What if property prices had not skyrocketed?
I find it interesting to consider where the current prices would be if the Northern California real estate market appreciation rates had been more “normal” since 1999…
Home prices in the region skyrocketed from 1999 to the fall of 2005. Since 2005, prices have fallen to where they are today. Suppose home prices had risen a more normal 5% per year since 1999 until today. According to my calculations, prices are approximately 5% to 10% higher today that what they would have been had a steep rise and fall had never occurred. The fact that these prices are so close is one other indicator that we might be nearing a more normal market.
Call (530) 902-399 or e-mail with any questions Andrew@DavisCalifornia.com
November 14th, 2008 at 4:43 pm
Thanks.
November 14th, 2008 at 11:36 pm
For this analysis, I compared the third quarter of 1999 to the third quarter of 2008. Per our Multiple Listing Service (MLS), the average sales price per square foot in the 3rd qtr of ‘99 was $179. At 5% appreciation per year, 9 years later the prices would be $277.7.
The average sales price per square foot in the 3rd qtr of ‘08 was actually $305 (again, per the MLS data) which is roughly 10% higher, but I mentioned 5% to 10% in my original post because I could tell from the latest closings and the pending sales that the 4th quarter average price per square foot is likely going to be in the $290’s (probably low 290’s which is 5% higher than $278).
I appreciate your comment. The information on Trulia could be correct (I am not sure where they get their data (perhaps county records) and whether or not it’s comprehensive). The MLS data I use for all my statistical analysis does not usually include private party sales).