News and Events

August 20, 2007

Real Estate

Real Estate "Oases":
Markets Thriving in
Tough Times

    Everybody has read the headlines: Home sales are down 11 percent across the country over the last 12 months, median home prices are down, and inventories of unsold homes are bulging.
    But look more closely at the numbers. In the latest quarterly study conducted by the National Association of Realtors, 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 nearly 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 metropolitan 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 code areas -- 20815 (Chevy Chase/Bethesda, Maryland) and 20015 (portions of Northwest D.C.) -- have been relatively unscathed by the softness that plagues the regional market.
    In Chevy Chase/Bethesda, sales volume in dollar terms soared 22 percent during the 12 month period ending in June, and average selling prices were up nearly 12 percent, according to regional MLS data provided by broker Dale Mattison of the Mattison Group at Long & Foster Realtors. 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 metropolitan area, close-in areas such as Coral Gables are far outperforming the overall market's well-publicized reverses, according to broker Maurice Veissi of Veissi & Associates Realtors. 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. Farther-flung communities with much larger numbers of newly-constructed entry-level and middle income housing, by contrast, have seen sales and prices plummet.
    Outlying communities such as Homestead and Florida City "are where you've got all the new construction," said Veissi, "and builders are cutting prices and offering every incentive in the book."
    Similar patterns can be found in the Los Angeles and San Francisco areas, according to local brokers. In San Francisco, highly-regarded, close-in neighborhoods such as Pacific Heights and the Marina are little affected by the credit crunch and mortgage problems. They continue to outperform not only the city as a whole but the region and the state with median price gains of about 8 percent for the first six months of 2007, according to John Ashdourian of McGuire Real Estate.
    In metropolitan Los Angeles, close-in "high-end neighborhoods are more robust at the moment than entry-level," according to Pat "Ziggy" Zicarelli, CEO of Style Realty, Inc of Tarzana. By contrast, farther-flung and more modest-priced area "are really struggling", he said, and beginning to experience price declines that reach into the double digits in some cases.
    As a general rule, oasis micro-markets are characterized by: higher than median household incomes; convenience to employment centers and cultural attractions; excellent school reputations and household educational attainments that are well-above metropolitan norms. The key, however, is that the underlying metropolitan economic fundamentals must be strong, with plenty of job creation, especially jobs with above-average compensation. That household wealth can then be transfused into these "desirable" neighborhoods and allow them to defy whatever down cycles may be underway at the national and regional levels.

From Realty Times

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