The Real Deal
Home prices high compared to nation
Since Silicon Valley often has a unique perspective compared to the rest of the country, it's interesting to find out what's happening with home sales in other parts of the United States. According to the latest survey by the National Association of Realtors, most metropolitan areas experienced moderate to strong gains in median existing-home prices during the first quarter of 2002.
The association's first-quarter metro area home price report, covering changes in 120 metropolitan statistical areas, shows 30 areas with double-digit annual increases in median existing-home prices and 18 areas posting generally small declines.
National Association of Realtors President Martin Edwards Jr. said the report reflects historically low inventories of homes available for sale in most areas, which compares to the current outlook in Silicon Valley.
"The lean supply of homes on the market, against a backdrop of record sales activity, means we are once again seeing a situation of multiple bids on desirable properties," he said. "This strong demand is the primary factor in sharper home price increases. In some areas there is almost no inventory in the higher prices ranges, which is causing an artificial dip in the median price for those markets."
The national median existing-home price was $150,900 during the first quarter, up 8.0 percent from the first quarter of 2001, when the median price was $139,700. The median is the midpoint, which is a typical market price at which half of the units sold for more and half sold for less.
David Lereah, the association's chief economist, said affordability in most areas remains favorable despite the rise in home prices. "Although low interest rates are the most important factor in housing affordability, the other components--income and price--remain in balance," he said.
"We expect we'll be able to preserve the balance between home prices and family income in the future," Lereah said. "Over the last 25 years, the ratio of median home price to median family income has been in the range of 2.5 to 3.0. Even with the run-up in home prices during the first quarter, the ratio was 2.9, so it's staying within the historical range."
The strongest price increase was in Nassau-Suffolk, N.Y., where the first-quarter median price of $287,500 was 26.5 percent above a year earlier. Next came Worcester, Mass., at $170,300, up 25.2 percent from the first quarter of 2001. Third was Mobile, Ala., with a first-quarter median price of $115,400, up 21.9 percent in the last year.
Median first-quarter metro resale prices ranged from $76,800 in Beaumont-Port Arthur, Texas, to more than six times that amount in the San Francisco Bay area, which was $482,300. The second most expensive area was Anaheim-Santa Ana (Orange County, Calif.), at $372,000, followed by Boston at $358,000.
Santa Clara County checks in with a median home price in March of $535,000, while the median home price for Los Gatos was $940,000, and in Saratoga, the median home price was $1.1 million.
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.
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