Smaller-city housing markets remain strong

December 02, 1990

WASHINGTON -- The strength of smaller metropolitan housing markets was evident during the third quarter of 1990, as home values in lower-priced areas generally climbed higher than those in larger, more expensive ones, according to the National Association of Realtors. Steady price increases occurred throughout the Midwest and South, while appreciation was much more mixed in the West and Northeast.

The NAR's quarterly metropolitan home price survey showed that median prices for existing single-family homes ranged from $375,000 in Honolulu to $49,200 in Saginaw, Mich., during the third quarter of 1990.

The survey covers median prices for single-family detached and attached existing homes in 96 metropolitan statistical areas.

A median price is the midpoint; half the homes sell for more and half sell for less.

Healthy growth exhibited in the Midwest, South, and in interior portions of the West and Northeast belie reports of sagging real estate markets nationwide, said the NAR's Norman D. Flynn. "People who are wondering whether to buy should not be scared off by doomsday forecasts. The benefits of homeownership are clear if homeownership is viewed for what it is -- a long-term investment providing shelter, tax benefits and a healthy return on the down payment. No one should buy a home expecting it to turn into a gold mine overnight."

The national median price for the third quarter was $96,600, which was 1.8 percent above that for the third quarter of 1989. Fifty-four metropolitan areas recorded price increases exceeding or equaling the national increase.

Honolulu, which continues to be buoyed by foreign investment, posted the largest annual price increase -- 36.4 percent. The second highest price gain was in Seattle, where the median price of $144,800 rose 24.9 percent. The third highest gain was in Sacramento, Calif., where the $144,600 price rose 24.4 percent.

Outside of these scattered price surges in the West, most of the 11 areas recording double-digit appreciation were Midwestern or Southern markets.

According to Mr. Flynn, the trend of smaller city strength is directly traceable to ready availability of affordable housing. "In general, the markets that are humming now have grown evenly. They never took off at a pace that could not be sustained."

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