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Real Estate Guide 2007
Analysis by region
National statistics are meaningful, but in real estate "location, location, location" means local trends trump all.
Analysis by region
West is looking cool, except for hottest markets

They don't call it the wild, wild west for nothing.

While the West is experiencing the same buyer's market as the rest of the country, it enjoys some special factors that set it apart. First, with a median home price of $355,100 at the end of 2006, home costs are higher than in any other region of the country, according to the National Association of Realtors (NAR).

And homeowners spend a larger chunk of their income on housing: 35 percent on average, according to NAR statistics.

When it comes to high home prices, California is king. "The California market is the most expensive in the country," says Lawrence Yun, a senior economist for the NAR. In the San Francisco area, a median-priced home is $733,000, according to recent NAR data. In the San Jose area, it's $760,000. And in Anaheim/Santa Ana it's $690,700.

At the same time, inventory in the state "by recent standards is high, but not excessive," says Yun. California's inventory is "close to the national average" of 7.2 months (the amount of time it would take to sell the current supply at the current sales rate), says Yun. But because the housing market there has been so tight, it's not something to worry about, he says.

Location, location, location
When it comes to home values, each city has its own story.

In Long Beach, Calif., "I have found more properties on the market and properties staying on the market longer," says Dick Gaylord, a president-elect of the NAR and a Realtor with RE/MAX Real Estate Specialists in Long Beach. "But I have not seen a decline in prices."

Instead of selling in days or weeks, as they did in during the boom, homes are staying on the market two or three months, Gaylord says. "It's not abnormal. We're getting back to a normal market."

Yet even some areas of California saw modest price declines last year. San Diego prices went down 1 to 2 percent, Yun says. Most of the rest of California experienced slower appreciation, gaining 3 to 5 percent over 2006.

In general, anything that was formerly a really hot market is "now a buyer's market," says Bernard Markstein, senior economist with the National Association of Home Builders. In some parts of the West, building restrictions and natural boundaries keep inventory low, which helps keep prices moving upward.

"L.A. proper is in good shape," but areas like Riverside and Bakersfield have seen "overbuilding," says Markstein.

Some cities, like San Diego, have an excess of condos on the market, along with "some excess single, family homes," says Markstein.

Prices still rising
For California as a whole in 2007, a modest price increase is expected, says Yun. "Something not more than 5 percent," he says.

On the whole that's about on par with what Yun expects to see from the region as a whole. And parts of the West may do even better, according to recent data. In areas, like Idaho, Utah and New Mexico, inventories are stabilizing or declining "because sales are going at a good pace," says Yun.

A good pick for nice appreciation in 2007? Utah, says Yun. Double-digit appreciation of "maybe a 15 percent rise for 2007 -- which is much higher than the 1 to 2 percent for the nation," he says.

-- Posted: March 8, 2007
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