The days of rapid growth in home prices
are cooling off, but you wouldn't know that by looking
at the appreciation of home values across the nation
in the fourth quarter of 2005.
Values rose at an annual
rate of 13.6 percent, with half of the nation's major
metropolitan regions reporting double-digit growth rates
for the median prices of existing single-family homes,
according to the figures released by the National Association
The modest dip in appreciation is an early
sign of a market adjustment, says David Lereah, the
National Association of Realtors' chief economist.
Last quarter, homes appreciated in value
at a tremendous pace mostly because of the tight supply
of existing homes in the market place.
"These historically high home-price
gains are the simple result of more buyers than sellers
in the market," says Lereah. "The good news
is that the supply of homes on the market has been trending
up and we are entering a period of a more normal balance
in supply and demand."
The softening of the housing market doesn't
mean home values will plummet. NAR president, Thomas
M. Stevens, predicts housing values will keep at a high
plateau because of consumers' demands for housing.
"The children of the baby boom generation,
often called the 'echo-boomers,' are the second largest
generation in U.S. history and are just entering the
period in which people typically buy their first home.
Along with a strong immigrant impact, and the boomers
themselves who remain in peak earnings years, this means
the need for housing will stay strong over the next
decade and long-term prices will continue to rise,"
The national median existing single-family
home price hit $213,000 in the fourth quarter, compared
to $187,500 in the same quarter 2004. A record 72 of
the 145 metropolitan areas surveyed by NAR showed a
double-digit percentage rise in home prices. Only six
areas posted modest declines. The previous record for
areas showing double-digit price growth was 69 regions
in the third quarter of 2004. The median is the point
at which half of the homes sold for more and half sold
Leading the nation in price increases
once again is the arid desert region of Phoenix-Mesa-Scottsdale,
Ariz. The median price in the fourth quarter hit $268,400,
an increase of 48.9 percent from the same quarter last
The more-humid Florida boasts the second-
and third-hottest growth markets during the fourth quarter.
The median price for a home in the Cape Coral-Fort Myers,
Fla., market came in at $293,100, up 48 percent from
the fourth quarter of 2004. The Orlando, Fla., metro
hit $261,800, a 42 percent jump over the same quarter
Regionally, the West saw the highest bump
up in home values. Existing home prices rose 18.2 percent
to a median price of $328,500 in the West. Homes in
the Midwest rose by 11 percent to $167,600; home values
in the South climbed 9.2 percent to $185,300, and the
Northeast's home values grew 8 percent to a median home
price of $240,300.
The most expensive homes in the nation
are in California. Residents of the San Jose-Sunnyvale-Santa
Clara, Calif., metro shop a housing market where the
median price for an existing home is $747,000, and in
San Francisco the price is $718,700.
Shopping for a bargain? Resale prices
were lowest in Danville, Ill., where the median price
New addition: Condos
Beginning with this report, NAR is reporting the pricing
changes on condos and cooperatives in 51 markets. Co-ops
are included in the condo numbers. The national median
condo price was $228,200, during the fourth quarter,
which is 12.3 percent higher than a year ago. The national
condo price is higher than the median single-family
home because of the high concentration of condos in
the most expensive metropolitan regions, says Lereah.
The best growth rate for condos was in
the same region as the No. 1 growth for single-family
homes -- the Phoenix-Mesa-Scottsdale area -- where condo
prices jumped 50.9 percent from 2004 to $175,600. The
most expensive condos are in the San Francisco-Oakland-Fremont,
Calif., metro with the median prices at $616,800.
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