In 2004, citywide home prices increased less than 1 percent, down from the 3.2 percent gain in the median price the year before, according to a study by the University of Houston's Institute for Regional Forecasting in conjunction with Crawford Realty Advisors.

"We're kind of like a ship that's caught in a calm," said Evert Crawford of Crawford Realty Advisors.

And that's worrisome to many homeowners.

Jeanene and Mark Haley wonder what will happen when they want to sell the home they just bought in Riverstone, a new subdivision in Missouri City.

The Haleys just moved here from Vancouver, Wash., where house prices are skyrocketing.

They made a bundle on the sale of their home before they moved, but are wary of Houston's sluggish prices.

"That's the thing that kind of scares us about moving here," said Jeanene Haley.

Homes have been selling in record numbers in Houston, but the annual rate of appreciation has been falling each year since 2000, when the value of houses in the area was up nearly 9 percent.

More than a third of the neighborhoods surveyed dropped in value or were flat in 2004.

The biggest declines were in areas outside of the Beltway, where three out of every four homes in Houston are sold, and where most of the homes are being built.

Even some inner-city neighborhoods where values had been rising, such as Montrose, Riverside Terrace and Stude, lost value in 2004.

On the other hand, prices in some of the costliest neighborhoods such as River Oaks and West University Place, continued to appreciate.

Prices below U.S. average

The median price for a single-family home in Houston was $135,000 in March, compared with the national average of $193,600, according to the Houston Association of Realtors. The median is a price where half of the homes sold for more and half for less.

"We're very different from many other parts of the country," said Frank Lucco, a real estate appraiser with Frank J. Lucco & Associates. "We're just about as flat as a pancake."

While Houston clearly has not been a place to reap enormous profits through home ownership, in the future that may not be a bad thing.

Most housing analysts predict that because home prices here haven't spiked, the market won't experience the price collapse predicted in other cities where home values have nearly doubled in just a few years.

"If you ask yourself which market is closer to normal, ours is," Crawford said.

And a slowly appreciating housing market makes it easier to protest rising tax appraisals that push up property taxes.

The markets most at risk of a price collapse are in places like California, Nevada and East Coast cities where land is limited and government regulations are strictly enforced, analysts said.

One study said the opposite is true here. Homes in Houston are undervalued by 11 percent, according to a report from National City Corp., an Ohio-based financial holding company, which rated 99 cities in terms of housing costs.

"In Houston, we do not have a bubble," said Barton Smith, director of the Institute for Regional Forecasting at UH.

Just don't expect a strong comeback this year. It could be years until home prices again show strong upward momentum throughout Houston, said Smith.

"While we aren't likely to see great losses here, we won't see much gains overall until the end of the decade," he said.

Many first-time buyers

Much of the new construction has been geared toward first-time home buyers who were able to qualify for mortgages for the first time.

Sonia DeJesus, a single mother with two children, is closing on her first home next month.

DeJesus has been renting a home in Fort Bend County since she moved here from New Jersey in the late 1990s.

Her new home is in Andover Farms, a subdivision just outside of Pearland.

One sign of increased competition is builders are piling on the incentives. Her energy-efficient home came with a washer, dryer, refrigerator, window blinds, a sodded back yard and more.

"You bring your stuff and you're good to go," said DeJesus, 41.

But buyers like DeJesus could be priced out of the market if interest rates rise.

Moreover, experts fear increased foreclosures could drag down the housing market.

There were more than 19,800 homes posted for foreclosures and some 6,550 homes foreclosed on in Harris County last year.

While the numbers of foreclosures don't come close to what they were in the 1980s real estate depression, it's still a concern.

"At this point, its not frightening, but I'd hate to see the foreclosure rate get a lot higher than it is," Smith said.

Some analysts said builders are putting up too many new homes. Last year, developers built more than 40,000 new homes, far more than were needed, based on job and household growth, said Smith.

One indication of an oversupply is it is taking longer to sell a property these days, he said.

Housing analyst Mike Inselmann of Metrostudy, disagreed, saying demand should be able to keep pace with the supply here, but said "developers need to be more watchful."

Reasons for low prices here

Houstonians who work downtown pay a premium to live nearby, but most of the city's new jobs are being created elsewhere, said Smith.

These farflung new subdivisions are often in good school districts and quickly putting up their own downtowns with shops, apartments and office space.

"We're creating these edge cities," said Toni Nelson, chairwoman of the Houston Association of Realtors and a division vice president with Coldwell Banker United, Realtors. "It has gotten almost cosmopolitan outside the loop."

Indeed, the neighborhoods with the most sales last year were in The Woodlands, which has several corporate headquarters and one of the tightest office markets in the city. More than 3,300 homes sold in the community's Grogan's Mill, Alden Bridge and Cochran's Crossing, according to the study.

Longtime Houstonians Wayne and Susan Tencer recently moved back to Houston after spending two years in Portland, Ore. During that time, the value of their home there rose 20 percent.

So when the couple returned to Houston, they knew they could afford a lot of house.They bought a new four-bedroom home in the northeast Houston subdivision of Eagle Springs for around $250,000 — about what they sold their Portland home for.

At 3,300 square feet, the Tencer's new house is double the size of their old one and on a lot four times as big. It came with granite counters, hardwood floors, and a landscaped yard.

"It was one of the reasons we chose to move back," said Wayne Tencer, a finance director for a gas storage company. "The affordability of the housing and what you can get for your money."

This e-mail address is being protected from spam bots, you need JavaScript enabled to view it