First-time home buyers responding to improved affordability conditions and lower prices of foreclosures and short sales, impacted metropolitan area median home prices in the first quarter, according to the latest survey by the National Association of REALTORS®.
With first-time buyers accounting for half of all purchases during the first quarter, 134 out of 152 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the first quarter of 2008, while 18 metros had price gains. The national median existing single-family price was $169,000, which is 13.8 percent below the first quarter of 2008 when conditions were closer to normal.
NAR President Charles McMillan said there are two levels of pricing in the current market. "Traditional homes in good condition have held their value much better, so owners shouldn't be overly concerned about median prices. Most sellers can expect a good return if they've been in their home for a normal period of homeownership and haven't excessively tapped their equity," he said.
"Given the unusual mix of conditions around the country, the expertise and negotiating skills of a REALTOR® have never been more important," McMillan said. "Unparalleled knowledge of local markets is crucial for consumers."
Seventeen states experienced sales increases from the fourth quarter, and six states were higher than a year ago. Sales in the first quarter do not reflect an impact from the first-time home buyer tax credit.
Lawrence Yun, NAR chief economist, sees the market in a lull before an upturn. "Over the past couple months, contract activity for home sales, buyer traffic and inquiries about the $8,000 tax credit have all increased," he said.
"Close to 455,000 buyers purchased their first home during the first quarter, and those are likely just the first wave of new buyers coming into the market – they're critical for a housing recovery," Yun said. "Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas."
The largest sales gain from a year ago was in Nevada, up 116.8 percent, followed by California which rose 80.6 percent, Arizona, up 50.2 percent, and Florida with a 25.0 percent increase. Virginia and Minnesota also experienced double-digit sales increases.
The largest single-family home price increase in the first quarter was in the Cumberland area of Maryland and West Virginia, where the median price of $114,900 rose 21.1 percent from a year ago. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois at $100,300, up 13.8 percent from the first quarter of 2008, followed by Columbia, Mo., where the median price increased 6.0 percent to $152,600.
Median first-quarter metro area single-family home prices ranged from a very affordable $30,300 in the Saginaw-Saginaw Township North area of Michigan to $570,000 in Honolulu. The second most expensive area was the San Jose-Sunnyvale-Santa Clara area of California, at $450,000, followed by the Anaheim-Santa Ana-Irvine area of California at $435,800.
In the condo sector, metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $172,800 in the first quarter, down 20.2 percent from the first quarter of 2008. Five metros showed annual increases in the median condo price and 51 areas had declines.
The strongest condo price increases were in Portland-South Portland-Biddeford, Maine, at $196,900, up 11.2 percent, followed by the Wichita, Kan., area, where the median condo price of $113,900 rose 6.8 percent from the first quarter of 2008, and Bismarck, N.D., at $132,400, up 6.0 percent.
Metro area median existing-condo prices in the first quarter ranged from $75,200 in Las Vegas-Paradise, Nev., to $345,900 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was Honolulu at $300,000, followed by the New York-Wayne-White Plains area of New York and New Jersey at $282,300.
Other affordable condo markets include the Palm Bay-Melbourne-Titusville area of Florida at $90,600 in the first quarter, and the Sacramento-Arden-Arcade-Roseville area of California at $93,800.
At this week's National Association of REALTORS® Mid-Year Meetings in Washington, D.C. Yun said this is the highest affordability index ever since tracking began in the 1970s, as more buyers, especially first-time buyers, are responding to the $8,000 tax credit and low rates. Yun said California sales are leading the way. And while there is still pressure in the jumbo market, government-backing of conforming loans helps credit and home sales.
Silicon Valley Association of REALTORS® President Julia Truesdale Keady, who is attending the NAR Mid-Year Meetings, along with other SILVAR board members and staff, said the housing market in the Silicon Valley region has picked up during the past month.
"The data is grossly delayed, which creates a problem, but the absorption of inventory should significant once all is said and done," Keady said.
Keady once again underlined the fact that markets are local and can differ by neighborhood, so now more than ever, it is important to contact a REALTOR® who is knowledgeable about the area.
"We see the difference in the market even between neighborhoods. It's important to know what sells and what is of good value in specific areas. An experienced REALTOR® can help sellers price their homes right and guide buyers to making the decision that is right for them," Keady said.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.