October 10, 2006
Data from Runzheimer International, the Rochester, Wisconsin-based relocation and mobility experts, confirm the recent slowdown in median home prices across the U.S. (see Table 1 below). Over the past year, Runzheimer researchers observed that home prices in many locations were not experiencing the same rapid appreciation as they did earlier this decade (see Table 2 below). More recently, home values in many locations started showing declines. Some good examples of areas where the housing market has slowed significantly over the past year are: El Dorado Hills, CA; Ann Arbor, MI; Tulsa, OK; Barrington, RI; and Decatur, IL.
El Dorado Hills is a living community outside of Sacramento, CA. According to Runzheimer research, the median price of a home in September of 2005 was approximately $680,000. The median price of a home a year later was approximately $698,000. This change represents an appreciation rate of 1.3%. A comparison of the median home price in this same community between September 2004 and September 2005 yields an appreciation rate of 22.4%.
In Ann Arbor, Michigan, Runzheimer estimated that the median price of a home in December 2005 was approximately $387,000. For October 2006, the estimated median price is approximately $392,000. While the median price shows an appreciation of 1.33%, it is somewhat misleading. Runzheimer research shows that only medium-sized homes (between 2200 and 2900 square-foot) have appreciated. In fact, smaller homes have depreciated on average 4.4%, and larger homes have depreciated on average 1.63%.
Home values in Tulsa, OK, have also shown depreciation. The estimated median price of homes was approximately $226,000 in October 2005. A year later, the estimated median price is approximately $216,000. This change represents a 4.7% decrease in the median price of homes.
In Barrington, a living community of Providence, RI, the median price of homes has depreciated 0.6%. In October 2005, Runzheimer estimated the median price of homes to be approximately $533,000. For October 2006, the median price is estimated to be approximately $530,000.
Home values in Decatur, IL, have seen only a modest appreciation over the last year. The estimated median price for July 2006 was approximately $148,000, while the estimated median price for July 2005 was approximately $146,000. The comparison between the two periods shows an increase of 1.5% in median home price.
Table 1: 2005-2006 Median Home Prices
Table 2: Appreciation Rates
The locations examined above provide support to claims that the U.S. housing market in general is slowing down, and that more modest increases or even decreases in home prices should be expected in the near term. The slow down in the market is part of a market correction mechanism necessary to reduce the housing inventory that has built up due to a variety of factors, such as: generally higher mortgage interest rates, a generally tightening job market, as well as local factors such as increased unemployment due to downsizing or outsourcing. Once the excess inventory is cleared from the housing market, home prices should resume their normal appreciation rate. During this correction period, Runzheimer will keep monitoring the housing market closely in order to accurately report home prices in all of its living communities.
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About Runzheimer International
Founded in 1933, Runzheimer International serves 60 percent of the Fortune 500. Recognized for providing innovative solutions relating to total employee mobility, Runzheimer is the global leader in business vehicle reimbursement programs, travel management consulting, employee relocation and compensation, virtual offices, and corporate aircraft.
For more information, contact Julia Lee at Runzheimer International, Runzheimer Park, Rochester, Wisconsin 53167, 262.971.2442, jpb@runzheimer.com, www.runzheimer.com
