So how IS the housing market in West University Place? A number of friends, neighbors, and customers have approached me recently. They are concerned by recent newspaper reports that prices in West University Place are “down ten percent”.Well, sort of.
Since 2007, I have kept rolling average statistical reports for West U single family homes. On a house-by-house basis, I find that most properties are worth now approximately what they were worth two years ago -- which is absolutely great in comparison to the horrendous price drops reported across the country.
The issue with our statistics is that the property mix being sold in West U has changed radically in response to the subprime mortgage meltdown. Check out this chart...
The subprime crunch found West U with a large inventory of big, new-built “spec homes”. These were liquidated as quickly as the market would allow. In June, 2008 the average age of a home sold in West U bottomed out, reflecting the prevalence of these new home sales. However, there were very few new homes coming on the market to replace them, because financing was difficult or impossible for builders to obtain. Therefore, the average age of homes sold began to rise, and now exceeds its pre-crunch values.
The old house/new house issue shows up in the average price statistics as well. While big houses dominated the market, the average price was high and vice versa.
Now let’s look at dollars per square foot…
The overall upward trend is clear. It is also clear that from 2006-2008 there is a divergence above the trend line – representing the higher prices during the “spec home” boom. Values have since returned more to their normal trend and begun to rise once again.
In fact, the total volume of real estate sold annually in West U has run between $200 and $250 million dollars a year for most of this decade – the exception being the “spec market” boom years of 2006 and 2007, when it was about $50 million dollars higher. Remember that each “spec” home is really two sales – one for the original lot, and once again for the new-built home. This explains, in part, the statistical double whammy that those sales had on the West U home market.
In conclusion, it appears to me that the housing market in West University Place probably bottomed out in December, 2009. Please be aware that “spec home” anomalies will continue to work their way through our statistical reports over the coming months and years. However, right now the supply of homes on the market is actually tighter than I would prefer – which, in my observation, usually precedes an uptick. Interest rates still remain historically low, which means that buyers can afford more house for their money.
The message is that the old adage (“location, location, location”) really works. During a crunch, prime neighborhoods retain value better -- and recover faster -- than other areas. West U is proving this point.
So if you are interested in selling your home – or if you want to discuss theses reports, please give me a call. Or drop by for a cup of coffee and we can chat about the housing market in West University Place.