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2008-02-15 16:04:00

Metro Areas Show Mixed Home Price Performance; Half Show Gains

Roughly half of metropolitan areas continued to show rising home prices in the fourth quarter of 2007, according to the latest quarterly survey by the National Assn. of REALTORS®.

In the fourth quarter, 73 out of 150 metropolitan statistical areas (1) show increases in median existing single-family home prices from a year earlier, including 11 areas with double-digit annual gains and another 12 metros showing increases of 6% or more; 77 had price declines including 16 with double-digit drops.

Lawrence Yun, NAR chief economist, said disruptions in the mortgage market have played a role.  “The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges,” he said.  “For buyers who need loans of more than $417,000, mortgage interest rates have been running more than a percentage point higher, and that has been having an obvious impact.  Higher ratios of sales for more moderately priced homes are naturally dampening the national median price as well as the data for some of the more expensive markets.”

NAR’s track of metro area single-family home prices is the largest published series of metropolitan home prices, with data available back to 1979.  The metro home price series treats all homes equally, without placing higher weights on more expensive homes as in other home price series. (See NAR Metro Area price charts.)

The disruption in higher priced sales continues to drag down the aggregate national median existing single-family home price, which was $206,200 in the fourth quarter, down 5.8% from the fourth quarter of 2006 when the median price was $219,000.  The national median normally is a typical market price, where half of the homes sold for more and half sold for less.

NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, CA, said he is encouraged with plans to increase conventional loan limits.  “Higher limits for FHA loans, which go into effect March 14, will be a big help to first-time buyers in high-cost markets.  Higher limits for conventional loans purchased by Freddie Mac and Fannie Mae will take a bit longer – when they become available, high-income, creditworthy borrowers in high-cost areas will have access to affordable and safer financing, and that will help unleash pent-up demand,” he said. 

“With the market in a state of flux, it’s especially important for consumers to stay abreast of widely varying and changing market conditions.  We encourage them to have a traditional long-term view, which means taking the time to thoughtfully research the market.  More than ever, the best resource is a REALTOR® who can put local conditions in perspective, provide advice and negotiate the transaction.”

Typical Sellers Saw Gains in Fourth Quarter

Despite the annual decline in the fourth quarter median home price, the typical seller who purchased their home six years ago still saw a very healthy gain.  The median increase in value for sellers who purchased that home in the fourth quarter of 2001 is 31.2%, and the median home equity accumulation is $49,000.

In the fourth quarter, the largest single-family home price increase was the Cumberland area of Maryland and West Virginia, where the median price of $116,600 rose 19.0% from a year ago.  Next was Yakima, Wash., at $170,600, up 18.0% from the fourth quarter of 2006, followed by the Binghamton, N.Y., area, where the fourth quarter median price increased 14.8% to $110,000. 

“The healthiest housing markets today generally are moderately priced and are experiencing job growth and often population growth, which in turn is supporting strong price growth,” Yun said.  “Most of the weakest markets have either experienced both job and population losses, or they are experiencing corrections following a prolonged period of rapid price growth.”

Median fourth-quarter metro area single-family home prices ranged from a very affordable $72,600 in the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to nearly 12 times that amount in the San Jose-Sunnyvale-Santa Clara area of California, where the median price was $845,300.  The second most expensive area was San Francisco-Oakland-Fremont, at $777,300, followed by the Anaheim-Santa Ana-Irvine area (Orange County, Calif.), at $657,400.

Other affordable markets include the Saginaw-Saginaw Township North area of Michigan, with a fourth-quarter median price of $74,900, and Decatur, Ill., at $75,000.

Condo Sector Shows Gains in 33 Metro Areas

In the condo sector, metro area condominium and cooperative prices – covering changes in 59 metro areas – show the national median existing-condo price was $221,100 in the fourth quarter, essentially unchanged from $221,200 in the fourth quarter of 2006.  Thirty-three metros showed annual increases in the median condo price, including four areas with double-digit gains; 26 areas had price declines including four with double-digit drops.

The strongest condo price increases were in Bismarck, ND, where the fourth quarter price of $125,000 rose 20.8% from a year earlier, followed by the New Orleans-Metairie-Kenner area of Louisiana, at $173,300, up 17.8%, and Knoxville, TN, where the median condo price of $160,800 rose 10.6% from the fourth quarter of 2006.

Metro area median existing-condo prices in the fourth quarter ranged from $109,900 in Wichita, Kan., to $595,700 in the San Francisco-Oakland-Fremont area.  The second most expensive condo market reported was Los Angeles-Long Beach-Santa Ana, at $363,100, followed by the San Diego-Carlsbad-San Marcos area at $327,000.

Other affordable condo markets include both Indianapolis and Greensboro-High Point, N.C., at $116,700 in the fourth quarter, and the Cleveland-Elyria-Mentor area of Ohio at $120,000.

Existing Home Sales Down in Fourth Quarter

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate (2) of 4.96 million units in the fourth quarter, down 8.5% from 5.42 million in the third quarter, and are 20.9% below a 6.26 million-unit pace in the fourth quarter of 2006.  “With prior reports of national home sales declines, it is not surprising to see 14 states with declines in excess of 20% from a year ago,” Yun noted.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to 6.23% in the fourth quarter from 6.55% in the third quarter; the rate was 6.25% in the fourth quarter of 2006.  In recent weeks, Freddie Mac has been reporting the 30-year fixed rate to be under 5.7%.

Regionally, the median existing single-family home price in the Midwest declined 3.2% to $156,300 in the fourth quarter from the same period in 2006.  The strongest metro price increase in the Midwest was in the Springfield, Ill., area, where the median price of $108,600 was 14.4% higher than a year ago.  Next was Bismarck, N.D., at $144,700, up 13.5% from the fourth quarter of 2006, and Waterloo-Cedar Falls, Iowa, at $115,400, up 12.1%.

In the Northeast, the median existing single-family home price fell 4.8% to $261,700 in the fourth quarter from the same period 2006.  After Binghamton, the strongest price increase in the Northeast was in Atlantic City, N.J., at $278,800, up 10.7% from the fourth quarter of 2006, followed by the Syracuse, N.Y., area, with a median price of $126,300, up 9.4%.

The median existing single-family home price in the South was $171,700 in the fourth quarter, down 5.4% from a year earlier.  After Cumberland, the strongest price increase in the South was in Amarillo, Texas, at $120,200, up 11.0% from a year ago, followed by the Oklahoma City area with an 8.2% gain to $133,800, and the San Antonio area, at $151,700, up 7.9%.

In the West, the median existing single-family home price was $324,100 in the fourth quarter, which is 8.7% below a year ago.  After Yakima, the strongest metro price increase in the West was in the Kennewick-Richland-Pasco area of Washington, at $172,400, up 14.0% from a year ago, followed by the San Jose-Sunnyvale-Santa Clara area, up 11.2% from the fourth quarter of 2006.

The National Assn. of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

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(1) Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget.  A list of counties included in MSA definitions is available at:

Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional%age changes do not necessarily parallel changes in the larger metro areas.  The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns.  Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series was launched at the beginning of 2006, with several years of historic data.

Because there is a concentration of condos in high-cost metro areas, the national median condo price sometimes is higher than the median single-family price.  In a given market area, condos typically cost less than single-family homes.  As the reporting sample expands in the future, additional area will be included in the condo price report.

Tables of metropolitan area median prices,% changes and some historic data are available at the site below – under Research click on Housing Statistics, then scroll down the center to Metropolitan Area Prices.

(2) The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters.  otal home sales include single family, townhomes, condominiums and co-operative housing. NAR began tracking the state sales series in 1981.

Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity.  For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.

First quarter metro home price and state resale data will be released May 13.

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