How Far Are Home Values Falling?
It has become clear to us that South Peninsula homes peaked in value sometime during the fall of 2007. However, it is extremely difficult to determine how far home values have fallen in a particular neighborhood.
The various media report current sale prices for a large geographic area, usually by county. Movement in median sales prices is not an accurate barometer, as it simply reflects what price range happens to be selling. And we also know that different types of homes depreciate at different rates.
For example, high-value homes generally fall first and fastest as they represent discretionary purchases. Homes with issues (noise, traffic, etc.) depreciate faster than those without issues.
The most accurate approach to assessing increases or decreases in a particular neighborhood is to find nearby homes which have sold and then re-sold a year or two later. If the home has not been significantly altered, this can give a true measure of the movement in value from the first sale to the second.
Through our analysis we are estimating that, so far, there has been a 10-25% drop in home values from the peak in our area, depending on the particulars as outlined above.
Jeff Stricker & Steve TenBroeck