Home Prices Shoot Up
Middle-class Americans are seeing the value of their most important investment - their homes - increase at the fastest rate in six years. Cities in the South and Midwest dominated the list of big gains in 1997.
The largest increase for existing homes, from the fourth quarter of 1996 to the fourth quarter of 1997, came in Charleston, S.C., the National Association of Realtors said Wednesday.
Charleston’s median home price - meaning half sold for more and half for less - jumped 16.7 percent to $110,500. Economist Kim Kennedy of Cahner’s Economics in Newton, Mass., said prices have been pushed up by retirees moving there.
“There are a lot of empty-nesters and seniors moving into these Southern coastal states. It’s not just Florida anymore,” she said.
Nationally, the median price rose 6.2 percent to $124,800. That was nearly double the 3.3 percent rise a year earlier and the biggest fourth-quarter-to-fourth quarter gain in six years. Adjusted for inflation, it was the most appreciation in 11 years.
Of course a price rise that benefits home sellers, can be bad for home buyers. So far though, falling mortgage rates have more than offset the impact of price gains.
A year ago, the monthly principal and interest payment on an 8 percent mortgage for 80 percent of the value of a median-priced home would have been about $691. With mortgage rates down about a percentage point and prices up, the same mortgage now would carry a $664 payment.
Of 134 cities surveyed by the real estate group, only 10 registered declines in their median prices. The median slipped 10 percent in Honolulu to $300,000 and, for the first time since 1989, it lost its status as most expensive housing market in the nation.
It was supplanted by San Francisco, where prices rose 14.1 percent to $304,600.
The high-tech and computer boom has helped San Francisco’s economy while a dropoff in Japanese investment has hurt Honolulu’s in recent years.
Other cities with large gains included Des Moines, 15.5 percent; Fort Myers, and Sarasota, Fla.; Lexington, Ky.; Champaign and Peoria, Ill.; Memphis, Tenn.; Canton, Columbus and Youngstown, Ohio; Dallas and Beaumont, Texas; Orange County, Calif.; South Bend, Ind.; Boston; Fargo, N.D.; and Kansas City, Mo.
After Honolulu, cities with declines included Richland, Wash., 7.1 percent; Trenton, N.J.; Syracuse and Albany, N.Y.; Charleston, W.Va.; El Paso, Texas; Springfield, Mass.; Rockford, Ill.; and Sioux Falls, S.D.
xxxx Mixed results in Northwest The median resale price of a home in Portland jumped 6 percent during the fourth quarter of 1997, but prices dropped 7.1 percent in Richland. Here are prices for five Northwest cities: Portland - Up 6 percent to $154,300. Seattle - Up 2.6 percent to $168,300. Boise - Up 2.1 percent to $104,500. Spokane - Up 0.6 percent to $100,900. Richland - Down 7.1 percent to $103,100.