Median selling prices of homes in Boston and New York, where real estate values are soaring, are now higher than in Los Angeles and Orange counties, where median prices are falling, according to a study due to be released today by a major savings and loan trade group.
Further, the study shows that San Francisco has replaced Southern California as the region with the most costly housing in the nation. The median price of a home in the San Francisco area increased to $152,000, far ahead of second place New York at $129,700. (The median price means that half the homes are selling for more and half are selling for less.)
Build Equity Faster
The study, conducted by the U.S. League of Savings Institutions, also noted that homeownership levels across the nation are continuing to drop and that the popularity of short-term mortgages is surging.
About one in every seven homeowners is choosing a 15-year mortgage, more than double the 1983 level, the survey said. Most mortgages are for 30 years.
The 15-year mortgage's higher monthly payments allow homeowners to build their equity more quickly at a time when real estate inflation has disappeared from many markets. "People are building equity in their homes the old-fashioned way--they are paying for it," said James W. Christian, the U.S. League's chief economist.
Homeownership in general is "becoming more difficult to achieve," the study said, in part because bankers are toughening their lending standards by requiring larger down payments on mortgage loans.
The number of American households who owned their own homes peaked at nearly 66% in 1980 but stood at less than 64% in 1985, the lowest level in 18 years, the survey said.
New York Up 44% in 2 Years
The survey was based on more than 16,000 mortgages that were made by savings institutions from April through June, 1985. The U.S. League has been doing such studies every other year since 1977.
Real estate inflation is hot in Boston and New York--reminiscent of Southern California in the late 1970s when land prices in some areas were rising 33% a year.
Housing economists say that the Northeast is undergoing an economic boom due to explosive growth in the computer industry and financial services.
New York's median home price of $129,700 is a 44% jump in just two years, while the Boston price of $126,000 represents a 56% increase.
"That has been a hot, hot market," Christian said, "and it's been generally overlooked."
The study showed that the Los Angeles and Anaheim areas, with median prices of $123,000 and $122,000, respectively, ranked fourth and fifth on the most expensive list.
In the 1983 survey, Los Angeles headed the list at $139,950, while the Anaheim area was No. 2 at $125,018.
However, real estate prices are still rising in San Diego. The median home price there was $120,750, 14% more than it was in 1983.
Christian said the sharp price rise in San Francisco--up 27% from $120,074--has occurred because land is so scarce there and because far fewer condominiums--which are generally cheaper than single-family homes--were for sale last year than in 1983.