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Thursday, August 14, 2008

Drilling down: Housing market data best at micro level

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    My local paper, the Hartford Courant, runs a section a few times a week called "Homing In:  The Housing Market in Your Part of Town."  It displays quarterly sales and price data for homes in Connecticut, by zip code, across the 72 towns in the state.  At 10 zip codes per week, it takes a few months to run through all of
The most meaningful housing data is by neighborhood.

them, but at the Courant's web site, you can retrieve data for any zip code in Connecticut.  Displayed in this way, the table reveals the brutal truth that anyone looking for a home should not focus on the data by town, but rather by zip code; if your real estate agent can provide meaningful data down to the neighborhood level, that is better yet.
    Today's listing in the Courant is a reminder that the housing market is local and that national, regional, statewide or even town data are misleading, as well as scary, in the current market.  I say "scary" because the macro data is much more depressing than some of the local data.
    In West Hartford, for example, a popular town with an excellent tax base and convenient services, housing market data across the four zip codes are all over the place.  Median prices are down year to year in three of the zips - by as much as 7.3% - but they are up 1.7% in zip code 06110.  The median prices of condos are up in three of the zips - not the same three as above - and down 22% in the other.  And over the past year, foreclosures are down in one zip code, level in another, and up in the other two, in one case a staggering 117% (a total number of 13 foreclosures, not inconsequential for one zip code).
    Such inconsistent data can be confusing, and if I were moving to West Hartford, or any other town for
Are lower prices an opportunity or a signal that the neighborhood is getting worse?

which there is such data by zip code, I'd be hard pressed to decide whether a lower price trend, for example, was good or  bad for me as a buyer.  Do I go for the bargain in a neighborhood whose real estate prices could continue to drop after I move in or, worse, one whose fortunes may be turning down?  Or do I pay more (relatively speaking) and go for stability in the zip code in which prices have held up, ostensibly because it is the most stable place to live in town?  
    What role do foreclosure numbers play?  In West Hartford, the zip code with a 117% increase in foreclosures saw only a modest decrease in sale prices (down 1.3%).  In the zip code in which prices softened the most, 06107, the foreclosure rate dropped the most as well, and the median price of condos in that zip code increased by 158%. (Note:  Some new, upscale condos skew the numbers, but if the developers can get those kinds of prices in this market, it implies something positive about that zip code's attractiveness.)
    It is all quite confusing, but the bottom line here is that it is better to have information than not.  And the best information is the most local.  

Read 2793 times Last modified on Thursday, 14 August 2008 06:42
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Larry Gavrich

This blog was conceived and is published by me, Larry Gavrich, a former corporate communications executive who founded HomeOnTheCourse, LLC, in 2005.  Our firm advises baby boomers and others seeking a lifestyle in which golf is a major component.  My wife Connie and I own a home in Connecticut (not on a golf course) and a condo at Pawleys Plantation in Pawleys Island, SC, on a Jack Nicklaus layout.  We began our search for our home on the course more than 15 years ago, and the challenges of the search inspired me to research golf communities and write objective reviews of them.

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