The headlines speak for themselves but should we be reading between the lines? When it involves the recent real estate market, the answer is yes. Even with recent home sales and median home prices considerably down across the U.S. and inventories of unsold homes fit to bust, there are some areas that are thriving.
The latest quarterly study conducted by the National Association of Realtors states that two thirds of the 149 markets surveyed actually registered price gains year to year. Thanks to a strong local economic growth and affordable housing prices the increases in some areas were exceptional.
For example, through the same period this year, Salt Lake City saw median prices jump by nearly 22% from the second quarter of 2006. Median prices rose by 19.8% in Binghamton, N.Y., during the year and in Salem, Oregon, prices were up by 16.7%.
Inside large metropolitan areas similar counter-trend patterns can be found as well, where in select micro-market neighborhoods entire zip codes challenge national, regional and state down cycles. Washington D.C., Chevy Chase/Bethesda, Maryland and portions of Northwest D.C. have been relatively unscathed by the regional market. In Chevy Chase/Bethesda, sales volume in dollar terms soared 22% during the past 12 month period and the average selling prices were up by almost 12%, according to regional MLS data. Inside the District, sales prices were up by almost 7% during the same period where Washington D.C. as a whole experienced a 7% drop.
Areas such as Coral Gables in the Miami-South Dade metropolitan area are by far outperforming the overall market's well-publicized slump. The average sales prices of homes in Coral Gables in the first six months of 2007 rose to $1.4 million, a $200,000 increase. Communities on the outskirts of Miami-Dade with larger numbers of newly-constructed middle income housing such as Homestead and Florida City have seen sales and prices plunge. Developers in these communities are cutting prices and offering every incentive in the book.
In the Los Angeles and San Francisco areas, similar patterns can be found according to local brokers. In San Francisco, reputable neighborhoods such as Pacific Heights and the Marina are little affected by the credit crunch and mortgage problems.
In general the farther-flung and more modest-priced areas are really struggling and beginning to experience price declines that may reach into the double digits in some cases.
As a general rule, oasis micro-markets are characterized by several things:
• higher than median household incomes
• convenience to employment centers and cultural attractions
• excellent school reputations and a level of education per household that is well above metropolitan norms
The most important aspect however: the underlying metropolitan economic fundamentals must be strong and an established work force of jobs with above-average compensation must be present. The wealth from these households can then be transferred into these neighborhoods allowing them to challenge whatever down cycles may be happening at the national and regional levels.
-- Contributor for MLR Realty
