The average price of housing rose only slightly last year, the second year in a row prices on a national basis have risen at less than the rate of inflation.
But several localities showed significant price increases indicating a strong, vibrant housing market in all price ranges.
Nationally, according to the latest figures from the Federal Housing Finance Board, the average price of both new and existing houses went up just 0.9 percent, from $151,500 to $152,800.
(The finance board’s data is based on conventional, purchase-money mortgages. Had it also included government-backed loans, which tend to be for less money, the average probably would have been somewhat lower.)
Of the 31 markets studied, however, only 17 showed higher prices at year’s end. Price hikes of 20 percent or more were registered in Salt Lake City, up 29.7 percent to $168,000 last year from $129,500 in 1992; 27.8 percent in Phoenix, to $151,400 from $118,500; and 24.7 percent in Greensboro, N.C., to $122,500 from $98,200.
Prices aren’t actually going up that fast in these markets. Rather, the extraordinarily high percentages mean that more folks bought houses last year in the higher price brackets than in the lower brackets.
Strong activity in the upper end of the market is a sign of health. People don’t step up the housing ladder unless their local economies are fairly robust. And as they do move up to bigger and better homes, it opens up more opportunities for others on the lower rungs.
Other double-digit gains last year were reported in Portland, Ore., 16.5 percent, to $149,600 from $128,400; Miami-Ft. Lauderdale, 13.3 percent, to $131,500 from $116,100; Denver, 12.1 percent, to $149,600 from $133,400; and Kansas City, 10.9 percent, to $125,500 from $113,200.
Unfortunately, the opposite is true for many of the 14 markets where the average price “fell” last year.
When there is more activity in the low end, which is what draws the average down, it means those who already have a home are staying put, and there isn’t as much for lower-income buyers to choose from.
The greatest decline last year was recorded in St. Louis, where the average price for new and resale houses dropped 26.6 percent, to $116,800 from $159,200.
Double-digit declines also were found in Houston, down 18.2 percent to $102,400 from $125,200; Honolulu, off 11 percent to $311,200 from $349,700; and Detroit, down 10.3 percent to $126,300 from $140,800.
Despite the 11 percent decline, the Hawaiian capital still is the nation’s priciest housing market.
In second place, but not even close, is San Francisco, where the average fell 1.1 percent last year to $253,300 from $256,100.
The third- and fourth-place cities, Los Angeles and New York, also showed declines. The average inched downward 0.5 percent in the City of Angels, to $228,200 from $229,000, and fell 1 percent in the Big Apple, to $197,100 from $199,000.
At the other end of the price spectrum, only two markets-Tampa-St. Petersburg and Louisville-exhibit an average price less than $100,000.
Tampa currently is the nation’s least expensive housing market at $96,800, a decline of 7.5 percent from $104,700 in 1992.
In Louisville, meanwhile, the average is $98,000, down 6.9 percent from $104,800 a year ago.
Other low-cost cities (in ascending order) are: Houston at $102,400, Milwaukee at $111,400, and Pittsburgh at $116,600.
It’s still location
Ask any real estate professionals to rattle off the three most important factors in pricing a house and they’ll probably respond by saying, “location, location, location.”
That old realty adage has been proven once again in a new study by the National Association of Home Builders. Say what you will about the size of the house or the number of bedrooms, according to the NAHB it’s the characteristics of the neighborhood that most affects its price.
When all else is equal, a “standard” 1,900-square-foot home with three bedrooms and two baths, a basement and garage is 27.8 percent more valuable when it is located within 300 feet from a body of water, NAHB’s analysis of Census Bureau found.
Conversely, if there are abandoned buildings nearby, the place will be worth 30.7 percent less.
