Real Estate Reports & How Micro-Markets Define The Case
If anyone saw the S&P/Case-Shiller Composite yesterday, you’d probably ask “what’s new”? And that “Real estate took another dip nationally”. Per Composite:
- An annual price fall of .8% (October 2009-October 2010)
- 1.3% price fall from (September 2010 and October 2010)
But Same Old Gloom and Doom For Denver Real Estate?
No — better yet…I should say ”it depends”. as a DC Metro realtor, I had good reason for some some excitement as the Metro area was just one of four “regions” to see annual appreciation per the report. San Diego, San Francisco, and Los Angeles rounded out the list of Metropolises.
What Does This Have to Do With Denver?
I noted in a post this morning that “Denver fared well” in this study despite 1.8% depreciation. In my humble opinion, any area in this study without more than a two percent depreciation rate could argue their market is stronger”. What was that, you ask? If you’re starting to question my basic familiarity with math, bear with me 
When Denver margins demand more definition
The Real Estate “Micro-Market” – The Real Barometer of Market Strength
I understand national data based on comparisons of “mega-tropolises” are engaging but I call them fundamentally flawed. No, this does not help me communicate optimism in the DC Metro area. But, in my opinion, the large market studies (in which the margins are so nominal) are just “noise”.
There are many outlying DC Metro areas that have seen depreciation over the October 2009/October 2010 time-frame defined in the study. But much of DC and the surrounding close-in suburbs pulled the averages above par.
I’m not a Denver expert by any means but I’d be willing to bet that a quick market study during this same period would show appreciation in many of the micro-markets.
While it’s exciting to give consumers confidence, in my opinion it’s also important to continue to remind them that real estate cannot market cannot be defined these “mega-tropolises”. They often can’t even be measured by zip codes, or towns, or cities.
Micro-markets can best be defined as a study in real estate trends on an almost a block by block basis. It’s also heavily defined by property types that lie in particular areas. For example, there is a crying need for large condos in close-in DC. And there are plenty of people willing to pay a premium for it.There are also neighborhoods in high demand because of certain amenities, proximity to public transportation.
So while the S&P/Case-Shiller study may show Denver in the “negative” — even an East coast boy like me realizes that Denver has some neighborhoods that are more than holding their own. And this is precisely what is wrong with the gross generalizations that are the product of these studies.
Thoughts?
Licensed in Virginia, Maryland, and D.C., Kevin Koitz from The Koitz Group @ Coldwell Previews International specializes in Washington DC Luxury real estate and surrounding fine DC Metro suburbs. Visit his Greater Bethesda Maryland real estate blog if you’re looking for more close-in DC Metro info…or just want to say hey!
Banner photo by pbo31, available under a Creative Commons Attribution-Noncommercial license.
