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Home values rose in most places during 2002, and in some hot markets prices jumped more than 20%.
February 25, 2003: 2:53 PM EST
By Sarah Max, CNN/Money Staff Writer
NEW YORK (CNN/Money) - The bummer economy and stagnant stock market did little to damper the housing boom in many parts of the country last year.
In fact, 39 out of 120 markets tracked by the National Association of Realtors (NAR) saw double-digit gains in home prices between the fourth quarter of 2001 and the fourth quarter of 2002. That was an all-time record, according to the NAR, which released its latest home price data Wednesday.
Leading the way was California's capital city, Sacramento. Here, the median price for an existing single-family home increased 26.7 percent to $224,209 during the time frame.
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Two other California cities were among the top 10 real estate markets, as well. In San Diego, for example, the median home price surged 26.6 percent to $379,300, while prices in Orange County jumped more than 20 percent to $434,600.
"In the last two years housing has been the beneficiary of a weak economy," said David Lereah, NAR's chief economist. The downturn, he notes, brought long-term mortgage rates to the lowest levels in decades and made homeownership more affordable than ever.
On a national level, the median price for an existing, single-family home was $161,600 in the fourth quarter of 2002, up nearly 9 percent over the same period last year, when the median price stood at $148,500, NAR reports. That was the highest year-over-year increase in more than 20 years.
Interest rates were the most important factor behind last year's thriving real estate market, but a lean inventory for homes, more available credit for first-time home buyers, and favorable demographic trends and also helped boost demand for houses.
"There is a strong push among immigrants to purchase homes," said Celia Chen, senior economist for Economy.com. "About a decade ago this country had a surge in immigrants who have only recently begun the home-buying process."
Although prices in 2002 were generally higher than they were in 2001, there was some softening over the course of the year. For example, prices in Monmouth and Ocean counties in New Jersey were $273,500 in the third quarter of 2002 but fell to $261,700 in the fourth quarter. Even so, that's still 22 percent higher than it was at the end of 2001.
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Not every market, however, saw values rise from 2001. In 11 markets, prices stayed flat or fell. Worst off was Biloxi-Gulfport, Miss., where the median value fell 6 percent to $100,400. In Albuquerque, N.M., prices fell 5.1 percent; in Charleston W.Va., they were down 3.6 percent; in Beaumont, Texas, they fell 2.4 percent; and in Kalamazoo, Mich., home prices were 2.0 percent lower.
But those markets are the exception rather than the rule. And they don't necessarily suggest a broader downturn for real estate prices this year. According to Lereah, market is likely to hold up in 2003, but probably won't break any new records.
*The original article can be found at the link below...
http://money.cnn.com/2003/02/11/pf/yourhome/hotmarkets/
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