Rise In Home Prices Slows A Bit

March 3, 2005
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GRAND RAPIDS — The median price for an existing home in the metro Grand Rapids area was $132,900 last year, up 2 percent from $129,900 in 2003.

The median price in 2004 was up 6 percent from 2002, when the median-priced house sold for $125,300.

The Office of Federal Housing Oversight reported that the median existing-home price rose 11.2 percent from the fourth quarter of 2003 to the fourth quarter of 2004, the largest annual gain nationwide since 1979. The price, however, for the average U.S. home only rose by 1.7 percent over the last three months of last year.

"This report reflects a slowing of the tremendous house price appreciation we've seen recently, but it is still growing at a strong pace," said Armando Falcon of the OFHO.

But this year, if the dollar continues to fall, mortgage payments and not sales price could be on the minds of many homeowners. If the dollar continues its slide, as some economists feel it will, interest rates are likely to rise.

"Given the number of people who have refinanced their homes with floating-rate mortgages, the falling dollar is a kind of a sword of Damocles, getting closer and closer to their heads," said David Rothkopf, a former commerce department official under President Bill Clinton, to the New York Times.

"And with any kind of market disruption, caused by anything from a terror attack to signs that a big country has gotten queasy about buying dollars, the bubble could burst in a very unpleasant way," he added.

Home prices rose the highest last year in Nevada, Hawaii, and California. The National Association of Realtors said the median price for an existing single-family house reached $187,500 during the last quarter of 2004, compared to $172,400 for the same quarter in 2003. The difference represents a gain of 8.8 percent.    

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