Market Conditions - March 21, 2006 by Carla L. Davis
Is the real estate market whistling a slightly different tune than it was at the beginning of March? While many experts still maintain that the market is "healthy" and "adjusting," others are concerned that the adjustments aren't enough to bring affordability back into line with incomes. The National Association of Home Builders (NAHB) has commented that the market itself -- the fundamentals -- remains strong. NAHB president David Pressly noted, "Job and income growth are moving ahead at healthy levels" as well. But CNN is reporting the market in a different light: Mortgages rates are up and affordability is down. In a country as vast as the United States -- the market is sure to vary, and in reports from across the nation we are seeing just that. Naples, Florida, has been known in recent months as one of the top overvalued markets in the nation. This comes on the heals of some hefty double digit appreciation rates in 2005. Many areas of Florida experienced rates near 40 percent. A median home in Naples now costs $367,100. The Office of Federal Housing Enterprise Oversight (OFHEO) notes that this price is almost twice what it "should" be. Our experts are reporting that Naples is seeing a jump in the amount of resale inventory available. Inventory was relatively low over the last three years -- part of the reason for the rapid price appreciation -- but now it is close to the level it was three years ago. As with much of the rest of the country, new construction is considerably slower. Rising construction costs are partially to blame. Will the market slow? One expert from Naples reports, "I firmly believe the market will continue to appreciate at rates unmatched throughout the country. The fact of the matter is that the southwest Florida is what some call a "sheltered" market. Being one of the most desirable areas to live in the United States, there will always be a strong and true demand for the area." In the same report that called Naples overvalued, we find cities that are reported as undervalued. Many of those cities listed are found in the state of Texas, which battled wild fires and floods just a few short weeks ago. Abilene, Texas, is known as the "Friendly Frontier," where residents strive to preserve the traditional heritage of the Old West. The current median price in this city of 115,000 is $93,000 -- almost a third of what the rest of the country sees. Our experts report that in 2005 Abilene sold 1,658 homes, 10 percent more than in 2004; which was also a great year. | 
