March 2006

A Publication of ELLIOTT® & Company Appraisers

 

TEN PRICIEST ZIP CODES FOR HOUSING IDENTIFIED

Forbes.com has released a list of the top 10 ZIP codes in terms of highest average housing prices.

The ranking was done with the research of OnBoard, a company in New York that specializes in data collection, Miller Samuel, a real estate appraisal and consulting firm, and the National Association of Realtors.

The study concluded that the most expensive ZIP code in the United States, based on the value of the average house, was 94027 in Atherton, CA, where the median house price in 2004 was $2,496,553. Atherton is located in the Menlo Park area near San Francisco.

Coming in second on this exclusive list is ZIP code 93108 in Montecito, a suburb of Santa Barbara in southern California, with an average home value of $2,176,521. Third was 92067 in Rancho Sante Fe, CA, at $2,144,254. It was one of two ZIP codes in the San Diego County town. No. 4 was 92662 in Newport Beach, CA, where home values averaged $2,046,577.

The highest ranked ZIP code outside of California was 11765 in Mill Neck, NY, a town of about 850, located just north of the Big Apple, where home values average $1,948,366. Coming in at No. 6 and the lowest California ZIP code on the top 10 (That’s right; Beverly Hills 90210 didn’t make it.) was 94967 in Ross, a Marin County suburb of San Francisco where home values average $1,910,263.

Lucky No. 7 was ZIP code 89402 in Crystal Bay, NV, where home values averaged $1,806,962. This ZIP is in the Lake Tahoe area. No. 8 was 07620 in Alpine, NJ, where the median home value was $1,773,180. Alpine is about 2.4 miles from Yonkers, NY. Ninth was 89413 in Glenbrook, NV, not far from Crystal Bay, where the medium home price was $1,765,000. Rounding out the top 10 was 07976 in New Vernon, NJ, near Morristown, where the median home value was $1,760,000.
 

STUDIES REVEAL SIGNIFICANT HOME-PRICE INCREASE IN 2005

Two independently conducted studies revealed significant home price increase throughout the United States last year.

According to the National Association of Realtors (NAR), the median existing single-family home price in this country rose from $187,500 in the fourth quarter of 2004 to $213,000 in the fourth quarter of 2005, for a gain of 13.6%. Meanwhile, the Office of Federal Housing Oversight reported that the average home price in this country grew by 12.95% last year. The OFHEO study also reported that prices of other goods and services increased by only 4.3% last year.

The median price is not the average price. Instead the median price is the one in the middle, where half of the homes sold for more and the other half sold for less.

Actually, the fourth quarter results of the NAR survey showed that home-value increases were slowing down. The annual rate of home-price appreciation derived from NAR’s third-quarter survey in 2005 showed a 14.7% growth in median single-family home price.

"Although home sales have eased, the tremendous momentum in price appreciation was sustained in the fourth quarter because tight inventories still favored sellers," said David Lereah, chief economist of NAR. "The good news is that the supply of homes on the market has been trending up and we are entering a period of a more normal balance in supply and demand."

"While deceleration continues in some areas, appreciation is still extremely strong," said Patrick Lawler, chief economist of OFHEO. "Mortgage rates climbed significantly during the second half of last year, but the effect of that increase on price appreciation, so far, appears to be limited."
 

HOMES BECAME MORE AFFORDABLE IN LAST 10 YEARS

 
Despite rapidly rising home prices in the last few years and recent public concerns over the scarcity of affordable housing, a report published by Moody's Economy.com indicated that housing in the United States has actually become more affordable during the past decade.

The report said that the percentage of a household's income needed to meet mortgage payments had dropped to 22% in 2005. In 2002, this figure was 30%. Reasons cited for the improvement in housing affordability include low interest rates, increasing incomes and a greater housing supply.

The most unaffordable areas of the country for housing were New York City, Chicago, Boston and coastal California, where the percentage of income needed to buy a house averaged over 40%, according to the Moody's report.
 

APPRAISAL ALLEGATIONS EXPENSIVE FOR AMERIQUEST

 
Ameriquest Mortgage Co., the largest sub-prime lender in the United States, recently agreed to a $325 million settlement after being accused of faulty lending practices, including "improperly influenced and inflated appraisals."

Restitution to the consumers throughout the country, who claimed they had been bilked by Ameriquest’s lending practices, accounted for the bulk ($295 million) of the settlement. The other $30 million will go to 49 states and Washington, DC, in order to cover the costs of their three-years' worth of investigation into these charges brought on by the irate borrowers.

While not admitting to any wrongdoing, Ameriquest has announced it will do things differently in the future. One major change in Ameriquest's procedures appears to be centralizing its collateral property appraisals, which will keep its loan officers from influencing the appraisers.
 

COSTS OF BUILDING HOMES ARE INCREASING

 
Due to the increased prices of materials, as well as rising energy costs and interests rates, the costs of building homes are also going up.

The National Association of Home Builders reported that building-material prices grew about 10% in 2005. The prices of concrete and PVC pipe rose at a significantly higher rate due to the high demand for these materials in the wake of Hurricane Katrina.

"There is an age-old misconception by the buying public, who think that the home builders are making these enormous profits," Dallas-area homebuilder Michael Mishler told the Dallas Morning News. "I'm here to tell you that's not the case. The profits are very minimal and hard to increase."

Builders of lower-priced housing are finding this inflation the most difficult.

"At the lower end, under $175,000, we are not seeing as much ability to pass on these costs," said David Brown of Metrostudy Inc., a housing analysis firm.
 

QUOTES OF WIT & WISDOM

"To acquire knowledge, one must study; but to acquire wisdom, one must observe."   -- Marilyn vos Savant

"The two most common elements in the world are hydrogen and stupidity."    -- Harlan Ellison

"If we take care of the moments, the years will take care of themselves."  
                                                                    -- Maria Edgeworth

"A healthy male adult bore consumes, each year, one and a half times his own weight in other people’s patience."   -- John Updike

"Poverty is the parent of revolution and crime."   -- Aristotle

"A painting in a museum hears more ridiculous opinions than anything else in this world."
                                                                                        -- Edmond de Goncourt

"Don’t complain about growing old. Many people do not have that privilege."   -- Earl Warren

"Everything you can imagine is real."   -- Pablo Picasso

"It is impossible to defeat an ignorant man in an argument."   -- William McAdoo

"Courage is the art of being the only one who knows you’re scared to death."   -- Harold Wilson

For previous newsletters or columns written by Charlie Elliott, MAI, SRA, president of ELLIOTT® & Company Appraisers, for mortgage publications visit our Web site at www.appraisalsanywhere.com.

 
CONTACT US
Newsletter Editor: kevin@elliottco.com    Web Site: www.appraisalsanywhere.com
3316-A Battleground Avenue • Greensboro, NC 27410
 

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