The Real Deal
Value of property hinges on location
Palo Alto most costly
By Jean Newton
Residential real estate continues to be a healthy segment of the economy, as existing and new home sales figures remained relatively strong throughout the first half of the year--although it might just depend on where someone lives.
The 2001 Home Price Comparison Index released at the end of July by Coldwell Banker Real Estate Corporation shows there is a $1,106,000 price difference between the most expensive market in Palo Alto and the most affordable market in Minot, N.D. Palo Alto rings in at $1,225,000 for an average sales price for a home, compared to Minot's average sales price at $119,000.
The Home Price Comparison Index study evaluates and indexes the average sales price of similar homes in more than 300 markets across the United States, and internationally. Out of the 307 markets surveyed, the study shows the average price in the United States, at $269,241, increased 74 percent from last year. The subject home is defined as a 2,200-square-foot, single-family dwelling with four bedrooms, 2 1/2 baths, a family room and a two-car garage in a typical, middle-management transferee neighborhood.
The 2001 study reveals that eight of the country's 10 most expensive markets are in California and four of the 10 most affordable are in the Midwest. The western region of the Unites States has the highest cumulative average price for the subject home at $347,404; followed by the Northeast at $301,421; the Southeast at $199,643; and the Midwest at $192,997. The American cities/areas that came closest to the cumulative market's national average sales price were in Grass Valley, at $268,487 and Montgomery County, Pa., at $269,475. Oklahoma has the least variance in price with just $50 separating the most expensive home in Tulsa at $134,275 and the most affordable in Oklahoma City at $134,225. In California, Palo Alto topped the list with the subject home at more than $1 million dollars higher than Bakersfield at $201,075.
"Our outlook on the real estate market is strong over the next five to 10 years due to the steady rise in corporate relocation, sharp jump in single-parent families and the baby-boom generation is achieving prime home buying age, meaning they are supporting the 'move up' and second home markets. Finally, the 2000 U.S. census showed an increase in population of about 30 million, including recent immigrants, who are buying homes as they realize the American Dream," said Alex Perriello, president and CEO of Coldwell Banker Real Estate Corporation.
Perriello added, "This increase in real estate spending is compounded when you consider that for every dollar spent on home purchases, another 20 to 50 cents is spent on things like furnishings, landscaping and improvements. Overall, the housing sector accounts for about 14 percent of the United States' economy and, on average, consumers spend about 40 percent of their income on housing and related costs. All of these factors help support our belief that the real estate market is one of the few bright spots in today's slowing economy."
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors. Send questions on any topic to: Real Deal, c/o SILVAR, ppompei@siliconvalley-realtors.org.
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Saratoga, California Since 1955
