California had seven of the top 10 highest-priced U.S. real estate markets, led by La Jolla, Beverly Hills and Santa Barbara, while North Dakota had the cheapest, according to a recent study by Coldwell Banker Real Estate Corp.
A $130,300 home in Minot, N.D., cost $1.71 million in La Jolla, according to the Home Price Comparison Index compiled from January to July by Coldwell Banker, which is owned by Cendant Corp. of New York. The index computed average sale prices for a 2,200- square-foot, four-bedroom home in 348 markets that were popular with transferring corporate executives.
In Maryland, the most expensive spot was in Bethesda/Chevy Chase at a cost of $491,440, according to the study. The most affordable spot in the state was the Eastern Shore with an average price of $247,425.
While low mortgage rates have fueled record gains in U.S. home sales and prices, not all markets have benefited, Lawrence Yun, an economist at the National Association of Realtors, said. Anaheim, Calif., had a 39 percent price increase last quarter from a year earlier, while Knoxville, Tenn., saw prices fall 7 percent.
"There are vast differences as you look at regional markets - some states have homes with prices six to seven times higher than other areas," Yun said. "It's mostly due to quality of life, income and the supply of land to build on."
In the No. 4 market, Palo Alto, Calif., a 2,200-square-foot home had an average price of $1.21 million, and in Greenwich, Conn., ranked No. 5, it cost $1.19 million, according to the index.
Newport Beach, San Mateo, and San Francisco markets followed in the ranking, with Wellesley, Mass., at No. 9 and Kailua-Kona, Hawaii, at No. 10.
While all of the top 10 markets had an average price of more than $1 million, 60 percent of the markets in the study were under $300,000, said Jim Gillespie, Coldwell Banker's president and chief executive.
The highest-priced markets were on the Atlantic and Pacific coasts, and the more affordable ones were in the center of the United States, Gillespie said.
"When people talk about real estate prices being out of whack, they're not looking at the individual markets," he said. "They are not out of whack if you look at the heartland of America."
The cheapest markets in the nation, after Minot, were Great Falls, Mont., where a 2,200- square-foot home cost $130,525; Arlington, Texas, at $134,550; and Billings, Mont., at $134,650.
Killeen, Texas, was No. 5, followed by Tulsa, Okla.; Topeka, Kan.; Parkersburg, W.Va.; Cadillac, Mich.; and, at No. 10, Knoxville.
Nationally, the median sale price for a single-family home rose 7.5 percent in 2003, the highest since 1980, a rate that probably will be matched this year, Yun said.
The average U.S. rate for a 30-year fixed mortgage was 5.8 percent in 2003, the lowest since 1965, according to Freddie Mac, the second-largest mortgage buyer. That rate probably will be 5.9 percent this year and 6.1 percent in 2005, according to Freddie Mac's chief economist, Frank E. Nothaft.