Home Price Changes Vary by Market,
Latest Data Shows
12-18-2007 Home appreciation rates vary significantly among the nation's top markets, according to the latest monthly S&P/Case-Shiller home price statistics. The S&P tracks the nation's 20 largest metro areas including the Twin Cities Metro Area. While the home price statistics for the 20 largest markets showed a 4.9 percent year-over-year decline, the same markets have appreciated in value by more than 95 percent since January 2000.
"We need to return to realistic expectations regarding home price appreciation, rather than analyzing data in one-year increments,” said Jim Gander, president of the Builders Association of Minnesota (BAM). "Housing has been and remains a solid long-term investment. Though housing is a cyclical business, history shows that over time, home prices will stabilize and move upward."
In the Metro area, we saw a 7.67 percent decline from September 2006 to September 2007, but values appreciated by 63.45 percent since January 2000. This represents almost twice the 36.16 percent gain in value that was realized between January 1990 and January 2000. Based on the numbers, now is actually a great time to buy for first-time buyers and trade-up buyers.
“It’s always better to trade up in a buyer’s market. While the value of your house has fallen in the short-term, the prices of higher-end homes have also dropped,” Gander advises. “Here’s an example: Your neighbor sold for $300,000 one year ago. Let’s say values in your area have dropped 10 percent, so you could get only $270,000 for your home today. You have your eye on a move-up home that previously sold for $500,000, but now is selling for $450,000. If you sold your home today for $270,000 and purchased the larger house for $450,000, the difference in price would be $180,000. But if you waited to recoup the 10 percent value on your home and sold it at $300,000, chances are the move-up home would also increase in price 10 percent to $500,000. That’s a $200,000 price difference. So by selling today, you would actually save $20,000.”
ABOUT BAM: The Builders Association of Minnesota is a St. Paul-based trade association representing over 4,800 members involved in home building, remodeling, multifamily construction, and other aspects of residential and light commercial construction industry. BAM is associated with 14 local associations throughout the state and the National Association of Home Builders as a charter member.
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