The latest Residential & Foreclosure Sales Report from RealtyTrac shows that median U.S. home prices in October hit their highest point in 73 months, even as price appreciation is slowing in more than half of major American metros.
According to the report, released Wednesday, the median price of single-family homes and condos rose 2 percent to $193,000 nationwide in October. This is their highest level since the beginning of the recession in September 2008. That's also a rise of 16 percent from a year ago, though it's still 19 percent below the median peak of $237,537 that occurred in August 2006.
A major reason for a rising national median and a general cooling trend in the appreciation rate in major metros lies in investor interest in smaller markets. Investors in the wake of the recession flocked to smaller metro areas such as Oklahoma City and Dallas, where lower-priced inventory came on the market with a vengeance. Heavy investment in lower-range homes has led to peak median prices for 20 non-major metros, including Denver, Pittsburgh, Columbus, and Charlotte.
"Home prices have risen substantially in the lower price ranges," said Phil Shell, managing broker of RE/MAX Alliance, near Denver. This price range—generally under $400,000—has, consequently, led to a compression in the middle of the market and a leveling-off of prices in upper-echelon homes, he said.
Some medium-sized cities, particularly in the Midwest, have seen huge increases in median price appreciation. Most notable is Toledo, where median prices are up 33 percent from a year ago. Detroit, up 27 percent, is a close second, followed by Cleveland and McAllen-Edinburg-Mission (Texas), which both are up 21 percent.
Major markets with double-digit increases in median prices are Memphis (up 18 percent), Austin (up 17 percent), Miami, and Houston (both up 16 percent). Cincinnati, which actually posted a 4 percent decline just a year ago, and Chicago each saw 15 percent rises in median prices.
Even where prices have leveled off, the turnaround from a year ago is significant. Craig King, COO of Chase International, in Lake Tahoe and Reno, Nevada, said that while the median sales price in Reno was unchanged from September to October, it is up 15 percent from a year ago. October marked the 29th consecutive month with a year-over-year increase in the market there.
O.B. Jacobi, president of Windermere Real Estate in Seattle (which posted a 10 percent growth in annual appreciation this year), attributes the rise in median prices there to a combination of "a strong local economy, low housing supply, and high buyer demand."
Still, 54 percent of American metros surveyed by RealtyTrac are appreciating at far more moderate speeds. Phoenix, which was a hotbed of investor interest after the crash, saw a 6 percent annual appreciation in October, which is down from the 25 percent the city boasted a year ago.
Similarly, Los Angeles last year claimed a 24 percent annual appreciation and a 9 percent appreciation in October. Oxnard-Thousand Oaks-Ventura in Southern California, Jacksonville, Boston, and San Diego also dipped to single-digit appreciation after reporting roughly 20 percent appreciation numbers a year ago.