Having lived in University Village for 10 years and doing a fair amount of business there I tend to keep a close eye on its real estate market. It’s been fascinating to watch the recovery in home prices there, as with most parts of the city, over the last year or so. But it’s one thing to intuitively know that home prices are recovering and it’s another thing to be able to quantify it, understand the timing, and to understand the variability in home prices around the “average”.
Fortunately, a large development like University Village lends itself well to a quantitative analysis like I’ve been known to relish. I finally got around to examining the trend in prices per square foot for the walkup condos and the townhomes – in the actual University Village development. In other words, I excluded the 4 mid-rise buildings at the south end of the development, all of University Commons, and the single family homes.
I separated the condos from the townhomes and then plotted the price per square foot of all the sales going back as far as the MLS lets me without diving into the archives – early 2007 – and then added in trend channels. I should explain that those trend channels are highly subjective. In reality they just tell you how I see a pattern in the data and also how I see the variability in the data, which is substantial as you can see. These trend channels have no independent validity. Also, always take any “trend” with a large chunk of salt because trends only remain trends until they stop being trends. So don’t assume prices are going to keep going up from here, though I personally share the view of over 100 economists and the futures markets that are predicting about 4% per year home price appreciation over the next 5 years or so.
One other caveat with this data. The University Village square footage numbers, like in many developments, include the garages. So for the townhomes with 2 car garages that adds about 400 square feet to the denominator and lowers the reported price per SF. That explains the fact that the price paid per square foot from the developer in early 2007 tended to be higher for the condos than the townhomes. What’s interesting though is that when prices bottomed about a year ago they bottomed at the same price/ SF for both condos and townhomes. So, either people felt that the townhomes were worth an effective premium over the condos at that time or, more likely, they were not aware, like they may have been when the development was new, that the townhome square footage includes the garages.
I think the bottom line is that since the end of 2012 University Village home prices have gone up by about $50 per square foot.
But what about the variability in those prices? Contrary to what some realtors would have you believe it has a lot to do with the quality of the properties being sold (although some realtors really do screw up by mis-pricing a property, taking terrible photos, writing bad descriptions, and turning down showing requests – just to name a few). For instance, some of those properties at the lower end of the trend channel were distressed – short sales or bank owned properties.
But then there are other factors that explain the differences in prices per square foot. For instance let’s compare two townhomes at opposite ends of the extreme – excluding all the distressed properties that sold really cheaply. 820 W Village Ct. sold on October 26, 2013 at $250 per sq. ft. while 818 W 15th Pl sold on February 28, 2013 at $180 per sq. ft. I did have 818 W 15th under contract with one of my buyers for a while and I previously sold a unit just like 820 W Village Ct. a while ago so I’m intimately familiar with these units:
- Over the course of 8 months prices did go up a bit
- 818 W 15th was a nice enough unit but nothing spectacular. Very ordinary, whereas 820 had updated kitchen’s and baths (see slideshow below)
- 820 W Village had a unique floor plan with the ground floor a self contained studio unit that could be legally rented.
- 820 W Village Ct. had a much nicer view of the city (see slideshow below)
- You will also note in the slideshow below that the 820 photos look much better. They are professional vs. the amateur photos used for 818.
- And drumroll please….820 W Village Ct. was sold under dual agency. Go figure.
So there you have the difference.
These types of analyses can be done for any large development or building and over the next few months I’ll be focusing on a few of the more interesting ones.
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