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Study Finds Wide Range of Estimated 2007 New Home Prices
On a state basis, there are no bigger differences in median new home prices in the country than between Hawaii, where an owner-occupied home built this year will cost $544,000, and Mississippi, where the price will be about a quarter of that amount, or $135,000, according to estimates by NAHB Housing Economics researchers Paul Emrath and Fei Liu.
Looking at median new home prices for 2007 in 354 metropolitan areas, the special study finds an even greater range — from a low of $86,000 in Charleston, W.Va. to a high of $849,000 in San Jose-Sunnyvale-Santa Clara, Calif. The two locations differ by a factor of 10 in their home prices.
Following Hawaii, the states with the highest estimated medians for 2007 are California ($518,836) and states along the East Coast: New Jersey ($469,293), Virginia ($463,566) and Maryland ($435,528).
Following Mississippi, the states with the lowest home prices are Arkansas ($137,516), Louisiana ($147,310), Alabama ($154,433) and West Virginia ($164,661).
The ability to make reasonable projections about this year’s home prices has been made possible by the Census Bureau, which at the request of NAHB has begun to tabulate its American Community Survey (ACS) question on house value by the age of the structure. This provides information about the value of recently built homes down to the individual state and metropolitan area levels for all areas with populations of 65,000 or more.
Because the data are a couple of years old by the time they are released, and the margin of error is high in some smaller metro areas, other sources of data are figured into the equation as well to arrive at the price estimates, including building permits, other Census surveys and the Office of Federal Housing Enterprise Oversight.
The median and average home values computed from the ACS “are based on all recently built owner-occupied homes, including any multifamily condominiums,” the NAHB economists write in their report. “The values recorded in the ACS are owners’ estimates of the values of their homes. Although not perfectly accurate, several studies suggest that owners’ estimates provide reasonably good approximations.”
While several checks were imposed at each stage of the process to screen out implausible results, the economists point out that the price estimates are subject to possible error from several different sources.
Significant variations in metropolitan area prices popped up even within the same state, the study found. For example, Hartford-West Hartford-East Hartford, Conn. has a median new home price estimate of $268,682 for 2007, ranking 105 on the list of metro areas, while the median new home price estimate is $837,559 for Bridgeport-Stamford-Norwalk, Conn., at a ranking of 2.
Approximately 83% of the total U.S. population lives in the metro areas analyzed in the report.
The largest share of the population in the metropolitan areas (33%) lives in areas with median new home prices between $200,000 and $300,000, followed by 16% living in areas with median prices between $400,000 and $500,000. About 11% lives where the median exceeds $500,000.
After San Jose, Calif. and Bridgeport-Stamford-Norwalk in Connecticut, areas that are home to the 11% of the metro population that will have to pay more than an estimated $500,000 for a median-priced home this year are:
- Salinas, Calif. ($669,901)
- San Francisco-Oakland-Fremont, Calif. ($667,401)
- San Luis Obispo-Paso Robles, Calif. ($621,523)
- Washington-Arlington-Alexandria, D.C., Va., Md., W.Va. ($604,407)
- Honolulu ($597,364)
- Los Angeles-Long Beach-Santa Ana, Calif. ($580,615)
- San Diego-Carlsbad-San Marcos, Calif. ($568,932)
- Santa Barbara-Santa Maria, Calif. ($563,069)
- Sacramento-Arden-Arcade-Roseville, Calif. ($561,876)
- Barnstable Town, Mass. ($520,503)
- Ocean City, N.J. ($512,414)
- Boulder, Colo. ($506,010)
- Santa Rosa-Petaluma, Calif. ($504,396)
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