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The average price of houses sold nationally in the second quarter fell less than 1 percent. But it could have been worse. Had it not been for inordinate price gains in four of the nation’s 32 largest metropolitan areas, the average would have sunk lower.
Dallas, Texas; Detroit, Mich.; St. Louis, Mo.; and San Antonio, Texas report year-over-year increases of 30 percent or more. Increases like 43.7 percent in San Antonio and 38.1 percent in Detroit are false readings. They are far more likely to be the result of above-normal activity in the higher-price brackets in these two markets than they are indications of price appreciation. And the same goes for the 36.4 percent jump notched in St. Louis and the 30.1 percent boost in Dallas.
Just as there were huge but unsustainable gains in these four major markets, larger-than-usual declines were recorded in Chicago, Ill.; Portland, Ore. and Sacramento, Calif. But these, too, were ghostly aberrations, impacted in this case by more than the usual number of sales in the lower end of the market.
Spikes like these, both up and down, are a good reason why it is a mistake for anyone to put too much faith in national statistics, even the ones published by the Federal Housing Finance Agency and analyzed in this column every quarter.
Unfortunately, there aren’t any reliable studies available to the media that drill down that deeply. But you can at least start with the FHFA’s figures, which cover large metro areas. After that, you need to find a real-estate professional who tracks price trends and other key benchmarks such as days on the market and the selling-to-asking-price ratio in the place that interests you.
In the meantime, it is worth noting here that in the latest FHFA study, prices were up in just 12 of the 32 regions from the second quarter last year. They were down in the other 20, not a good sign.
We’ve already mentioned the biggest losers and the largest gainers, so let’s jump to the most and least expensive big-time markets.
As usual, San Francisco is the most expensive city in the country to buy residential real estate. But in a somewhat strange twist, the two major California markets to the south — Los Angeles and San Diego — have returned to the second and third spots, respectively.
The average price of both new and existing houses in the Bay Area fell by 0.4 percent, from $598,200 a year ago. Now it’s at $595,700, which is still more than enough to remain in the top spot by a significant margin.
The Los Angeles-Riverside region is the second costliest place to own, but the average there is $85,000 lower than in the Bay Area. And the average in third-place San Diego is $6,000 less than that, at least for now. In L.A., the average in the second quarter was $510,600, an 8.4 percent gain from $470,900. And in San Diego, the average was $504,500, up 2.1 percent from $494,200.
Two East Coast markets finished in the top five. The Washington, D.C.-Baltimore, Md., region — some call it “Washimore” — was No. 4 at $485,600, an increase of 4.1 percent from $466,400 in last year’s second quarter. And the New York-Long Island metro area was fifth at $470,700, a gain of 2.6 percent from $458,700 a year ago. The only other market where the average is now above $400,000 is Seattle-Tacoma, Wash., which placed sixth in the current survey at $439,800, an 11.8 percent decline from $498,600 12 months earlier.
From there, there’s another substantial drop-off, this one of more than $40,000, to $395,900 in San Antonio, which is now the nation’s seventh most expensive housing market.
San Antonio is normally a relatively inexpensive market, as are most metro areas in the Lone Star State. But because of the unusual amount of activity in spots where houses are not cheap — every market has them, even those in Texas — the average in the South Texas city spiked 43.7 percent, from $275,600.
Back on the Eastern Seaboard, meanwhile, Boston, Mass., is in the eighth spot at $375,100, off 6.8 percent from $402,600 a year ago. Then it’s back to the West, where Denver, Colo., holds down the ninth position at $371,700, a 7.9 percent gain from $344,600. And finally, back east to Virginia Beach, Va., which is 10th at 360,900, an increase of 12.4 percent from $321,000.
At the other end of the price spectrum, downtrodden Las Vegas, Nev., the poster child for the busted housing market, is now the least expensive of the nation’s 32 largest markets. The average in Sin City is now $184,300, which is up 1.6 percent from $181,400 last year at this time.
Indianapolis, Ind., is the only other place in the sample where the average is below $200,000 — but not by much. The average in the Indiana capital is currently $199,400, a drop of 8.2 percent from $217,300.
In ascending order, the next three relatively inexpensive markets are Cincinnati, Ohio, at $214,300, off 11.4 percent from $242,000; Detroit-Ann Arbor, up 38.1 percent — yeah, right — from $158,400; and Columbus, Ohio, at $220,700, down 9.8 percent from $244,700.
Lew Sichelman has been covering real estate for more than 30 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance-industry publications.