The average price of new and used houses started to climb again in the second quarter. But it’s still cheaper to own than rent in more than half the nation’s largest markets.
According to the latest analysis of housing costs by the E&Y Kenneth Leventhal Real Estate Group, it’s less expensive, on an after-tax basis, to own than rent in 38 of the 74 cities studied.
That flies in the face of popular wisdom, which has it that it’s usually less costly to rent than buy, even after accounting for the tax deduction Uncle Sam allows for interest owners pay on their mortgages.
But apartment rents rose about 5 percent nationally last year-and as much as 12 percent in some places-while slightly higher selling prices were more than offset by the “steep slide” in mortgage rates.
As a result, E&Y analysts say, the carrying costs of “mid-management” quality housing declined significantly last year. Such a house is described as an “amenitized” four-bedroom home in a good neighborhood.
Consequently, it takes just 26.1 percent of the median household income in Miami to own a typical mid-level house, but it takes 33.8 percent to rent a comparable two-bedroom apartment. In Anchorage, it takes 19.5 of the area median to buy but 24.7 percent to rent, and in Charleston, it takes only 22.1 percent of the median to buy but 27.2 percent to rent.
The most affordable markets are Dallas and Jacksonville, where it takes just 16.5 percent and 18.3 percent on each area’s median, respectively, to buy a place of your own.
At the other end of the spectrum are the traditionally high-cost places like San Francisco, Honolulu, New York and Los Angeles.
In San Francisco, for example, it takes 63 percent of the area’s median income to buy a mid-level house. And in Honolulu, it takes 60.6 percent. It’s somewhat less costly-but not much-in Los Angeles (51.8 percent) and New York (49.3 percent).
Meanwhile, after dipping a bit in the first quarter, housing prices began to climb again in the second quarter, according to the latest figures from the Federal Housing Finance Board.
The average price of houses in the 31 markets studied rose 0.7 percent in the last 12 months, from $154,300 to $155,400. In the first quarter, prices fell by 1.8 percent on a year-to-year basis.
Prices were up in 16 of the 31 markets and down in 14 others. They were unchanged in Kansas City.
The largest jump in prices was recorded in Greensboro, N.C., where the average soared 29.9 percent, from $108,800 to $141,300. But the increase is far more indicative of greater activity at the high end of that city’s housing market than of price inflation.
The big spenders also were out in force elsewhere in the South in the second quarter:
In Tampa, the average rose 18.3, from $101,900 to $120,500. In Atlanta, the average was up 13 percent, from $144,200 to $163,000. In Dallas, it was up 12.2 percent, from $116,300 to $130,500. And in Miami, it was up 10.7 percent, from $125,900 to $139,400.
But the high-end markets faltered in several other places. Largely because most of the quarter’s activity took place in the lower price brackets, the average fell 18.7 percent in Salt Lake City, from $181,000 to $147,200, and 13.3 percent in Boston, from $204,300 to $177,200.
As usual, Honolulu is the nation’s most expensive housing market. But for the first time in memory, the average moved beyond the $300,000 mark in the Hawaiian capital to $330,400. That’s a 14.8 percent increase from $287,700 a year earlier.
Only a 2.5 percent increases was recorded in San Francisco. But it was still enough to allow that city to maintain the No. 2 spot at $267,100, up from $260,500.
Los Angeles is third at $210,700, down 5.5 percent from $222,900, followed by Washington, D.C., at $206,500, up 4.3 percent from $198,000, and San Diego at $202,800, down 2.5 percent from $207,900.
The rest of the 10 most expensive markets are all under $200,000: New York, $195,600; Seattle, $184,200; Boston, $177,200; Chicago, $165,500; and Denver, $164,000.
At the bottom end, however, only one city has an average price of less than $100,000. That distinction belongs to Pittsburgh, where the second-quarter average fell 10.3 percent, from $109,300 to $98,000.
But that doesn’t mean there aren’t some spots were you can still find a nice house in a nice neighborhood for under a hundred grand. It just means that, for the most part, you won’t find them on either coast, or in a major market.
According to a study of 300 metropolitan areas by Runzheimer International, the Rochester, Wis.-based management consulting firm, a 2,200-square-foot house with four bedrooms and 2.5 baths averages a mere $89,200 in Andrews, Texas. And in nearby Midland, a similar place averages just $90,700.
Just across the border in Hobbs, N.M., a 2,200-foot house goes for $90,100 on average. The same place runs $90,300 in Scottsboro, Ala., $93,200 in Soda Springs, Idaho, and $96,700 in Newport, Tenn.
And according to Runzheimer’s housing expert, Tammy Molumby, “there are a host of cities where this same spacious home can be purchased for under $110,000.
CITY-BY-CITY SALES
Here are the average sales prices of homes in major U.S. cities in the second quarters of 1994 and 1995, along with the percent of change.
The figures include new and resale homes.
For all of the United States, based on sales figures from 31 cities, the average sales price was $154,300 in the second quarter of 1994, which rose to $155,400 in the same quarter of this year, an increase of 0.7 percent. Figures by city are:
Atlanta, $144,200 for the second quarter of 1994, to $163,000 for the second quarter of 1995; up 13 percent.
Boston, $204,300 in 1994 to $177,200 in 1995, down 13.3 percent.
Chicago, $172,900 to $165,500, down 4.3 percent.
Cleveland, $122,600 to $103,000, down 15 percent.
Columbus, Ohio, $122,300 to $129,600, up 6 percent.
Dallas-Fort Worth, $116,300 to $130,500, up 12.2 percent.
Denver, $155,500 to $164,000, up 5.5 percent.
Detroit, $125,500 to $129,200, up 2.9 percent.
Greensboro, N.C., $108,800 to $141.3, up 29.9 percent.
Honolulu, $287,700 to $330,400, up 14.8 percent.
Houston, $104,500 to $106,300, up 1.7 percent.
Indianapolis, $125,500 to $126,700, up 1 percent.
Kansas City, $122,300 to $122,300, unchanged.
Los Angeles-Anaheim, $222,900 to $210,700, down 5.5 percent.
Louisville, $114,500 to $111,100, down 3 percent.
Miami-Ft. Lauderdale, $125,900 to $139,400, up 10.7 percent.
Milwaukee, $128,700 to $120,200, down 6.6 percent.
Minneapolis-St. Paul, $146,500 to $143,200, down 2.3 percent.
New York, $209,000 to $195,600, down 6.4 percent.
Philadelphia-Trenton, $164,100 to $148,700, down 9.4 percent.
Phoenix, $127,500 to $124,900, down 2 percent.
Pittsburgh, $109,300 to $98,000, down 10.3 percent.
Portland, Ore., $139,000 to $148,400, up 6.8 percent.
Rochester, N.Y., $148,200 to $130,000, down 12.3 percent.
St. Louis, $119,000 to $128,900, up 8.2 percent.
Salt Lake City, $181,000 to $147,200, down 18.7 percent.
San Diego, $207,900 to $202,800, down 2.5 percent.
San Francisco, $260,500 to $267,100, up 2.5 percent.
Seattle-Tacoma, $167,400 to $184,200, up 10 percent.
Tampa-St. Petersburg, $101,900 to $120,500, up 18.3 percent.
Washington, D.C., $198,000 to $206,500, up 4.3 percent.
