Lucky Living: Real Estate Prices

By on 11 November, 2010 in Real Estate, Sandra Nickel with 0 Comments

How lucky we are to live in Montgomery!

I have just returned from the 2010 National Association of REALTORS meeting in New Orleans. I met and networked with hundreds of the top agents in the business.

The favorite topic of conversation was, of course, “How’s your market?” And I was stunned by the number of folks who reported that their cities or towns had seen declines in property values such that homes were selling this fall at about the same prices as early in the last decade. That’s right — homes selling in 2010 in markets like Phoenix and Ft. Lauderdale are bringing prices about the same as 2000-2001.

All that caused me to wonder just how we’re doing here. And, I’m glad to say, the news is definitely good! Our Montgomery area statistics are as follows:

•    In September 2010, the average selling price of a home was $149,152 area-wide.
•    This compares to September 2001’s average selling price of $122,823 area-wide.

What the above does not take into account is the impact of foreclosures, which then become distress sales when the properties are placed back on the market for sale. In a “normal market,” Montgomery has a foreclosure rate of about 4%. But through October 2010, foreclosures accounted for 987 (or 32%) of the 3,124 homes sold year-to-date.

The average foreclosure home sold this year has been purchased for $73,106. If the impact of those low-dollar sales is excluded from total home sales, the non-foreclosure average home sale through October has been $177,870. Not too bad, considering that the 2001 average was $122,823.

So, I asked myself, how do these numbers compare to “normal” times in Montgomery … those many, many years when our growth in real estate values would average 3 to 4% (or just about the rate of inflation).

I did the calculations. Assuming property values had increased 4% per year over the past decade, our average home sale price today would be $181,808. Our current average for 2010 is just under that ($177,870).

So, bottom line, despite all the gloom and doom in the national media (and sometimes in the local press as well), we have maintained just about the growth in value that one would expect in any decade. It has only been diluted by the glut of foreclosure/resale of inexpensive homes. Incidentally, it was those same inexpensive homes that sent our number of sales soaring in the middle of the last decade.

A speaker at an economic summit just today announced that Montgomery is over the hump in foreclosures and that our market should begin to behave normally once again. Won’t it be wonderful to be back to our “boring” 3-4% growth, year in and year out. How lucky we are to be in a city where normal is just that … pretty darned normal!

Sandra Nickel has been listing and selling residential real estate for over 29 years, most with an intense focus on Montgomery’s Midtown neighborhoods. Sandra serves on the Mid-Alabama Coalition for the Homeless, the Cloverdale Business Coalition, Historic Southview, the Volunteer and Information Center, Landmarks Foundation and her own neighborhood Garden District Preservation Association.

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