Saratoga News

Homes

Metro home prices cool, but appreciation is strong

Realty association's 1st-quarter numbers reveal median prices

By Jean Newton

Silicon Valley is one of the most expensive places to live in the United States with the highest median home prices, while two other areas in California claim second and third place compared to the rest of the metro areas in the nation.

The growth in single-family home prices continued to cool in the first quarter, but many metropolitan areas are still showing double-digit annual gains, according to the latest survey by the National Association of Realtors. At the same time, metro area condo price appreciation has generally cooled to normal levels.

The association's first-quarter metro area single-family home price report, covering changes in 149 metropolitan statistical areas, shows 60 areas with double-digit annual increases and 16 metro areas experiencing price declines.

The national median existing single-family home price was $217,900 in the first quarter, up 10.3 percent from a year earlier when the median price was $197,600. The median is a typical market price where half of the homes sold for more and half sold for less. In the fourth quarter of 2005, the annual rate of home-price appreciation was 13.6 percent.

David Lereah, National Association of Realtors chief economist, said the market is responding to the improvements in inventory. "With the supply of homes picking up very nicely in many areas of the country, pressure is coming off of home prices," he said. "By the time we report second quarter data, I expect most areas will be returning to normal rates of price growth in the single-digit range. Consumers generally can expect normal price appreciation for the foreseeable future, providing solid returns over time."

Metro area condominium and cooperative prices, covering changes in 56 markets, show the national median existing condo price was $224,100 in the first quarter, up 5.2 percent from a year earlier. Twenty-seven metros showed double-digit annual gains in the median condo price, and five areas had declines.

Thomas M. Stevens, National Association of Realtors president, said inventories have picked up more strongly in the condo sector. "Although we continue to have areas of hot growth, we're finding more broadly balanced conditions across the country in the condo market," Stevens said.

"Condos have good fundamentals given the demographics of buyers, with baby boomers focused on the high end and their kids on more affordable units. However, in a handful of areas where there may be an oversupply, prices may level out, so the longer your time horizon the better your investment," Stevens said.

The national condo price is higher than the median single-family home price because there is a high concentration of condos in the most expensive metropolitan areas. Within a given area, the typical single-family home costs more than the median condo price.

The largest single-family home price increase was in the Phoenix-Mesa-Scottsdale area of Arizona, where the first quarter price of $268,300 rose 38.4 percent from a year ago. Next was Orlando, Fla., at $260,500, up 34 percent from the first quarter of 2005. Gainesville, Fla., with a first quarter median price of $210,100, increased 31.9 percent in the last year.

Median first-quarter metro area single-family prices ranged from $52,500 in Danville, Ill., to 14 times that amount in the San Jose-Sunnyvale-Santa Clara area, where the median price was $746,800. The second most expensive area was the San Francisco-Oakland-Fremont area at $720,400, followed by the Anaheim-Santa Ana-Irvine area at $712,600.

Other low-cost markets include Decatur, Ill., the second least-costly metro, at $80,000, and the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, with a first-quarter typical resale home price of $81,100.

In the condo sector, the strongest gains were in the Phoenix-Mesa-Scottsdale area, where the first quarter price of $179,600 rose 38.0 percent from a year ago. In the Honolulu area, the median condo price of $309,000 rose 34.9 percent from the first quarter of 2005, while Miami-Fort Lauderdale-Miami Beach, at $221,500, increased 31.4 percent. The condo price series will be expanded in the future as more data becomes available.

Metro area median existing condo prices ranged from $97,400 in Bismark, N.D., to $615,300 in San Francisco-Oakland-Fremont.

The second most expensive reported condo market was Los Angeles-Long Beach-Santa Ana, at $404,600, followed by the San Diego-Carlsbad-San Marcos area at $382,200.

Regionally, the strongest increase in the median existing single-family home price was in the West, where the price rose 12 percent to $344,000 during the first quarter.

After Phoenix-Mesa-Scottsdale, the strongest increase in the West was in Spokane, Wash., at $172,100, up 26.3 percent, followed by Eugene-Springfield, Ore., at $223,600, up 25.3 percent from the first quarter of 2005, and the Tucson area, at $248,600, up 24.9 percent.

In the Midwest, the first-quarter median existing single-family home price of $158,800 rose 6.7 percent from a year earlier.

The strongest metro increase in the Midwest was in Waterloo-Cedar Falls, Iowa, where the median price of $109,700 was 26.8 percent higher than the first quarter of 2005.

Next was Decatur, Ill., up 14.3 percent, and Cedar Rapids, Iowa, at $134,600, up 13.4 percent in the last year.

In the Northeast, the median resale single-family home price during the first quarter was $285,200, up 6.6 percent from a year ago.

The strongest increase in the region was in Elmira, N.Y., at $88,500, up 18.8 percent from the first quarter of 2005, followed by Trenton-Ewing, N.J., with a median price of $264,900, up 17.5 percent, and Atlantic City, N.J., at $251,700, up 15.8 percent.

In the South, the median existing single-family home price was $179,700 in the first quarter, up 6.6 percent from a year earlier.

After the Orlando and Gainesville areas of Florida, the strongest increase in the South was in Ocala, Fla., at $159,800, up 30.8 percent from the first quarter of 2005.

Next was the Virginia Beach-Norfolk-Newport News area of Virginia and North Carolina, where the first quarter median price of $221,100 was 27.1 percent higher than a year ago, and Deltona-Daytona Beach-Ormond Beach area of Florida, at $212,600, up 25.4 percent.