Yet another reason why neighborhoods matter
Of course we all know that neighborhoods are important for many reasons; friendly neighbors, community support, etc. And we all know there are many reasons to choose a particular neighborhood; location, style, affordability, etc. However, from the perspective of your wallet, there’s another important benefit the right neighborhood can provide; price stability.
A recent study by the Joint Center for Housing Studies of Harvard University showed that higher-priced homes are less susceptible to bubbles than are lower-priced homes. Higher-priced homes don’t appreciate as quickly in a run-up, but neither do they fall as quickly in a downturn. According to analysis of Standand & Poor’s / Case-Shiller home price data, prices of lower end homes in Atlanta fell by nearly 50% from the 2007 peak to December 2010. The drop for higher-end homes fell by less than half that percentage.
Of course, this is a macro look at the entire Atlanta metro area, in which “low tier” homes were qualified as those under about $122k and “high tier” homes were those above approximately $221k. You might extrapolate from this data that even higher-tier homes in desirable neighborhoods may have lost even less value since the 2007 peak. You’d be right.
A quick check of the sought-after Intown Atlanta neighborhood of Morningside shows an average sale price of $668,952 in 2007. The average sale price in 2010 was $582,339, a 12.9% decrease from the peak. That’s certainly a lot better than the national average. Checking the Buckhead neighborhood of Chastain Park, we see even more stable prices. The average sale in 2007 was $1,052,769 while in 2010 it was $1,005,636, a reduction of a mere 4.5%. (Source: FMLS)
Whether these neighborhoods are in your price range or not, the principle remains the same all along the scale. So, the old adage remains: it’s better to buy a so-so house in a great neighborhood than to buy a great house in a so-so neighborhood. And now we have the numbers to back that up.
Photo credit: woodleywonderworks on Flickr. CC License
Tina McGee is Associate Broker and co-owner of Intown Elite. Tina blogs about residential real estate and local happenings in Buckhead, Midtown and surrounding Intown Atlanta Neighborhoods. Feel free to contact Tina about your real estate questions by clicking here.
You can follow any responses to this entry through the RSS 2.0 feed.