| | Surplus of homes cools prices
Surely you've noticed an abundance of "for sale" signs around your neighborhood lately. Home sellers are plentiful, home buyers less so. It's becoming more the norm across the nation as existing-home prices continue to cool, according to the latest quarterly survey from the National Association of Realtors.
Home prices are responding to the improvements in inventory.
"With the supply of homes picking up very nicely in many areas of the country, pressure is coming off of home prices," says David Lereah, NAR's chief economist.
Even so, home values rose at an annual rate of 10.3 percent during the first quarter of 2006, with the median value of an existing single-family home at $217,900. During the first quarter of 2005, the median value was $197,600. The median is the point at which half of the homes sold for more and half sold for less. That 10.3 percent annual growth in the first quarter is down slightly from the 13.6 percent rate in the fourth quarter of 2005.
Yet, even as prices begin to level, many of the nation's metropolitan areas are still showing double-digit growth in home values. The NAR survey showed that 60 of the nation's 149 metropolitan regions experienced double-digit growth, while 12 regions decreased in value. Lereah expects that late summer when he reports the second quarter growth, most areas will be back in the normal rates of price growth -- single digits, not double.
Some of the hottest regions showed marked signs of returning to those norms. The Miami metro area, for example, grew an annual 23.9 percent in the fourth quarter of 2005. The annualized growth for the first quarter, 2006, fell to 11.2 percent. In the Bradenton/Sarasota, Fla., area, which grew at an annualized rate of 30 percent in the fourth quarter of 2005, the first quarter showed a far tamer 11.2 percent annualized growth rate.
Over the top growth over
The days of over-the-top growth in housing prices may be over, but homeownership is still a stable investment. "Consumers generally can expect normal price appreciation for the foreseeable future, providing solid returns over time," says Lereah.
Leading the nation in growth once again was the Phoenix-Mesa-Scottsdale area of Arizona, where the first quarter price of $268,300 is up 38.4 percent from a year ago. Florida follows with Orlando at $260,500, up 34 percent from the first quarter of 2005, and Gainesville, Fla., with a first quarter median price of $210,100, an increase of 31.9 percent in the last year.
Regionally, the West saw the highest bump in home values where existing home prices rose 12 percent to a median price of $344,000. Homes in the Midwest rose by 6.7 percent to $158,800; home values in the South and the Northeast climbed 6.6 percent. The median price in the South was $179,700 and $285,200 in the Northeast.
The most expensive homes in the nation are in California. Residents of the San Jose-Sunnyvale-Santa Clara, Calif., metro area shop a housing market where the median price for an existing home is $746,800, and in San Francisco the price is $720,400.
Shopping for a bargain? Resale prices were lowest in Danville, Ill., where the median price was $52,500
NAR now reports the pricing changes on condos and cooperatives in 56 markets. Co-ops are included in the condo numbers. The national median condo price was $224,100 during the first quarter, which is 5.2 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.
Inventory is again a factor. The number of condos on the market has picked up more strongly than single-family homes, says Thomas M. Stevens, president of the NAR and senior vice president of NRT Inc.
"Condos have good fundamentals given the demographics of buyers, with baby boomers focused on the high end and their kids on more affordable units. However, in a handful of areas where there may be an oversupply, prices may level out, so the longer your time horizon the better your investment," says Stevens.
The best growth rate for condos -- first quarter 2006 versus the same quarter 2005 -- was in the same region as the No. 1 growth for single-family homes. The Phoenix-Mesa-Scottsdale area saw condo prices jump 38 percent from 2005 to $179,600. The most expensive condos are in the San Francisco-Oakland-Fremont, Calif., metro with the median prices at $615,300.
By Julie Bandy • Bankrate.com