November 16, 2004 09:16 PM
Pattern of Strong Home-Price Gains Continues in Most Metro Areas
Excerpt: The association's third-quarter metro area home price report, covering changes in 127 metropolitan statistical areas,* shows 45 areas with double-digit annual increases in median existing-home prices and 11 areas posting small declines. News Source
WASHINGTON (November 15, 2004) – Tight housing inventories continued to drive home price increases in most metropolitan areas during the third quarter, according to the latest survey by National Association of Realtors®.
The association's third-quarter metro area home price report, covering changes in 127 metropolitan statistical areas,* shows 45 areas with double-digit annual increases in median existing-home prices and 11 areas posting small declines.
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The national median existing-home price was $188,500 during the third quarter, up 7.7 percent from the third quarter of 2003 when the median price was $175,000. The median is a typical market price where half of the units sold for more and half sold for less. In the second quarter, the annual price increase was 8.9 percent.
David Lereah, NAR's chief economist, said the rate of home price appreciation is cooling. "Nationally, the annual rate of price growth is slower than in the second quarter, and that is good for long-term gains in the market," he said. "Home prices are still rising faster than historic norms because we continue to have more buyers than sellers. However, those conditions vary widely with the greatest pressure on home prices in California and Florida."
"In the relatively small number of markets where prices were down slightly, there was some local economic weakness from a soft labor market, an unusually large supply of homes available for sale, or both," Lereah said. "However, none of these areas had experienced rapid price growth and we see no evidence of price bubbles."
NAR President Al Mansell, CEO of Coldwell Banker Residential Brokerage in Salt Lake City, said there are other signs of balance coming to the market. "Although home prices have risen faster than incomes over the last three years, for much of the 80s and 90s the reverse was true," he said. "To a certain extent we've been experiencing some catch-up, but the ease in price appreciation may be a sign that the level of price growth will be at a more sustainable pace in the future." NAR projects the median existing-home price to rise 5.3 percent in 2005.
The strongest metro area price increase was in the Las Vegas area where the third-quarter median existing-home price of $283,200 was 53.7 percent higher than a year earlier, the highest rate of price growth ever measured in any metropolitan area. Next came Bradenton, Fla., with a median price of $248,000, up 40.7 percent from the third quarter of 2003. Third was the Riverside-San Bernardino, Calif., area, at $311,700, up 36.2 percent from a year ago.
Median third-quarter metro resale prices ranged from $94,200 in Buffalo-Niagara Falls, N.Y., to nearly seven times that amount in the San Francisco Bay area, where the median price was $646,300. The second most expensive area was Anaheim-Santa Ana (Orange Co., Calif.), with a third-quarter median resale price of $643,600, followed by San Diego at $578,300.
Other low-cost markets include El Paso, Texas, the second least costly area at $95,100, and Beaumont-Port Arthur, Texas, with a third quarter typical resale home price of $95,300.
Regionally, the strongest increase during the third quarter was in the West where the median existing-home price was $271,000, up 14.9 percent from the third quarter of 2003. After the Las Vegas and Riverside-San Bernardino areas, the strongest increase in the region was in San Diego, which was 32.5 percent above a year ago. In Sacramento, the median price of $329,700 was 30.5 percent higher than a year earlier; Anaheim-Santa Ana rose 26.0 percent in the same timeframe.
In the Northeast, the median resale home price of $218,100 rose 10.6 percent from a year ago. The strongest increase in the region was in the Albany-Schenectady-Troy area of New York, where the third quarter median price of $174,000 rose 18.3 percent in the last year.
This was followed by the Providence, R.I., area, where the typical resale price of $283,900 increased 17.6 percent from the third quarter of 2003, and Monmouth-Ocean, N.J., at $343,500, up 14.7 percent.
In the South, the median existing-home price of $172,500 rose 5.9 percent from the third quarter of 2003. After Bradenton, Fla., the strongest increase in the region was in West Palm Beach-Boca Raton-Delray Beach, Fla., where the median price of $321,500 was 29.0 percent higher than a year earlier. In Norfolk-Virginia Beach-Newport News, Va., the third-quarter median price of $182,200 was up 27.3 percent in the last year, while Fort Meyers-Cape Coral-Punta Gorda, Fla., at $194,800, rose 26.3 percent.
In the Midwest, the median resale home price of $154,000 during the third quarter was 4.8 percent higher than the same period in 2003. The strongest increase in the region was in Peoria, Ill, with a median price of $113,000, up 16.0 percent in the last year. The next highest increase was in the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price of $119,500 was 15.5 percent higher than the third quarter of 2003, followed by Springfield, Mo., at $110,200, up 12.6 percent.
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
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