Once Booming Real Estate Markets Experience Hard Times
We’ve all seen the headlines.
Home sales are down 11 percent across the U.S. over the last 12 months, home prices are down, and inventories of homes are bulging.
But look more closely at the numbers.
In the quarterly study by the National Association of Realtors, syndicated columnist Kenneth Harney writes that about two thirds of the 149 markets surveyed registered price gains year to year.
Some of those increases were exceptional, thanks to strong local economic growth and affordable housing prices.
- For example, Salt Lake City saw median prices jump by 22 percent from the second quarter of 2006 through the same period this year.
- In Binghamton, N.Y., median prices rose by 19.8 percent during the year, while in Salem, Oregon, prices gained by 16.7 percent.
Similar counter-trend patterns can be found inside large metro areas as well, where select micro-markets-neighborhoods and entire Zip codes-defy national, regional and state downcycles.
For example, in the Washington D.C. area, two contiguous Zip codes - 20815 (Chevy Chase/Bethesda) and 20015 (portions of Northwest D.C.) - have been relatively unscathed by the slow regional market.
In Chevy Chase/Bethesda, Md., where Maryland mortgage applicants pay hefty prices, sales volume in dollar terms soared 22 percent during the 12 month period, and average selling prices were up nearly 12 percent.
In the 20015 Zip code inside the District, average sales prices were up around 7 percent during the same period - in sharp contrast to the 7 percent drop experienced in Washington D.C. as a whole.
In the Miami-South Dade metro area, close-in areas such as Coral Gables are far outperforming the overall market’s well-publicized reverses.
In the first six months of 2007, the average sales prices of homes in Coral Gables rose by $200,000-from $1.2 million to $1.4 million.
This may be due in part to high-end buyers not relying so heavily on Florida mortgage trends as average citizens.
Regardless, the farther-flung areas with larger numbers of newly-constructed, entry-level and middle income housing units, by contrast, have seen sales and prices plummet across South Florida.
Similar patterns can be found in the Los Angeles and San Francisco areas, according to local mortgage brokers.
In San Francisco, highly-regarded neighborhoods such as Pacific Heights and the Marina are little affected by the credit crunch and the problems with California mortgages sweeping much of the state.
In Los Angeles, close-in areas also remain robust, while the farther-flung and more modest-priced area “are really struggling” and are beginning to experience big price declines.
As a general rule, oasis micro-markets are characterized by: higher than median incomes; convenience to employment centers and attractions; good school reputations and high household educational attainments.
The key, of course, is that underlying metro economic fundamentals must be strong. That means plenty of job creation, especially jobs with above-average compensation.
SOURCE: Detroit Free Press