Metro Area Continue to Show Strong Home Price Gains
August 13, 2004
WASHINGTON – Home prices in the second quarter increased at a strong rate in most metropolitan areas in comparison with the same period a year earlier, according to the latest survey by the National Association of Realtors®.
The association's second-quarter metro area home price report, covering changes in 128 metropolitan statistical areas,* shows 49 metros with double-digit annual increases in median existing-home prices and 11 metros with generally small price declines – none in areas that had experienced sustained periods of rapid growth.
David Lereah, NAR's chief economist, said that 49 is the largest number of areas ever to experience double-digit annual price gains. "A tight supply of available homes in a record sales market has been favoring sellers," he said. "Even so, the low level of mortgage interest rates and loan origination costs are providing the headroom necessary for buyers to handle higher prices in most areas."
The national median existing-home price was $183,800 during the second quarter, up 9.1 percent from the second quarter of 2003 when the median price was $168,500. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said there is no evidence of a price bubble. "The relatively small number of areas showing price declines have experienced one or both of the factors necessary for home prices to soften – a period of local economic weakness or an abundant supply of homes for sale in those markets, which is very much the exception to the rule for the nation as a whole. In short, these are not corrections because there had been no unusual inflation in those areas."
The strongest increase was in Las Vegas, with a median price of $269,900, up 52.4 percent from the second quarter of 2003. Next came Anaheim-Santa Ana (Orange Co., Calif.), at $655,300, up 38.7 percent. Third was Riverside-San Bernardino, Calif., where the second quarter median price of $294,500 was 38.5 percent higher than a year earlier.
Lereah said the Las Vegas price performance is quite remarkable. "That is the biggest annual home-price increase in any metro area on record. A close examination of the data shows why – Las Vegas only had a 1.7-month supply of homes on the market in the second quarter, compared with a 4.2-month supply for the nation as a whole," he said. "By contrast, a housing supply in the range of 6.0 months represents a fairly even balance between home buyers and sellers."
Median second-quarter metro resale prices ranged from $93,800 in South Bend-Mishawaka, Ind., to nearly seven times that amount in the Anaheim-Santa Ana area. The second most expensive area was San Francisco Bay, with a second quarter median resale price of $647,300, followed by San Diego at $559,700. Other low-cost markets include Syracuse, N.Y., the second least-costly area at $94,700, and, Waterloo-Cedar Falls, Iowa, with a second quarter typical resale home price of $95,400.
Regionally, the strongest increase was in the Northeast where the median resale price during the second quarter was $214,800, a rise of 17.6 percent from the same quarter in 2003. The strongest increase in the region was in the Portland, Maine, area, where the median existing-home price was $231,200, up 23.4 percent from a year ago, followed by Atlantic City, N.J., at $194,800, up 18.6 percent, and New Haven-Meriden, Conn., with a typical price of $246,800, up 15.6 percent. In the West, the median existing-home price of $259,700 was 10.9 percent above the second quarter of 2003. After Las Vegas, Anaheim-Santa Ana and Riverside-San Bernardino, the next highest increase in the region was San Diego, which rose 37.4 percent, followed by the Los Angeles-Long Beach area, up 30.4 percent to a median price of $438,400 in the second quarter.
The second quarter median existing-home price in the South was $170,300, up 8.7 percent from a year ago. The strongest increase in the region was in the Sarasota, Fla., area, where the second-quarter median price of $264,800 was 29.9 percent higher than a year earlier. Next came Ocala, Fla., with a median price of $112,300, an increase of 27.0 percent; the Miami-Hialeah area at $271,900, up 25.9 percent; and the West Palm Beach-Boca Raton-Delray Beach area of Florida at $294,000, also up 25.9 percent.
In the Midwest, the median resale home price of $150,300 during the second quarter was 7.1 percent higher than the same period a year ago. The strongest increase in the region was in the Minneapolis-St. Paul area, with a median price of $218,000, up 10.6 percent in the last year. The next highest increase was in Appleton-Oshkosh-Neenah, Wis., where the median price of $127,600 was 10.1 percent higher than the second quarter of 2003, followed by the Madison, Wis., area, at $199,700, up 9.9 percent.
The National Association of Realtors