The Real Deal

Home prices set record in spite of 9/11 attack

Sales of existing single-family homes set a new annual record in 2001, according to the National Association of Realtors, in spite of the economy and consequences of Sept. 11.

There were a total of 5.25 million existing home sales in 2001, up 2.7 percent from 5.11 million in 2000. The previous record was 5.21 million sales in 1999. NAR began tracking the existing-home sales series in 1968.

National Association of Realtors' chief economist David Lereah said low interest rates were a major factor throughout the year.

"Although mortgage interest rates moved around a lot during 2001, they generally stayed within a range of a half of a percentage point. In fact, last year was the second lowest year on record since Freddie Mac started tracking mortgage interest rates in 1971, and that is one of the fundamental factors in the favorable market conditions that we expect to prevail for this year as well," Lereah said.

The average 30-year rate for all of 2001 was 6.97 percent, the lowest annual average next to 6.94 percent in 1998. "In the last couple weeks, mortgage interest rates have eased back into the high-six range, but we expect a gradual increase during the year as the economy improves," Lereah said. "The 30-year fixed-rate mortgage should average 7.3 percent in the second half of the year--still pretty good in historic terms."

The association's president, Martin Edwards Jr., said first-time buyers might need to be a bit more flexible in 2002. "Although most people prefer fixed-rate loans, the spread between fixed- and adjustable-rate mortgages has increased. That's a pattern we expect to continue this year, meaning adjustable loans may be a better option for people that have difficulty qualifying for a fixed-rate mortgage," Edwards said. "In addition, potential first-time home buyers may want to consult a real estate professional to learn about loans available in their area that are designed for entry-level buyers, especially in the higher-cost markets."

For the year 2001, the national median price was $147,500, up 6.1 percent from $139,000 in 2000. "Home prices rose a little more than expected in 2001, primarily due to tight housing inventories in many markets," Lereah explained.

The median price in the Midwest was $129,200, up 6.7 percent from a year ago, while the median existing-home price in the West was $193,200. The median existing-home price in the Northeast was $154,000, up 10.5 percent from a year ago. The median price of an existing home in the South was $143,200, which was 8.9 percent higher than December 2000.

The contrast between these prices and those in Silicon Valley show what a difference location makes. The median home price in Santa Clara County for December was $499,00. In Cupertino the median home price was $783,333; Saratoga's median home was $950,000; and Los Gatos topped in with a median home price of $1,236,250.

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For more information about local median home prices for sales of existing family homes or condos, check out the Silicon Valley Association of Realtors website at www.siliconvalley-realtors.org.

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