Alamo Real Estate Review: “Three Bedroom Home Prices Rocket Upward”
In 2006, I wrote an article titled “What’s a Bedroom Worth” and concluded from the data that a bedroom in Alamo was worth on average about $300k when comparing 3 and 4 bedroom homes. It’s been awhile since I revisited the Alamo 3 bedroom home, so I thought I might invest a little time and ink sifting through the data to see what can be learned. (Please note that multi-unit housing is not included in this analysis).
Looking at the chart of sales, we can see that Alamo three bedroom homes hit a peak in in 2007, logging in at an impressive $543 per square foot and commanding a purchase price of $1,254,000. Following 2007, prices drifted steadily downward until a price bottom of $831,000 was obtained in 2011, representing an average price decline of 33.8% from peak. Dollars paid per square foot found a bottom a year later, declining from $543 to $375 indicating a 31% decline in square foot value. This is pretty much in line with the general market decline in Alamo from the 2007 peak to the bottom.
Prices in 2012 jumped briskly to $882,000 and exceeded the 2010 average price of $871,000. This 2012 price jump was bit more than 6% above the previous year and definitely represented the beginning of a significant trend reversal. Given that unemployment in our area is around 4%, and interest rates are 2% lower than they were at the peak, and home values are 20% below the peak values of 2007, it’s reasonable to assume that prices can and probably will continue to advance even in the face of rising mortgage interest rates. Particularly since the number of distressed property sales continues to fall.
What’s happening in 2013 can be seen as nothing less than remarkable. Prices paid for three bedroom homes have jumped to $1,010,000 on average. This represents a 14.5% increase in average price paid from the previous year. Price paid per square foot rocketed from $375 to $486 in the same time period for a 30% climb year over year. Astounding as it may seem, the results appear to be correct. When I first came up with these numbers, I ran the data again and performed the calculations three times. 2013 has been a record breaking year for Alamo Real Estate.
For the fun of it, I decided to compare Alamo four bedroom home prices to 3 bedroom home prices and see if there has been a change from what I reported in this column in 2006. The average price paid for an Alamo 4 bedroom home from Jan 1, 2013 to August 26, 2013 is $1,333,000. The difference today is actually a little greater at $323,000. In theory, it still makes sense to add a bedroom, if you can get the job done for less than $300k.
It’s important to remember that there really is no “average” home and no two homes are exactly alike. If you would like an honest opinion of your home’s current market value, please give me a call 925-989-6086 or send me an email firstname.lastname@example.org.
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