Market Values

A few weeks back, one of the agents in our office called me during negotiations on a home in the West End. The owner of the property had purchased the home in 2006 and the question was asked, ‘How do we stand compared to 2006?’

It spawned this totally informal study.

This is the second installment in the series on pricing levels throughout Richmond.  This article will focus on Midlothian (the first installment discussed The Fan District pricing.)

So here goes…

Where Do Midlothian Property Values Stand in 2013?

For this exercise, we are using more of an ‘Old School’ definition of Midlothian by using a combination of Zone 64 and Zip 23113 to form the boundaries in the study. The newer definition of Midlothian encompasses much of the area between Midlothian Turnpike and Hull Street (MLS Zone 62.)  We will examine that area in a future installment as the number of new homes there is greater than almost any other area of Richmond.

The area being discussed in this analysis is comprised of many of Chesterfield’s most valuable residential areas.  Neighborhoods such as Salisbury, Tarrington, Founder’s Bridge, Oak Park and the neighborhoods along Cherokee/Old Gun are also a part of the data.  Charter Colony, Hallsley, The Grove and neighborhoods south of Route 60 are not part of the data.

So what does Case Shiller say?

The chart above is the gold standard for home pricing.  The Case Shiller Index measures both the Top 10 and Top 20 largest metro markets in the US and tracks both the prices of the homes as well as the appreciation rates in each market. It should be noted that Richmond is NOT one of the cities in the index (the two geographically closest markets that are measured are Washington DC and Charlotte NC, in case you were wondering…) It is also worth noting that the CS Index measures home pricing and not the Price Per SF.  When the market soared, many large homes were built that skewed the appreciation and depreciation within each market.  Secondarily, some of the largest price increases occurred in markets that became the most overbuilt, also skewing down the average.

According to Case Shiller’s latest press release, as of December 2012, the pricing for homes nationally had returned to 2003/4 levels.

According to CVRMLS (our Multiple Listing Service), the Midlothian area (as defined at MLS 64/23113) yielded the following ‘Per Foot’ pricing in 12 month increments beginning in 2005.

• 2005 – $143/SF
• 2006 – $154/SF
• 2007 – $154/SF
• 2008 – $141/SF
• 2009 – $135/SF
• 2010 – $127/SF
• 2011 – $124/SF
• 2012 – $122/SF

The data suggests that the pricing in the NW Quadrant of Chesterfield is probably consistent with the national average.  While the peaks and valleys in the Midlo market mirror the national peaks valleys in terms of time, the level of decline was not as severe (by 5-7%).

Midlothian, compared to The Fan, is lagging.  However, the Fan District is less seasonal than the suburban marketplace.  With the spring market around the corner, the 2013 market in places like Midlo, with its top notch public schools, strategic Chesterfield location and relatively smaller number of new homes and lots to be absorbed, should be in for some level of recovery as we move through the year.  The number of homes sold in 2012 was greater than both 2011 and 2010, which is a positive sign and the inventory levels are also as low as in recent memory.

Midlothian is still in stuck 2003, but expect a 2-3 year jump forward soon.

Next up, Ginter Park and Bellevue…

Calling All Sellers!

The last two sales in the Fan District that we have been involved with both resulted in multiple offers…and when we say multiple offers, we mean 5 (or more) on a home.  And, no, this is not a reprint of an article from 2007.

How can this be?

The best way to think about the market right now is that there are two markets for housing, both operating concurrently and both behaving in radically different manners.  These two markets can exist almost adjacent to one another and are barely distinguishable from the other one.  The only way you can tell one from the other is by the result…immediate sale or extended days on market with no offers.

The first market, the RED hot one, is the market for “GOOD Housing.”  GOOD Housing can be defined as well designed, well maintained, fairly priced and in areas whose supporting amenities (schools, walkability, culture, architecture, history, shopping) are superlative.  Another characteristic is the inability to provide any new inventory (or at least very limited ability) to the market.  Richmond’s Fan District, Richmond’s West End (Westhampton, South of Cary, Libbie/Grove, Bellevue and West Ginter Park) all share these characteristics.  Many of these areas, at the upper-middle to lower-middle price points, are in the throws of a full on recovery.

The market that is struggling is the market for “BAD Housing.”  Homes that are poorly maintained, in poor school districts or located in areas where the amenities have not caught up to the residential development or where there are new homes being built on lots bought from banks at a sever discount, are struggling.  Sometimes what puts the home in the BAD category is a pricing or condition flaw.  Other times, it is a flaw that cannot be easily remedied.

It is imperative that the sellers and buyers recognize which side of the market they are on.  Expecting to buy a quality home that is new to the market requires quick action and a strong offer.  Selling a home with a flaw based on the anecdotal evidence of a friend or co-worker having a bidding war for their home is also a flawed strategy.