Home price appreciation in parts of country offsets declines elsewhere

Nationally, according to the quarterly survey of house prices by the Federal Housing Finance Board, the average cost of houses in the year’s first three months rose by a mere 0.8 percent, from $318,000 a year ago to $320,500 at the end of March.

Twenty-one of the local markets recorded increases, one by a whopping 40 percent. But 11 posted declines, proving that, once again, there are no national housing markets, only a bunch of local ones.

Even local markets have local markets in that they are made up of various communities and neighborhoods, some of which are selling much faster and at higher prices than their neighbors.

On a big-city basis, however, the clear winners in the current housing crunch are in the Pacific Northwest and Texas. California continues to suffer, though, as do parts of Florida. Big parts of the Midwest also are seeing prices fall.

In the Pacific Northwest, the two largest markets reported extremely strong gains. Portland registered a 16 percent jump in the 12-month period, from $332,200 to $385,400, while Seattle recorded a 14.9 percent increase, from $415,100 to $476,800.

Seattle is now the fifth most expensive housing market in the country, according to the FHFB. Portland ranks seventh.

Texas’ three biggest metropolises also experienced superior price appreciation during the survey period.

The largest gain was in Houston, where the average leaped 21.7 percent, from $208,600 to $253,800. Dallas-Fort Worth saw the average grow by 15 percent, from $181,500 to $208,800, while San Antonio recorded a 9.9 percent increase, from $194,300 to $213,500.

Even with these increases, though, Texas has some of the least expensive big-city markets in the country. California has four of the country’s largest metro areas, and all four saw their prices drop by double digits in the latest survey. But they are still among the nation’s most expensive housing markets.

Sacramento notched the largest decline. The average price in the California capital sunk 15.5 percent, from $410,500 to $346,900.

In Los Angeles, the average fell 13.2 percent, from $567,300 to $492,700. San Diego reported a 12.6 percent dive, from $621,500 to $543,300. And San Francisco netted out with a 12 percent loss, from $692,700 to $609,700.

The East Coast didn’t escape the housing price ax, either. In Boston, the average was off 12.4 percent, from $383,500 to $336,100. And Washington, D.C., was down 6.3 percent, from $500,600 to $469,200.

In Florida, the average fell 7.1 percent in Miami, from $397,300 to $369,00. But the Tampa-St. Petersburg and Orlando markets experienced gains. The Tampa Bay area saw its average rise 2.7 percent, from $280,800 to $288,500, while the average price in Orlando rose a healthy 7.2 percent, from $307,200 to $329,400.

Some other large Eastern Seaboard markets also more than held their own during the first three months of this year.

Atlanta posted a 10.7 percent gain, for example, from $242,000 to $268,000, according to the FHFB’s figures. And Virginia Beach, Va., sported a nice 8 percent upswing, from $289,800 to $313,000.

Even Phoenix and Las Vegas, two of the poster-child markets for the current downturn, recorded gains in the first quarter, albeit not terribly strong ones.

The average in Phoenix rose 1.5 percent, from $321,400 to $326,300, while in Las Vegas, the average gained 1.4 percent, from $317,400 to $322,000.

On the other hand, several Midwestern markets took it on the chin.

In Cincinnati, the average slid 21.4 percent, from $281,300 to $221,000. In Cleveland, it dropped 11.9 percent, from $232,900 to $205,100. And in Minneapolis, it fell 10.6 percent, from $301,100 to $269,200.

The Midwest wasn’t all bad, though. Detroit notched a surprising 19.1 percent gain, from $159,800 to $190,400. Milwaukee, posted a 17.3 percent increase, from $223,800 to $262,600.

Chicago had a 16.4 percent gain, from $293,400 to $341,500. And St. Louis recorded a 14.1 percent increase, from $182,900 to $208,600.

As of the first quarter, the nation’s most expensive housing markets, in descending order, are as follows: San Francisco, $609,700; San Diego, $543,300; Los Angeles, $492,700; New York, $488,400 (an increase of 2.2 percent from $477,800); Seattle, $476,800; Washington, D.C., $469,200; Portland, $385,400; Sacramento, $346,900; Chicago, $341,500; and Boston, $336,100.

In ascending order, the least expensive big-city markets are Indianapolis at $188,400, up 17.5 percent from $160,400; Detroit, $190,400; Cleveland, $205,100; Columbus, Ohio, $206,100 (up 4.9 percent from $196,400); St. Louis, $208,600; and Dallas, $208,800.

Zillow, the popular online real estate community that “zestimates” homes values, says the top 20 percent of all houses in 125 metropolitan statistical areas have suffered the most significant price declines. But economist LaVaughn Henry reads the tea leaves differently. He says price declines have been greater for lower-priced homes.

Henry, director of economic analysis at PMI Mortgage Insurance, stated that he couldn’t say conclusively why less expensive houses have declined in 12 of the 17 markets in which the S&P/Case-Shiller house-price indices provide price-tier information. But he believes a primary reason is that subprime financing is used more often to buy cheaper homes than to purchase expensive ones.

On the other hand, Stan Humphries, Zillow’s top number cruncher, found that most higher-priced houses are in the regions experiencing the steepest declines in value. Hence, they took the hardest hit.

However, both Humphries and Henry warn that there are wide variances to their theories at the local levels.

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.