Location, location, location
You can read the story HERE. Check out the interactive maps, too -- HERE for the metro-area ZIP codes and HERE for city neighborhoods.
As you know if you've been following along for a while, I fear the apples-to-kumquats comparisons that can happen when the homes that sold in a community last year are very different than the ones sold the year before. You can end up with a huge change in price just because it was all older rowhomes one year and newly built condos in the other, for instance.
So as usual, I threw out any ZIP or city neighborhood that didn't have at least 10 sales each year, figuring that would help. I also -- for my peace of mind -- did a separate analysis of all the areas with a large number of sales, just to see if the overall trend remained the same. It did. (Cue the sigh of relief.)
Just remember when you're checking out individual ZIP codes or city neighborhoods, though, that there could be factors at work more complicated than simple gains or losses in value. Some of that could be related to the market: A drop in a pricey area might signal that homes that were average in 2006 are sitting on the market now, having trouble finding a buyer, while less-pricey homes are getting contracts.
Overall, expensive areas were more likely to drop in average price last year while cheaper areas were more likely to rise.
Comments
Great article in the paper today and kudo's to Christine the maps are awesome, best I have seen!
I think your right about the apples-to-kumquats comparison in a neighborhood. Take Mt. Vernon where there was more sales but a drop in price. My thoughts are that there was a lot of activity buying whole buildings in 2006 that drove the average up, where as in 2007 in a harder Jumbo loan environment it was the condo conversions that ruled sales.
Another that you highlighted, Canton is so true. I have been looking for a place but it's next to impossible to get a feel of value on a single block. With so much on sale, foreclosures left and right, and what appears to be questionable construction and "interesting" appraisals I have a feeling prices are going to continue to fall for a while. Canton is "broken" as a place for young single professionals to buy till average price gets down below $250k.
That's the price of the typical pimped out HGTV rowhome with stainless, granite, hardwoods, exposed brick when people can come back and buy and not be struggling with the mortgage.
People forget a $300,000 townhouse in Canton is $6200 in taxes a year which is over $520 a month on top of your mortgage. Add in insurance for the house along a doubling of car insurance and increases in piggy-back income tax vs. other jurisdictions, and of course the personal property tax and cell phone tax your likely talking another 200 a month.
So basically there is a roughly $500 cash premium a month to live in the city vs. the county. (Not to mention the school situation if you have a child.)
That's why there is so much inventory right now in Canton, singles folks who were looking for a fun, walk home from the bar at night, short term (5-7 years) housing are now getting married and having kids. The neighborhood does not "work" for school aged children of parents with 300k+ rowhomes, thus they want to move to the county. This was easy when housing stayed with inflation but with a 200% increase in some cases people without big downpayments,(read the majority of the purchases in Canton the past 5-7 years where no money down)it's going to sit till they drop considerably.
The next question is what's going to happen with all this high end 500k-600k new construction in Canton? So where's all the people making 200k a year? From DC? Where are the empty nesters who can put 300k down on these places? Is anyone buying them? Or are they going to end up going to end up foreclosure?
Keep up the good work!
Posted by: Adam | February 10, 2008 11:53 AM
There will always be yuppies to move into Canton and Federal Hill to replace those that get married, have kids, and move to the County. The same cycle has happened the past 20 years.
Also, nobody forgets the added costs associated with the conveniences of city living. These costs are merely something that you factor in when you decide that you've had enough dinners at Appleby's and Ruby Tuesday and move to the city.
Posted by: Ed | February 10, 2008 1:00 PM
Neat-o! Thanks!
Posted by: msh | February 10, 2008 1:28 PM
Great work Jamie and Christine. I've always been skeptical of the offical numbers regarding price increase and decreases because it doesn't factor in kickbacks, type of home, potential value increases from rehabs, etc... That is why I really like the Case-Shiller Index since it tracts the value of individual homes sale over sale, but the closest metric to home is DC which isn't exactly Baltimore.
Regarding seeing price declines in higher end homes. I'd completely agree. I'm currently watching about 50 homes in the 700-800 price range (todays prices) and most of then have huge price drops from their initial listing price (ZipReality data). I admit I'm looking in a very isolated area (Marriottsville, West Friendship, Arlington, Sykesville), but the high end homes there are falling fast in price. And a lot of new inventory has hit the market there in the last 45 days. And to think that our housing market is in trouble pre recession...what will happen during and after a recession?
Thanks ago for your hard work put into this map and analysis.
-Kevin
Posted by: Kevin | February 10, 2008 4:09 PM