Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 18, 1990 TAG: 9003212469
SECTION: HOMES PAGE: D1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY HOMES EDITOR
DATELINE: LENGTH: Long
The school's Real Estate Research Center took a look at median family incomes and average home prices and determined that Danville is the most affordable housing market in the state. The average home price in the Danville area was $57,835 and the median income for a family of four was $30,298. The figures were from the third quarter of 1989, the period on which the study was based.
By using an index of 100, Danville was given a score of 158.79, which indicates that more than three-quarters of the households should be able to afford the average home in that area. By contrast, fewer than than half of the households in Charlottesville, Fredericksburg, Newport News-Hampton and Northern Virginia can afford the average-priced house in those areas.
Charlottesville had the lowest affordability index, 89.41, reflecting an average home price of $117,263 and a median family income of $35,331. Charlottesville's affordability ranking dropped 14 percent from the same quarter in 1988.
Roanoke's index of 128.69 was based on an average home price of $83,075 and a median family income of $35,272. It likely would have had an even higher index if the average home price had not soared during the third quarter of 1989 because of several sales involving expensive properties.
Roanoke's index was down only slightly, by .31 percent, over 1988's third quarter.
The Lynchburg area ranked at 138.17 with an average home price of $73,748 and average income of $33,978.
The report pointed out that home sales for the period were higher than in the previous quarter of 1989 in every area but the Northern Virginia market where sales dropped 17 percent from the first quarter to the third quarter.
In looking at home sales against the same period the previous year, six of the 11 markets studied showed drops. Roanoke had the lowest drop, 2 percent, and Virginia Beach-Norfolk had the greatest gain, 56 percent.
Gains also were posted by Lynchburg, 13 percent; Fredericksburg, 7 percent; Danville, 5 percent; and Richmond, 1 percent.
Portsmouth-Chesapeake and Northern Virginia were off 23 percent in third quarter 1989 over third quarter 1988 and Charlottesville sales were off 21 percent.
The average selling time for a home in the study period 1989 was 98 days, a 19 percent increase over 1988. Charlottesville properties averaged 128 days on the market. Roanoke's average-days-on-the-market were 75 in 1989 and 86 in 1988.
The average sale price for the state was down slightly in a year, from $124,082 to $123,619. Northern Virginia continued to be the most expensive market with an average price of $175,444.
Typical rents on apartments in the markets surveyed showed that the Roanoke area rents ranged from $265 to $370 for one bedroom; $300-$450 for two bedrooms and $360 to $650 for three bedrooms. Northern Virginia rents, by far the highest in the state, ranged from $600-$825 for one bedroom; $650-$1,100 for two bedrooms and $800-$1,600 for three bedrooms.
A separate study done by the Federal Home Loan Bank of Atlanta on the entire Southeast region concluded that the housing market softened in 1989 and that economic conditions indicate the trend will continue in 1990.
Two key housing market measurements - existing home sales and construction - declined in the Southeast last year, mirroring a national trend, said Richard G. Fritz, senior economist.
The study was based on year-end data and the specific section on Virginia said the state is retrenching from four years of growth.
"With prices escalating in Northern Virginia housing markets 11.1 percent annually through 1988, residential construction activity seemed to have no limit. However, the limit was reached in 1989," the report said.
The median price of an existing home in Virginia slowed to an inflation rate of 1.9 percent. In neighboring North Carolina the housing market declined throughout the year and the state was the only one in the southeast to record a decline in average home prices during the year.
There was a slowdown in North Carolina home sales of 6 percent from 1988. It was the first time in five years that the state had experienced a slowdown in the volume of sales.
For the Southeast region, existing home sales were 3.9 percent below 1988 sales, a more moderate decline than the 5.6 percent drop nationally, the study showed.
Fourth quarter home sales in the Southeast declined 4.1 percent from the same period a year ago. National fourth quarter results showed a 13.4 percent drop.
The number of homes sold is affected by pricing, and median home prices were up modestly in the Southeast with a more marked rise nationally, the report said. Median price means that half of the houses sold for more than that amount and half sold for less. The 1989 median price for an existing home regionally was $93,100 up 2 percent from $91,300 the previous year. Nationally, median home prices rose from $89,300 in 1988 to $93,100 in 1989, a 4.3 percent increase.
"Normal supply and demand relationships dictate that when sales are down, price drops follow," Fritz said. "But the current housing market, with sales down and median housing prices up, indicates the national real estate market has highly variable areas of activity.
"What seems to be driving the national median home price higher is a shift in the regional composition of home sales that has resulted in an increasing median price, rather than widespread strength in the real estate market. In higher priced markets, sales have generally held steady, while in markets where home prices are below average, sales have become weaker."
Sluggish home sales contributed to a decline in residential construction. Across the nation, construction activity dropped more than 20 percent in the past five years. In the Southeast, building permits were down 8.2 percent in 1989 compared with 1988 activity. Nationally, construction dropped 7.6 percent for the year.
Reflecting an ongoing trend, final quarter results for 1989 indicate the construction decline is likely to continue into 1990. In the fourth quarter, housing permits were down 14 percent in the Southeast, and 10.2 percent nationally, in contrast to the same period a year ago.
"While residential permits recently declined more in the Southeast than the nation, construction activity per capita in the nation was only two-thirds the level achieved in the Southeast region," Fritz said. "Even with the five-year decline in home building, the 1989 per capita level of residential construction in the region exceeded the national level in 1985, the peak year for the nation."
The Southeast region includes Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina and Virginia.
The Federal Home Loan Bank of Atlanta is a $22 billion reserve credit bank that provides low-cost financing and other banking services to more than 600 member institutions. The bank is one of 12 in the national Federal Home Loan Bank System established in 1932 to offer credit at competitive rates to support economical home financing.
by CNB