Update on Glover Park Property ValuesGlover Park houses continue to maintain their value despite the prolonged downturn in the economy and the real estate market nationwide. The chart below shows average rowhouse sale prices, number of annual sales, and percent change year-over-year for the past seven years. No, we are not seeing the double-digit (or even single-digit) gains in average property values that we experienced back in the first half of the decade, but we are not seeing the painful drops in property values that have upset the lives of so many homeowners in the region and across the country. Average prices in 2010 are roughly at the same level compared to the height of the market in 2005; and we've been creeping up ever so slightly since a modest drop from 2005 to 2006.
Why have we fared so well relative the region and the nation? There are a number of reasons:
- The obvious reason is the strong federal jobs market here in DC. While other cities are seeing entire industries decimated, Washington continues to attract qualified homebuyers accepting or keeping federal jobs as well as private sector jobs linked to the operation of the federal government.
- Our neighborhood has seen a bit of a demographic shift in the past 10+ years in which more and more families with small children are staying put rather than moving to the suburbs as soon as their kids are old enough to walk. Also, more and more families with children are buying houses in our area and sacrificing some space for a shorter commute and a vibrant urban (or less suburban) lifestyle.
- Glover Park continues to be a popular rental area near universities and for new workers who view their well-paying jobs as potentially transient and wish to rent instead of buy. Rents have risen significantly since 2000 and rental houses are in great demand, which buoys property values.
- Move-up mobility has decreased due to the tight credit market and lack of equity to roll over, so more and more homeowners are staying put longer. One of the most striking statistics from the chart above is the roughly 40% drop in annual turnover of houses (down to 30 houses in 2010). With a tight supply, and steady (unfrenzied) demand, prices levels will be maintained.
- Rowhouse foreclosures and short sales are rare. We’ve seen a couple of instances in the last few years, but they have not had any noticeable impact on property values. The condo market in the neighborhood has seen more short sales and foreclosures with a bit of an impact on their respective buildings in the short term, but still nothing like the experience of most of the rest of the region and nation.
- The run-up in the market through 2005 sparked a renovation boom. Owners flush with equity or cash from home equity loans felt secure in spending money to do major home renovations, and sellers often felt these renovations could get a good return on re-sale. Back in the 80's and 90's seeing an opened-up kitchen with extended granite counters and stainless steel appliances was a rarity, but now it is commonplace in the neighborhood. This trend helped to raise the average home price.
Will prices rise when the economy finally recovers? I don't have a crystal ball, but much of the eye-popping rise in prices in the early part of the decade was due to the lending free-for-all, in which you could get a mortgage if you could simply prove you had a pulse. The credit market has gone to the opposite extreme now, and it is difficult even for many qualified buyers to finance a purchase. These changes are likely to loosen somewhat in the years to come, but we will not be back to the free-wheeling days until our collective memory is erased and we forget about the crisis. It will happen again - it always does - but considering the magnitude of the economic disaster this time, that will not happen again for a long time to come. The good news is that as long as we don't experience some other major unexpected economic shock, we can feel secure in the value of our Glover Park properties.
