What will the average house price get you?

by: Kevin Fields

What the average house price buys you…

August 2006, became the first time since the mid 1990s that house prices were actually lower than the year before. But instead of the property bubble bursting the prices of houses are stabilizing or deflating slowly. While prices have definitely cooled it has yet to become the massive collapse that some were predicting. House prices are still way up. In 1980, 75 grand would have gotten you an average house on an average street in most places in the US. The white picket fence, yard and three-bedroom family home was affordable to most.

Today, that dream remains but the costs to reach it are still high. Today, you'll need more than a quarter of a million to get just to average in the US. Of course, houses have gotten bigger and in 1980 a granite countertop was a luxury. Today, it is almost a standard fixture. And with the cost of the house comes all the other things that have gone up in price - mortgage fees and home loan borrowing cost, property taxes, real estate fees, and house insurance costs have also gone up significantly.

The so-called housing bubble appears ready to burst in some areas, has already seen some deflation in some spots like California while some areas of the country just the housing boom continues to expand undaunted. For five years, home sales had hit record highs as low mortgage rates lured buyers. But the housing sector lost steam in the opening months of 2006 with mortgage rates rising. And with a slowing economy and high energy prices buyers are becoming more cautious.

Mean Versus Median

There are two major ways in which home prices are recorded: the median price which is half way between the most expensive and the cheapest house price in any given area. The mean price is the average price of a house. The median home price is probably the most common measurements used to compare real estate prices in different markets.

The measurement is less biased than the average price since it is not as heavily influenced upward by the top two percent of homes. For example, according to the Federal Housing Finance Board and the National Association of Realtors the average home price in the US was $264,000 in October 2005, compared with a median home price of $213,900 for the same time period.

According to the National Association of Home Builders, in 2006 the average price of a newly built home was $274,500. For the sake of this story, we are going the split the difference and say that $250,000 is the average price for a house in the US. But what would that get you across the US? Armed with a quarter of a million dollars, we looked at what that would get you in a couple of major spots and then 15 randomly selected American cities.

There are a few places in the United States where $250,000 will not get you very far. In Los Angeles, California you could find a one bedroom condo in Torrance. A median priced single family, three bedroom home in Palmdale would cost you $465,000. In Malibu you'd better have $1.6 million burning a hole in your pocket to buy an average sized house.

However, LA in general is a bargain compared to San Francisco where the median cost for that same family home is $837,000. On the East Coast things are a little better - in New York City the median cost of a house comes in at $423,600 and Boston is $407,000. Like the sun? West Palm Beach seems like a bargain at $338,000. On the other end of the scale the cheapest cities for three-bedroom, single family homes are Buffalo, New York; Springfield, Illinois; and Fort Wayne, Indiana, where $90,000 gets you nicely into the market.

What does $250,000 buy you in:

Tuscon, Arizona. 1,533 square foot, 3-bedroom 2-bath home, built in 2005. In Pima County. Attractive desert landscaping and new kitchen appliances.

Long Beach, California. 672 square foot, 3-bedroom, 1-bath home, built in 1923. In Long Beach. Concrete patio and a parking space.

Naperville, Illinois. 1,650 square foot, 3-bedroom 2.5-bath condo built in 1992. In Du Page County. Nice lot with a garage.

Lexington, Kentucky. 2,478 square foot, 4-bedroom, 2.5-bath, two-storey, single family home built in 2000 in Fayette County. Wide lot. Attractive stone work frontage.

Lansing, Michigan. 2,300 square foot, 4-bedroom 2.5-bath, two-storey home in Eaton County. Built in 1972.

Lincoln, Nebraska. 2,370 square foot, 3-bedroom, 3-bath, two storey single family residence In Lancaster County. Two car garage and large lot.

Reno, Nevada. 1,136 square foot, 3- bedroom 2-bath, single storey family home. Views of mountains and recent upgrades. Built 1988.

Manchester, New Hampshire. 1,659 square foot. 3-bedroom, 1.5-bath, Cape Cod style home built in 1955. Hardwood floors.

Syracuse, New York. 2,262 square foot, 3-bedroom, 2.5-bathroom, colonial style house built in 1988 in Brewerton. View of Oneida Lake on half acre lot.

Dayton, Ohio. 3,105 square foot, 4-bedroom, 2.5-bathroom, 3-car garage, two-storey home built this year.

Columbia, South Carolina. 2,376 square foot, 4-bedroom, 2.5-bathroom, 3-car garage, two-storey home built this year in Chestnut Hill Plantation.

Newport News, Virginia. 1,581 square foot, 3-bedroom, 2-bath single story ranch style home in Shore Park. Built in 1962.

Vancouver, Washington. 2,104 square foot. 4-bedroom, 1.5-bathroom, ranch style home. In Allwood, built in 1959.

Denton, Texas. 2,520 square foot, 4- bedroom, 3.5-bathroom, two storey home in Denton. Marble floors. Built in 2002.

Honolulu, Hawaii. 485 square foot, one bedroom townhouse built in 1985. New appliances and shared pool.

Kevin Fields CityBloc.com

Kevin Fields is editor of www.citybloc.com, a website that presents US statistical information, census data and demographic analysis on all US cities and counties.