Metro home-price appreciation stays hot

According to the National Association of Realtors’ latest single-family home price report, released Feb. 15, 72 metropolitan statistical areas posted double-digit annual increases in median existing single-family home prices.

Previously, the record number of MSAs showing double-digit price appreciation was 69, in the third quarter of 2004. The report covers a total of 145 MSAs.

In the Midwest, the fourth-quarter median existing single-family home price of $167,600 rose 11 percent from the same period in 2004. The strongest metro increase in the Midwest was in Peoria, Ill., where the median price of $112,700 was 18.4 percent higher than the fourth quarter of 2004. Next was Bismarck, N.D, up 16.0 percent, and Danville, Ill., at $63,800, up 12.5 percent in the last year.

In the Springfield MSA, preliminary reports show that median home sale prices were $121,000, up from $109,100 in 2004.

National median gains

The national median existing single-family home price was $213,000 in the fourth quarter, up 13.6 percent from $187,500 for the same quarter in 2004. The median is a typical market price where half of the homes sold for more and half sold for less. In the third quarter of 2005, the annual rate of home-price appreciation was 14.7 percent. Six MSAs posted price declines for the quarter.

NAR Chief Economist David Lereah said the modest dip in appreciation is an early sign of a market adjustment.

“Although home sales have eased, the tremendous momentum in price appreciation was sustained in the fourth quarter because tight inventories still favored sellers,” he said in a news release. “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 biggest single-family price increase in the nation was in the Phoenix-Mesa-Scottsdale area of Arizona, where the fourth-quarter median price of $268,400 rose 48.9 percent from a year earlier.

Median fourth-quarter metro-area single-family prices ranged from $63,800 in Danville, to nearly 12 times that amount in the San Jose-Sunnyvale-Santa Clara area of California, where the median price was $747,000. The second most expensive area in the United States was the San Francisco-Oakland-Fremont area at $718,700, followed by the Anaheim-Santa Ana-Irvine area (Orange Co., Calif.) at $699,800.

Low-cost markets include Elmira, N.Y., the second least costly metro area at $78,800, and Decatur, Ill., with a fourth-quarter typical resale home price of $84,500.

None of the areas with price declines had previously experienced rapid price growth. Generally, these were lower-cost areas experiencing one or both of the conditions necessary for temporary price softness – local economic weakness, mainly in jobs, or a large supply of homes available in the local market.

Condo price growth

With its latest report, NAR launched a new series on metro-area condominium and cooperative prices, examining changes in 15 markets. According to the report, annual appreciation in metro-area condo prices was mostly in double-digits.

In the fourth quarter, the national median existing condo price was $228,200, 12.3 percent higher than a year ago. In all, 27 areas showed double-digit annual gains in the median condo price; there were seven areas with declines.

“The national condo price is higher than the median single-family home price because there is a high concentration of condos in the most expensive metropolitan areas,” Lereah said. “The data shows that within a given area, the typical single-family home costs more than the median condo price.”

For condo prices, the strongest gains were in the Phoenix-Mesa-Scottsdale area, where the fourth quarter price of $175,600 jumped 50.9 percent from a year ago. In the Tampa-St. Petersburg-Clearwater area of Florida, the median condo price of $185,400 rose 37.1 percent from the fourth quarter of 2004, while the Honolulu area, at $300,000, increased 36.4 percent.

In all, 52.9 percent of the available markets experienced double-digit annual condo price appreciation. The condo price series will be expanded in the future as more data becomes available