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Metro Areas Show Greatly Mixed Home Price Performance; Half Show Gains

February 14, 2008

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 Association 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 percent 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 - http://www.realtor.org/Research.nsf/Pages/MetroPrice.)

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 percent 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, Calif., 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.”

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 percent, 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 percent from a year ago. Next was Yakima, Wash., at $170,600, up 18.0 percent from the fourth quarter of 2006, followed by the Binghamton, N.Y., area, where the fourth quarter median price increased 14.8 percent 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.

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, N.D., where the fourth quarter price of $125,000 rose 20.8 percent from a year earlier, followed by the New Orleans-Metairie-Kenner area of Louisiana, at $173,300, up 17.8 percent, and Knoxville, Tenn., where the median condo price of $160,800 rose 10.6 percent 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.

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 percent from 5.42 million in the third quarter, and are 20.9 percent 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 percent 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 percent in the fourth quarter from 6.55 percent in the third quarter; the rate was 6.25 percent in the fourth quarter of 2006. In recent weeks, Freddie Mac has been reporting the 30-year fixed rate to be under 5.7 percent.

Regionally, the median existing single-family home price in the Midwest declined 3.2 percent 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 percent higher than a year ago. Next was Bismarck, N.D., at $144,700, up 13.5 percent from the fourth quarter of 2006, and Waterloo-Cedar Falls, Iowa, at $115,400, up 12.1 percent.

In the Northeast, the median existing single-family home price fell 4.8 percent 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 percent from the fourth quarter of 2006, followed by the Syracuse, N.Y., area, with a median price of $126,300, up 9.4 percent.

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

In the West, the median existing single-family home price was $324,100 in the fourth quarter, which is 8.7 percent 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 percent from a year ago, followed by the San Jose-Sunnyvale-Santa Clara area, up 11.2 percent from the fourth quarter of 2006.

Source: The National Association of Realtors



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