12 months ending in March, according to the National Association of Realtors. Three areas had double-digit price increases.

If anyone believed that capital cities, with their steady government jobs, were immune from housing busts, that illusion was shattered with this report. Sacramento, capital of California, reported the nation’s biggest decrease in the median price in percentage terms. In the first three months of this year, half the houses sold in Sacramento cost $258,500 or more; in the first quarter of 2007, the median price had been $365,300. That represents a year-over-year drop of 29.2 percent.

Eight metro areas saw year-over-year price declines of more than 20 percent: Sacramento (29.2 percent); Riverside-San Bernardino, Calif. (27.7 percent); Lansing, Mich. (26.9 percent); San Diego (22.9 percent); Sarasota, Fla. (22.2 percent); Los Angeles (21.3 percent); Grand Rapids, Mich. (20.7 percent) and Las Vegas (20.2 percent).

The Michigan cities of Detroit and Kalamazoo did not report first-quarter price data. If they had, they probably would have reported double-digit percentage losses, too. Prices in Saginaw, Mich., dropped about 25 percent compared with the second quarter of 2007; price information was unavailable for the first quarter of 2007.

Besides Sacramento and Lansing, other capitals on the double-digit-decline list include Phoenix (15.4 percent); Washington, D.C. (13.1 percent); Jackson, Miss. (13 percent), and Minneapolis-St. Paul (10.2 percent).

Nationally, the median house price fell 7.7 percent, from $212,600 in the first quarter of 2007 to $196,300 in the first quarter of this year. The Northeast region had the only price gain, of 3.2 percent. Median prices fell 12.3 percent in the West, by 7.9 percent in the Midwest, and by 7.5 percent in the South.

— Updated: May 13, 2008

A few bright spots
Binghamton, N.Y., led price gainers in percentage terms. In the first quarter, the median home price in Binghamton was $109,700, compared with $98,100 a year earlier, for an 11.8 percent increase. The other two double-digit risers were Peoria, Ill. (10.4 percent, to $119,000) and Spartanburg, S.C. (10.1 percent, to $130,300).

There was one metro area where prices were the same from a year earlier: Honolulu. The median price was $620,000 in the first quarter of this year. That was the same from the first quarter of 2007, but down 0.8 percent from the median price of $625,300 in the fourth quarter of 2007.

Looking at the nation’s biggest metro areas, median prices in New York fell 5.7 percent, Los Angeles fell 21.3 percent, Chicago fell 6.6 percent, Dallas-Fort Worth fell 2.1 percent, Philadelphia fell 0.7 percent, Houston rose 0.8 percent, Miami-Fort Lauderdale fell 17.2 percent, the District of Columbia fell 13.1 percent, Atlanta fell 9.6 percent and Boston fell 7.8 percent. San Antonio rose 1 percent and San Jose fell 1 percent.

NAR apples and oranges
The Realtors used an apples-and-oranges argument to caution observers to be careful about drawing conclusions from the house price data. “These are highly unusual results because there were very few jumbo loan originations in the latest quarter, so sales are much slower in high-cost areas, and at the same time, foreclosures related to subprime mortgages rose,” says Lawrence Yun, the Realtors’ chief economist.

He means that in high-price areas, a lot of people were unable to afford the high rates on jumbo mortgages of more than $417,000. That depressed sales of expensive houses and dragged the median price lower. In other words, a San Diego house worth $459,000 at the beginning of 2007 didn’t necessarily lose 22.9 percent of its value over the following year. Instead, fewer houses were sold above that price because buyers couldn’t qualify for mortgages, while there were relatively more sales of houses below that price, because mortgages for smaller loans were easier to get. When the mix of home sales moved toward the cheaper end, the median price dropped.

But Yun’s explanation ignores the fact that median prices in most of the “biggest loser” cities were well below the $417,000 that divides conforming mortgages from jumbo loans. The median price in Sacramento topped out at $375,900 in 2005 and has dropped since then. That’s well below the conforming limit, and prices there started dropping well below the jumbo market meltdown that began last August. And the median house price in Lansing was $92,600 in the first quarter — far too low for jumbo mortgages to be a factor.

How did home values fare in your area? See our state-by-state map.

— Updated: May 13, 2008