Strong Home Price Pattern Continues in Most Metro Areas
May 13, 2004
WASHINGTON – Median existing-home prices in most metropolitan areas continued to experience above-average appreciation in the first quarter, according to the latest survey by National Association of Realtors®.
The association's first-quarter metro-area home price report, covering changes in 126 metropolitan statistical areas,* shows 35 areas with double-digit annual increases in median existing-home prices and 16 areas posting generally small declines. Most markets—80—rose faster than the norm for price appreciation.
David Lereah, NAR's chief economist, said a strong home-price growth pattern is well established. "It's a simple matter of supply and demand," he said. "We continue to have more home buyers than sellers in most of the country, which results in tight housing inventories and higher rates of home price appreciation."
The national median existing-home price was $170,800 during the first quarter, up 6.5 percent from the first quarter of 2003 when the median price was $160,400. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said housing continues to be an excellent investment. "Normally, overall home prices appreciate one-to-two percentage points above the rate of inflation, but we've been well above that for the last three years," he said. "Although the rate of price growth is expected to slow, it should continue to rise faster than historic norms both this year and next."
Lereah noted that none of the metros experiencing price declines had recently experienced rapid appreciation. "In some of these areas we may be seeing a surge of first-time buyers at the lower end of the market, but many of them have gone through a period of local economic weakness, primarily in the labor markets, and they also have an adequate supply of homes from new home construction," he said.
"Generally, these areas are now recovering jobs and should gradually turnaround. In other words, they are not harbingers of local price bubbles because those area home prices were never inflated to begin with."
The strongest price increase was in the Riverside-San Bernardino area of California, where the first quarter median price of $258,900 was 32.9 percent above a year earlier. Next came Las Vegas, at $224,900, which was 31.3 percent above the first quarter of 2003, followed by Anaheim-Santa Ana (Orange Co., Calif.), with a first quarter median price of $572,500, up 28.1 percent in the last year.
Median first-quarter metro resale prices ranged from $82,300 in South Bend-Mishawaka, Ind., to more than seven times that amount in the San Francisco Bay area, which was $597,300. The second most expensive area was Anaheim-Santa Ana followed by San Diego at $483,000.
Other low-cost markets include Peoria, Ill., the second least-costly area at $83,900, and Springfield, Ill., with a first-quarter typical resale home price of $84,000.
Regionally, the strongest increase was in the Northeast where the median resale price during the first quarter was $212,000, rising 18.7 percent from a year earlier.* The strongest percentage increase in the region was in Portland, Maine, where the typical resale price was $218,100, up 17.9 percent from a year ago, followed by the Monmouth-Ocean, N.J., with a median price of $298,000, which was 16.6 percent higher than the first quarter of 2003. Next came the Hartford, Conn., area with a first quarter median price of $212,300, up 16.4 percent in the last year. Six other Northeastern metros also show double-digit median price increases, including Nassau-Suffolk, N.Y.; Providence, R.I.; Atlantic City, N.J.; the New York City area, Syracuse, N.Y.; and Newark, N.J.
In the West, the first-quarter median existing-home price was $241,300, up 10.7 percent from a year ago. After the Riverside-San Bernardino, Las Vegas and Anaheim-Santa Ana areas, the strongest increase in the region was in Los Angeles-Long Beach, where the median price of $387,700 rose 25.8 percent from a year earlier. The San Diego area, at $483,000, rose 24.1 percent, and, Reno, Nev., with a typical resale price of $227,500, was up 24.0 percent. Four other Western metros experienced double-digit median price gains, including Sacramento, Honolulu, San Francisco and Seattle.
In the South, the median existing-home price of $155,500 rose 3.8 percent from the first quarter of 2003. The strongest increase in the region was in Sarasota, Fla., where the first-quarter median price of $239,900 was up 24.5 percent in the last year. In the Miami-Hialeah area, the median price of $245,900 rose 21.6 percent, while Ft. Meyers-Cape Coral, Fla., at $171,800 rose 21.5 percent from a year earlier. Twelve other metro areas in the South experienced double-digit price increases including Bradenton, Fla., Washington, D.C., West Palm Beach-Boca Raton-Delray Beach, and Daytona Beach, Fla.
In the Midwest, the median resale home price of $137,100 during the first quarter was 1.9 percent higher than the same period in 2003. The strongest increase in the region was in the Waterloo-Cedar Falls, Iowa, area where the median price of $88,800 was 10.0 percent higher than the first quarter of last year. Next was Green Bay, Wis., at $138,500, up 9.0 percent from the first quarter of 2003. This was followed by Omaha, at $130,800, up 8.7 percent, and Minneapolis-St. Paul, where the median price of $205,000 was 8.4 percent higher than a year ago
Source: The National Association of Realtors