Tuesday, May 17, 2011
SAN DIEGO When it comes to cars, depreciation is the rule. The older the car the less it’s worth. But when it comes to houses, it’s different. In fact, if you live in a neighborhood full of old houses there’s a much better chance your house has maintained its value.
Houses aren’t wine and they don’t get better with age. But old houses come with stability in price and ownership, and they’ve come through the housing bust with their values largely intact.
All neighborhoods lost value during the past five years. But John Karevoll, a housing specialist with Dataquick, said some places ended up in much better shape. It wasn’t the quality or size of the homes or even the neighborhood demographics, though tony neighborhoods did fare better.
An important factor was the age of the homes.
“There are areas that have older housing stock that goes back to the 30s, 40s and 50s,” said Karevoll. “They have fewer homes financed with crazy mortgages because there is less turnover.”
Contrast that with places full of new homes that came on line over the past ten years. Karevoll said there are parts of California where 85 to 90 percent of the homes were financed during the early 2000s. Those places have done very poorly, riddled with foreclosures and vacant structures.
“But in older, established neighborhoods, where the median length of ownership is 15 to 20 years, they just cruised past this whole problem,” he said.
A quick look at home price stats seems to bear it out. El Cerrito is a neighborhood just south of San Diego State where much of the housing stock dates from the 1930s and 1940s. March numbers from Zillow.com show the value of homes there lost only about out 1 percent over the past year. Homes in San Diego as a whole lost more than 8 percent of their value during the same period.
Chula Vista, the site of many new housing tracts during the past decade, was a huge loser in the housing downturn.
There are many exceptions to the rule and no single snapshot of home values will give you the whole story. In fact, Karevoll said the most remarkable thing about today’s housing market is not what’s happening, but what’s not happening.
Sales have been stagnant, as home mortgages have become very difficult to qualify for. People have been doubling up and staying put, for fear they won’t qualify for a mortgage or find anyone interested in buying the home they’re trying to sell.
“Pent-up demand is a huge issue,” said Karevoll. “There is an accumulated demand that’s waiting for a little bit of market stability. And there will be a surge (in home sales). In the next couple of years we’ll see it.”