Home Prices Around the Country

by Coldwell Banker Evergreen Olympic Realty, Inc. on December 3, 2008

Federal Housing Finance Agency recently released pricing data for 292 metro markets around the country. The data reveals the price changes over three periods, including the latest quarter, the last year, and the past five years.

Of the 292 markets, Olympia ranks number 12 for price gains over the past 5 years. According to the study, our market stands at nearly 61 percent appreciation over that time. Six of the top 15 best markets are from Washington State (Wenatchee, Bellingham, Mount Vernon, Spokane, Bremerton, and Olympia).

On the other end of the spectrum, only 3 of the top 50 worst markets over the last year are outside the states of California, Nevada, Florida, Arizona and Michigan. Yet even with these poor markets, the average appreciation over the past 5 years in all markets combined is still a healthy 27 percent.

And this is with many of the worst markets are now bouncing from their bottoms (as evidenced by the pace of sales escalating). California, for example, which has many of the worst price performing markets over the past 12 months, has seen sales increase 12 percent year over year.

This report is fascinating in that it shows not just the bad with each market (253 of 292 markets lost value in the 3rd Quarter of 2008), but some of the good each has to offer. For instance, many news reports speak to how much California prices are falling. Bakersfield is, in fact, down almost 29 percent over the past year. That is not great. However, the market is still up 32 percent over the past five years. That is not bad. In real numbers, this would mean that a home purchased for $400,000 in the fall of 2003 is now selling for $527,000. This translates to a 5.7 percent annual appreciation. This level of appreciation is right in line with historical gains seen in most parts of the country (our market averaged 5.9 percent gains prior to our hot sellers market from 2003-2006).

However, facts like these are generally lost on the media. Instead, they report that the same house sold for $742,000 a year ago. And while this number is not to be trivialized, as many bought or refinanced with those inflated numbers, the majority of folks are nicely ahead of where they started (the average length in a home is 6 years, according to the NAR Survey of Home Buyers and Sellers, and 30 percent of homeowners have no mortgage at all).

As for Olympia, the fact that we rank so high on the report tells me at least two things. First, we did not fly as close to the sun. Our appreciation from 2001-2006 was 71 percent, while much of California, Nevada and Arizona were closer to 90-100 percent. As a consequence, our downward correction has not and should not be as sharp.

Second, we still have some price adjusting to do. Places like Bakersfield have normalized back to sustainable levels of price appreciation. Olympia still averages 8.75 percent annual appreciation over the past 5 years (our average price in 2003 was $188,870 and is now $286,187). So while we are close to normal, we are still a few ticks above our market’s historically steady and sustainable levels of price appreciation. Once we get back to those levels, our sales overall will see a bounce.

In fact, we are seeing pockets of well priced homes move nicely. Comparing the 3 month periods ending October 31, 2008 and 2007, sales are up 17 percent in homes priced under $200,000. As I shared with you last week from a Real Trends article, “Any strong housing turnaround will start with recovery with entry-level buyers.” History has proven this theory and we are starting to see it here. As a consequence, we are now seeing well priced homes in the trade-up price ranges sell. As more of those homes adjust their prices to better reflect the supply-demand balance, we will see even more of them sell — just as we are seeing at the lower end of the market.

And while this discussion is about market-wide averages, it is important to remember that each home is unique and well priced homes in all price ranges are still moving. See our 10/29/2008 blog article for more information on that topic.

For a complete details of the FHFA market report, or any of the Coldwell Banker Evergreen Olympic Realty South Sound market reports, please feel free to contact us.

Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.

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