29 September 2009

Housing More Affordable For The "Move-Up" Buyer

Associated Press Story

Welcome to Grayling, where residents paddle canoes through town on the winding AuSable River, ride snowmobiles on forest trails and take scenic walks among 150-year-old trees at Hartwick Pines State Park.

The former logging town ensconced in the woods of central Michigan owns another distinguishing trait, according to a Coldwell Banker study: Grayling's 6,500 residents live in the nation's most affordable housing market.

The real estate firm on Wednesday released its annual survey of the price of a 2,200-square-foot home with four bedrooms, 21/2 baths and an attached garage.

Comparing homes that meet those criteria in more than 300 markets, the lowest average price was in Grayling, where such a house costs about $112,000. On the other end of the spectrum lies the San Diego neighborhood of La Jolla, Calif., where a similar home costs more than $2.1 million.

The study's results also show that homes matching the study's criteria are becoming more affordable. About a third of the markets in the survey boast an average price below $200,000, the highest number in the past five years. Nationally, prices are down 30 percent from their peak in mid-2006.

The type of property used in the survey represents a "move-up" home, bought by someone who wants a larger place to live because of lifestyle changes, such as a new job or having children.

These buyers often need to sell a home before moving up, a dicey proposition during the housing recession. But the first-time homebuyer tax credit of up to $8,000 has spurred sales of homes in the lowest price ranges, allowing sellers to become "move-up" buyers. Buyers are getting more for their money because of low prices and attractive mortgage rates.

"This represents a unique opportunity for move-up buyers to get back into the market," said Jim Gillespie, president and CEO of Coldwell Banker Real Estate.

Known as a solid second home market, Grayling took a hit after the troubled economy, particularly the embattled U.S. auto industry, led owners to sell off property in their recreation destinations.

Sales lagged until recent months, and prices are starting to stabilize at affordable levels, said Laurie Jamison, a broker at Coldwell Banker Cornell Realty in Grayling. For about $200,000, a buyer can secure a four-bedroom home on the AuSable River.

"People are shocked at what they're able to get at that price," Jamison said.

Joining Grayling in the top five least expensive markets were Akron, Ohio, with an average price of $121,885; Fayetteville, N.C. ($130,875); Canton, Ohio ($131,867); and Detroit ($132,000).

On the high end, La Jolla residents are paying a premium for it's proximity to a big city, easy access to the Pacific Ocean and sunny weather. Other California markets like Beverly Hills and Palo Alto have similar qualities, and also are in the study's top five most-expensive markets.

While La Jolla also experienced a slight downturn, the area has seen sales improve by about 6 percent year-over year, said Rick Hoffman, president of Coldwell Banker San Diego. Prices have decreased from the peak three years ago, to the point where move-up buyers are getting more for their dollar.

"(La Jolla) has always been known for beach-front living and for having a real sense of community," said Rick Hoffman, CEO of Coldwell Banker San Diego. "It still has a little bit of a small town feel."

California claimed eight of the top 10 most expensive U.S. housing markets. Completing the top five were Beverly Hills. ($1,981,750); Greenwich, Conn. ($1,519,250); Palo Alto ($1,489,726) and Santa Monica, Calif. ($1,460,912).

The Golden State also had the largest difference between its most and least expensive markets. Lancaster, Calif., registered an average sales price of $165,205, more than $1.9 million lower than La Jolla.

Oklahoma had the smallest difference, with about $9,400 separating Oklahoma City ($164,250) and Tulsa ($154,800).

And, for buyers wondering what a 2,200-square-foot house with four bedrooms, 21/2 baths and a garage would cost overseas, Coldwell Banker surveyed 57 markets in 29 countries.

The most expensive market is the Asian metropolis of Singapore, where the sample home averages $1.9 million. The least expensive is Salinas, Ecuador, which sits on the Pacific coast. The average price of the sample home in Salinas is about $69,000.

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