Frequent readers of TrueGotham know my feelings about the national housing market. There is NO SUCH THING as a national housing market! I have repeatedly defended the fact that the country and even each local market is made up of a plethora of micro-markets. For example, take the recently released market reports from the major brokerages (via Curbed). If you were to break each of this up into the micro market neighborhoods that comprise Manhattan, you would see different trends in different areas. Perhaps one neighborhood has seen double digit price appreciation while another neighborhood remains flat (just speculating here based on anecdotal evidence). A solid example of the erratic behavior of housing’s micro markets is beautifully displayed on Carol Lloyd’s SFGate.com in A seller triumphs in a bad micro-market’s micro-bloodbath as she describes the effects of speculating in San Francisco’s suburb of Antioch:
In April 2006, the market continued to rise — one house at 4601 Mendota Way sold for $650,000. The price wavered slightly that year: In late 2006, an identical house — 5347 Southwood Way — sold for $641,500. In November 2006, that model of home hit its highest price when 4592 Imperial Way sold for $720,000.
Since then, this particular example of the American dream has seen better days. By March of 2007, one of the models at 4599 Menona Drive sold for $644,000. This month, the sale of 4561 Mendota closed at $363,000. The number of upgrades can influence the pricing slightly. In this case, it makes the drop in prices look even worse, because 4561 Mendota, according to Strausz, had an extra $35,000 in upgrades. For it to work as a comp for the other homes, the value should be closer to $328,000.
What’s the bottom line? Since its their high of $720,000 less than a year and a half ago, these particular models of Antioch homes have fallen a whopping 55 percent.
This 55% percent drop in this micro-market is NOT in line with the overall San Fransisco market and some in the area are even seeing as many as 20 offers on a single property:
Thus, one might brandish the latest figures suggesting that San Francisco Bay Area markets were cooling since there was a 20.4 % dip in median price between February March 2007 and February March 2008, but a real estate professional could counter by mentioning a recent San Francisco listing that garnered not less than 20 offers.
This is an excellent illustration of how broad market numbers can’t possibly portray an accurate picture of what is happening across all micro-markets in any given area. Although most of what is posted here and on other blogs like UrbanDigs, Curbed and Matrix is anecdotal, it can’t be ignored that the Manhattan real estate market is a complex and sophisticated conglomerate of multiple markets (both geographically and financially) that often times behave completely independent from one other.
