The average price of a house nationwide rose 6.6 percent last year, according to the latest government tally. Of the 31 markets surveyed by the Federal Housing Finance Board, 25 sported increases — almost half by two digits. Only five places registered declines, and one — Atlanta — was unchanged. In monetary terms, the average selling price for both new and existing houses rose $14,000 over the last 12 months, to $225,100 in 2001 from $211,100 in 2000.
That works out to an appreciation rate of more than $1,000 a month, not all that much less than the $1,269 mortgage payment (principal and interest) on a $200,000 mortgage at 6.54 percent, the going rate in many places for a loan.
But several markets fared far better. In the San Francisco Bay area, the owner of an average priced house saw the value of that home rise by $35,500, or almost $3,000 a month, last year.
In the Chicago area, the price of a home rose by $27,600–or a monthly gain of $2,300.
Other places where homeowners registered big gains included Seattle, up $32,300; Greensboro, N.C., up $31,600; Miami-Ft. Lauderdale, up $29,700; Washington, D.C., up $27,400; New York, up $28,700; Los Angeles, up $26,400; and San Diego, up $23,400.
Much of the rapid advance was fueled by greater activity at the high end of the housing market, where analysts believe many investors are parking their money until the stock market quiets down.
In places where prices declined, values didn’t actually fall. Rather, there simply was more activity in lower-end product last year than the year before, which caused the average to dip.
Well, “dip” probably isn’t the right word to describe what occurred last year in Rochester, N.Y., where the average price plunged 16.5 percent, to $137,000 from $164,100 in 12 months. And it doesn’t adequately portray the tumble experienced in Indianapolis, where the average was off 9 percent, to $166,800 from $183,200.
The decline in Cleveland was a more modest 4.8 percent, to $172,000 from $180,700. And, in Columbus, Ohio, the drop was a negligible 0.6 percent, to $192,900 from $194,100.
In many of the other markets, though, sellers were gobbling up big profits as the housing markets in their cities and towns remained on fire. And the largest windfalls were recorded in normally low-cost places. In Greensboro, N.C., for example, the average price of both new and used houses shot up 22.2 percent, to $174,200 from $142,600. In Milwaukee, it jumped 20.5 percent, to $187,400 from $155,500. In Miami, the average rose 17.4 percent, to $200,600 from $170,900. And, in Pittsburghand Kansas City, the average rose 15.1 percent, to $157,400 from $136,800, and to $182,600 from $158,700, respectively.
The more expensive markets didn’t do as well last year. But then, prices are so high in most of these places that even a relatively small percentage increase results in huge monetary gains. Take the San Francisco Bay Area, which, as usual, heads the list of the nation’s most costly housing markets. The average in the San Francisco-Oakland-San Jose region rose 8.5 percent last year, to $454,600 from $419,100.
On a percentage basis, the increase there wasn’t much greater than the average for the country as a whole. But the result was practically a $3,000-a-month gain.
The second and third most expensive markets also are located in the Golden State. San Diego is second at $340,700, an increase of 7.4 percent from $317,300 in 2000. Los Angeles is third at $313,800, up 9.2 percent from $287,400.
It is worth noting here that Honolulu, which not all that long ago was far and away the most expensive housing market in America, has slipped all the way to ninth in the latest government tally. The average in the Hawaiian capital is now a mere $263,700, and that’s down 5.8 percent from $280,000 in 2000.
The three California metropolises are the only markets in the country where the average is over $300,000. But two big Eastern cities, New York and Washington, are pushing the barrier. In the Big Apple, the average now stands at $298,200, an increase of 10.6 percent from $269,500. And in the nation’s capital, the average is $291,600, up 10.4 percent from $264,200.
Rounding out the Top 10 are: Seattle-Tacoma, at $283,600, up 12.9 percent from $251,300; Denver-Boulder, $283,200, up 8.5 percent from $261,000; Boston-Worcester, $278,700, up 3.4 percent from $269,500; Honolulu and Chicago-Gary, both $247,300, up 12.6 percent from $219,700.
At the other end, the average in the 31 markets studied is lowest in Rochester at $137,000, followed by Pittsburgh at $157,400.
– How strong is house price appreciation? Robust enough to allow homeowners to use up the equity they built and still owe less than they did when they first bought their places. Homeowners refinanced a whopping $1.1 trillion of housing debt last year, according to Fannie Mae, a major supplier of funds for home loans. About $800 billion of the total was in cash-out loans in which more was borrowed than was owed at the time the loan was traded in.
Yet in most cases, the loan-to-value ratios on their new loans were “still substantially lower” than they were when their original mortgages were written, says David Berson, Fannie Mae chief economist. And that, he adds, “all points to strong gains” for homeowners.
