High-End Home Sales Push Up Median Price
For the first time ever, the median price of the storied American home has topped the $100,000 mark.
Strong sales of high-end new homes during January, particularly in the Northeastern states, pushed the median to $100,700, passing the previous record of $94,600, set only last December. About 11,000 of the 53,000 new dwellings sold were in the Northeast, nudging aside the usual leader, California. The two areas currently represent the nation’s hottest real estate markets.
The surge of sales in the Northeastern states is attributed to an increasing number of buyers employed in the high-technology fields. Prices there are not in the bargain category but are certainly lower than comparative California prices, and homeowners are upgrading in record numbers.
Trade-up buyers are purchasing about two out of three new homes, “a trend which certainly is exerting upward pressure on the sales price statistics,” according to James Fischer, president of the National Assn. of Home Builders, and “the pent-up demand for single-family housing among relatively affluent buyers in the Northeast shows no signs of weakening.”
Comparing the present market with the early part of this decade, Fischer noted that almost half of the new homes built then were starter units designed for first-time buyers.
“The first wave of the baby-boom generation--those born between 1946 and 1964--is now approaching 40 and the last wave is 23 or older. Consequently, new households are being formed at a slower pace and demand for new housing has shifted to those who already own a home and are looking to improve their housing standards,” he said.
Availability of mortgage money at low rates obviously continues to enhance sales, even though prices have been rising. But average conventional mortgage rates of just over 9%--lowest since 1959920261continue to attract buyers from a wide spectrum.
At this clip, the nation’s home builders expect 700,000 sales this year, down about 7% from last year’s eight-year high of 749,000. Recording a seasonally adjusted rate of 716,000 sales in January, the Commerce Department reported a 7% drop in the rate from last December.
In resale activity, as reported by the California Assn. of Realtors, January sales “plummeted as the Tax Reform Act of 1986 officially kicked in and the economy slowed.”
The annualized rate of sales of existing single-family homes dropped 32.9% from the December totals, from 653,086 to 437,970. However, resales were still up 13.3% from January of 1986.
California’s median resale price dropped 3.1% in January to $126,532, down from December’s $130,565.
For the Los Angeles region, the median was $126,407; Orange County, $152,438; San Diego region, $119,603; Riverside and San Bernardino counties, $93,255.
