Real Estate Market

A decade in residential real estate

by Broderick Perkins

12/31/09 - The real estate decade ends with relatively unchanged home prices, more browsing for housing and greater bargaining power, but challenges remain to achieve the so-called "American Dream."

When you consider inflation, today's home prices are pretty much where they were 10 years ago, and cheaper than they were at the peak of the market, according to data from the National Association of Realtors (NAR).

The median home price in November 1999 was $137,600, according to NAR, but by November 2009, home prices were up 25 percent to $172,600.

Affordability

However, when you tally inflation over the period, prices come in nearly identical to where they were a decade ago according to the U.S. Bureau of Labor Statistics' inflation calculator.

Based just the cost of a home, housing is more affordable than its been since the boom times in the mid-2000s. The median home price peaked in June of 2006 at $231,000, according to NAR.

"The real estate industry has seen tremendous change and evolution over the past decade," said 2010 NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, AZ.

Affordability, however, is relative.

Improved housing affordability in recent years, due to lower home prices, cheaper mortgage rates and tax credits has been offset to a great extent by higher energy costs, interest rate adjustments and unemployment.

How buyers have coped

Buyers have managed, in part, because fewer of them are buying more expensive detached, single family homes -- 82 percent in 1999 compared to 78 percent in 2009, says NAR.

However, more people are buying homes in suburban neighborhoods 46 percent in 1999 compared to 54 percent today -- thanks largely to the growth in higher density housing -- even in the suburbs.

Shopping habits

NAR also says just 10 years ago, most home buyers had never electronically browsed for housing. Yard signs, newspaper ads (remember them?) and open houses were still de rigueur and fixed-rate, 30-year mortgages were all the rage.

Today, 90 percent of buyers are searching online -- when they have the income and credit scores to qualify for housing loans -- and less risky, fixed rate, 30-year loans are popular again.

Changed buyer profile

Buyers themselves have also changed over the years.

While married couples comprised 68 percent of all home purchases at the beginning of this century, they represent 60 percent of all buyers today.

Single men purchased 10 percent of all homes last year, compared to only 7 percent 10 years ago.

Single women are 21 percent of all buyers, up from 15 percent in 1999.

What hasn't changed

The median age for home buyers this year was 39, just as it was in 1999.

Neighborhood quality, affordability, and convenience to work and school have remained the top priorities for both past and present buyers.

Finally, eight out of 10 recently surveyed consumers believe that owning a home is an investment in their future.

"One constant has been the persistence of homeownership as the American Dream," said Golder.

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