Recession Catches Up With Decatur and DeKalb Home Sales
Decatur Metro | January 27, 2009 | 8:00 am
Graph Courtesy of city-data.com
As you can see above, 4th quarter home sales in the city of Decatur fell to their lowest level since Q1’03 (if that ’03 number can be believed). As for the median home price, its down around its Q1’07 level – though the sample size is obviously much smaller than usual.
Looks like the trend is pretty consistant across the area – 30306, 30307, 30308, 30316, and DeKalb County. Meanwhile, things in 30032 continue to just get worse.
Anyone know how many Decatur houses on average sold per quarter prior to the housing bubble? That might give a better indication of the new normal.
Yeah, I would take these things with a grain of salt.
It all sort of depends upon what houses sold in a particular quarter doesn’t it? While less houses selling certainly means a weakness in the market, I wouldn’t necessarily think it means that there was a 17% drop in prices for the quarter.
I having a little problem with this data. Where are sufficient numbers of <$250K units in 30030 or <$300K units in 30307 such that the median price could be as stated in 4Q? Take a quick look (which I realize isn’t a perfect measure) of MLS condo and house listings in these 2 zips and there are very few of either in those price ranges.
I wonder if this includes multiple units transferred to a lender. That could really skew the number downward.
Why wouldn’t the recession catch up to Decatur? This recession is global. Charm can’t stop it. My neighbor just lowered the price of his house by $75,000 in Druid Hills. And Druid Hills was listed in 2008 as Forbes magazines top 15 blue chip real estate investments. Ouch. However, I’m not crunching numbers. I’m just using my eyes, ears, and gut instinct to see the changes.
No doubt about it, Stephen. Just on gut reaction, I’d say we’ve lost 10% of value in Decatur over the past year (which is much better than the national numbers or Atlanta metro as a whole). But what happens in one quarter (where maybe more condos sold than houses, more foreclosures, etc. is necessarily an accurate indicator of where we are.
A better comparison may be Q4 2007 vs. Q4 2008. I can’t see the exact numbers, but according to the chart above, it looks like about half as much of a drop.
I’m wondering if the numbers are a bit scewed due to the small number of sales…if a bunch of 150k condo’s sold, and not many 400k homes then…
This may not directly relate to property values, just shows that more lower cost condo’s sold.
or, it could be just that the economy blows… 😉
If you look at all of the other zip codes, they have similar drops in price and sales. I don’t think you can chalk this up to an unusual mix of property sales in Decatur – the US banking system and economy melted down in Q4 08, which impacted people’s desire to buy and/or ability to get financing, and that’s what these numbers show.
People love their own cozy perceived home value. There is huge denial in realizing that even great neighborhoods and cities can get creamed. The love of home equity seems especially profound in wealthier desirable areas like say…. Decatur. (See the NY Time’s link below for corroboration. I’m too inept to make a link tag.) The hubris and denial of our own precious Decatur could be seen in past assertions that indicated Decatur was somehow immune and different than the rest of the metro area and nation. Although the city-data zip code sampling leaves several imperfections (sample size, sample consistency, the zip code is an arbitary boundary for almost everything except delivering mail, etc…), it’s longer-term trajectory shows a similar depreciation/appreciation rates for Atlanta and Decatur. In other words, as Atlanta goes, so goes Decatur.
Also, get ready for more bad news about Decatur home values. We have a ways to go.
B. Steal
http://bits.blogs.nytimes.com/2008/02/08/a-psychological-bubble-for-homeowners/?scp=7&sq=perceived%20home%20value&st=cse
I choose to be in denial. There’s much less stress there!
I will pull my head out of the sand…summer 2011…maybe. 😉
Everything Brad says is true, though I’d more charitably refer to it as “misplaced relief” rather than “hubris and denial.” Probably a mixture of both.
That does not suggest, however, that every place is destined to suffer the exact same fate. The ongoing wave of overstock and depreciation is working its way towards a ginormous buyer’s market. With more choices available than actual buyers, the advantage (from the property owner’s perspective) goes to areas that can compete on a basis other than just price. Schools, transportation options, leadership, and quality of life are some common examples, and all are well represented in Decatur.
So, yes, we’ll continue to depreciate until the market bottoms out. But I don’t think it’s Pollyannish to believe that some areas of the city will fare worse. Places are not interchangeable on an apples to apples basis.
Clearly other places will fare worse. The cookie-cutter houses in Alpharetta that are convenient to nothing have already suffered worse than Decatur.
That said, I agree there is more pain ahead for owners. I watch the market and there are a lot of houses in town that aren’t moving because they are so hopelessly overpriced. There was even one instance in East Lake (close enough to illustrate the point) where one owner on a street of new homes was asking 650k when there were two almost identical new, unsold homes 2 doors down with asking prices under $500k. Talk about denial.
It sucks to owe money on a depreciating asset, but the thick silver-lining is that Decatur continues to be a great place to live.
Be glad you are not stuck in a house in an unsellable area. As Nouraee said, living in a great place is a heck of a silver lining. I’d take that over a ez credit-fueled run-up in value any day.
From what I’ve read thus far, we all seem to be in general agreement here…though Brad thinks I’ve been a bit too optimistic in the past.
Obviously, as goes Atlanta goes Decatur…though I agree with many of the commenters above who believe that Decatur is in the right side of the anti “oh my god I live in the middle of nowhere subdivision” trend, and therefore is in a pretty good position considering.
Couple that with the fact that Atlanta never saw the bubble that many other cities did (and thus is seeing a smaller 11% decline), and I still don’t think we’ll get “creamed” comparatively.
Having lived in-town in a couple of other large cities, Decatur still seems like a bargain. Property values have not had a run up in Decatur, like they have in other parts of the country. Over the last several years, property values here have basically kept up with inflation, or done slightly better. Historically, that’s what they should do. But during that same time, Decatur has become a much nicer place to live. I don’t think that has yet been reflected in the property values, and probably won’t be for awhile…. but it will eventually.
Given the limited space available in the city of Decatur, the supply of single family homes is naturally limited (as is the ability to build new ones). Meanwhile, population is increasing.
Lastly, most of our homes are very close in value to what it actually costs to build the home in the first place. In a good area like Decatur, when the construction cost is close to the value of a home, depreciation is going to be temporary and confined to specific cases that don’t have the luxury of time.
For these reasons, it would be unlikely for any property value loss in Decatur to extend beyond the recession. If I had a house on the market, I would pull it off and wait for Spring. If I needed to buy a house, I would do it now.
Don’t read B. Steal’s terse polemic as an indictment of Decatur. Coming from a southern-smalltown rearing and decade residing in San Francisco before coming graduate school near Decatur, I think of Decatur as one of the few (unfortunately) authetic areas in the metro. It is a refreshing, genuine and civil place.
However, B. Steal does have a jaded opinion of the love affair with home values. Unbalanced tax policy that favors owners over renters and a real estate industry that over-romances the benefits of ownership has created financial bad behavior and contributed significantly to our current pickle. Real estate values can be very volitile and the “American Dream” notion can really only be experienced via mowing the lawn and opening a tax bill.
For example, if you bought in Q3 2008 with a reasonable 20% down payment, the 11% value decrease means that you have lost more than half of your equity – that 20% down. Compare that to renting. It will be interesting to see if B. Steal can carry the same sober tune in Q2 2009.
B. Steal