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
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.