I’m frequently asked, when working with buyers, how to make a “smart purchase.” They remember the drop in prices we saw after the bubble burst, and want to be sure that the house they buy does not lose value. Location is obviously the most important factor, which is why we always say it three times. But another key factor is lot size: the homes that hold value best are on large lots — they aren’t making any more land.
Last week, I looked at the stats over the past five years in Alamo and Danville. Both towns saw a huge jump in the price per sq foot and the median price from 2011 to 2015, but the Alamo numbers were more dramatic. Alamo is a town where the majority of the homes sit on 1/2 acre lots or larger. Danville is much larger with two zip codes, and although I only included single family homes in my stats, the difference in neighborhoods and size of lots is quite varied.
I was already thinking that I should return to the Danville stats and see how the numbers would look using only large lot homes when I was inspired by a conversation with a Danville homeowner. She said she bought in 2010 and felt that her house had not gone up in value. I often say that if only I could go back in time, I would go to 2010 and buy 10 houses, so of course her house has gone up in value–she bought at the very bottom of the market. In addition to perfect timing, she selected a house in a wonderful location, location, location: just off the El Pintado loop where lots are huge, it feels like country, and yet so close to downtown Danville.
Here’s a chart that shows the five year sales snapshot in Danville for homes on large large lots. I defined large lots as those over .4 acre because many 1/2 acre lots are a bit shy of the full ~22,000 sq feet.
|DANVILLE||# Homes Sold||Median DOM||Median Price||Median PPSF|
Not unexpectedly, these numbers are similar to the Alamo stats, and even stronger. Certainly in the downturn, I noticed that the most desirable parts of Danville (especially the walk-to-town westside locations) held values better than Alamo as a whole. But all neighborhoods in both towns survived the foreclosure years relatively well. And you know why: location, location, location.