Though real estate sales and prices are flat or down in dozens of metropolitan areas, micro-markets within them are performing very differently: Prices and sales are up this year over last, and plenty of buyers still want to move in.
Call them real estate oases — neighborhoods and ZIP codes that defy national and regional downturns, and remain in demand as long as the local economy keeps generating jobs and rising incomes. Housing analysts say they can be found in most major markets whose local economies display moderate to strong fundamentals.
As a group, oasis micro-markets share some key characteristics. They are often:
Close-in, established neighborhoods convenient to the urban center’s employment and cultural attractions. They don’t require residents to make long commutes, sit in traffic for hours or worry about gas prices.
Above median income — often well above — with home prices to match. Typically these are not entry-level, first-time buyer markets, nor do they have lots of new subdivision construction. Educational levels of residents exceed regional norms, local school systems are highly regarded, and crime rates generally are low.
Prime, not subprime, mortgage territories with little to none of the negative neighborhood impacts of rising foreclosures caused by payment-shock loans going sour.
A few examples: In the Washington, D.C., metropolitan area, the ZIP codes 20815 (Bethesda-Chevy Chase, Md.) and 20015 (portions of Northwest D.C.) are avoiding most of the down-market trends in the larger metropolitan area that surrounds them. In the 20815 ZIP code, which borders the District of Columbia to the north, headlines about housing market distress don’t capture what’s happening on the ground.
Dollar volume of sales was up 22 percent from June 2006 versus June 2007, average selling prices were up 11.5 percent, and median selling prices were up 6 percent, according to multiple listing service data provided by veteran broker Dale Mattison of the Mattison Group at Long & Foster Realtors. The only hints of strain, he said, have been in total houses on the market — which were up by 9.7 percent — and average days on the market, which increased to 47 from last year’s 33.
Just across the D.C. line, in the 20015 ZIP code area, average sale prices were up 6.6 percent and median prices up 3.5 percent during the 12-month period, though total dollar volume of sales was down 2.5 percent.
Contrast these two micro-markets’ performances with the District’s as a whole, where dollar volume was down by more than 16 percent, the average sale price was down 6.8 percent and the median price dropped by 3.5 percent.
Move to Florida: In the Miami-South Dade metropolitan area, a number of oases exist. Close-in communities such as Coral Gables are handling the downturn far better than more distant, lower-cost communities such as Homestead and Florida City, which saw extensive construction in recent years.
Maurice Veissi, owner of Veissi & Associates Realtors of Miami, tapped into MLS statistics and found that Coral Gables has seen average sales prices rise from $1.2 million in January to about $1.4 million as of June 30. In Homestead, the average sales price has remained relatively flat — around $320,000 — while prices in Florida City have declined on average. Inventories of unsold homes in the latter two areas exceed three years, according to Veissi.
“In my 38 years in real estate, I have never seen a market where more expensive properties have stayed relatively healthy, while entry-level houses are the toughest to sell.”
Other metropolitan areas where similar patterns can be found include San Francisco, where highly regarded in-town neighborhoods such as Pacific Heights and the Marina continue to outperform the metropolitan area and the state as a whole, with nearly 8 percent median price gains for the first six months of the year, according to John Asdourian of McGuire Real Estate.
In the sprawling Los Angeles metro area, close-in “high-end neighborhoods are more robust at the moment than entry-level,” says Pat “Ziggy” Zicarelli, CEO of Style Realty Inc. of Tarzana, Calif. Moderate-priced and distant communities — especially those where large numbers of buyers used creative financing to purchase more than they could afford — “are really struggling” and experiencing declines in prices, sometimes in the double digits for the first six months of the year.
The bottom line here? Real estate value patterns and sales performances are uniquely localized — right down to ZIP codes, neighborhoods and even individual streets. In the current national correction phase following the unprecedented boom years of 2001-2005, even adjacent micro-markets may be performing very differently.
Ken Harney is a real estate columnist with the Washington Post.