Housing Analysis Based On School District

Four years ago we started to an analysis of homes in the three primary Colorado School Districts, Academy School District 20, Colorado Springs District 11, and Falcon District 49.  January is always a long month for me, because I have to wait until February 1st to update my analysis.  This analysis includes home values based on sold properties for the month of January.

The market statistics found on the Colorado Springs MLS (Multi-Listing Service) website and reported by the media is an average for all single family homes, town homes, and condos in the City of Colorado Springs.  The housing market in each area and even subarea can be significantly different from the City average.  Since we market to buyers in Academy School District 20, we felt that a comparison between Academy School District 20 and the adjacent school districts would help the reader/buyer see the value in purchasing a home in the award winning Academy School District 20.

Data Collection

 

The following analysis is based on homes sold in the month of January between 2005 and 2012.  Why January?  Technically, the analysis could be for any month, but we started the data collection right after the January housing statistics became available, so it made sense to use January.  Yes, a summer month, during peak buying season, would probably be a better choice, but three years ago we noticed sales increased significantly in January 2009 over December 2008, probably due to the availability of funding and distressed properties.  A perfect solution to the data collection would be to use all the data for each year.  Unfortunately, the Colorado Springs MLS, does not allow for large volumes of data to be downloaded for analysis at any one time.  We opted to pull and manipulate the data 15 times vice 180 times.  This also makes it simpler to update annually when dealing with only one month.

Analysis

For listings sold, the trend for each area is more important than the actual numbers, primarily because District 11 covers a significantly larger area.  From the chart, we see that sales in District 11 and District 49 both increased, 7.6% and 11.1% respectively, while sales in District 20 decreased 17.5%.  When comparing 2012 sales with the peak for each district, District 20 is down 67% from 2006, District 11 is down 30% from 2009, and District 49 is down 50% from 2007.

We are seeing signs of recovery with this slide.  Average sales price remained steady for Districts 11 and 49 and increased 12% for District 20.

The median sales price dropped for all three school districts with the biggest drop of 12% occurring with District 20.

It is encouraging to see that the average price per square foot increased for all three districts with the largest increase of 10.7% for District 20, priced at $104.2/sq ft. District 11  saw a 3.7% increase to $86.2/sq ft and District 49 saw a 3.9% increase to $80.1/sq ft.  This is another positive sign of recovery for the area.

Academy School District 20 continues to have the lowest percentage of distressed properties sold, approximately 15% of the total properties were considered distressed, compared with 27% for District 11 and 33% for District 49.  All districts experienced a drop in distressed properties.

We believe the reason for the higher number of distressed properties in Districts 11 and 49 is due to the difference in economic status.  With the lower prices in Districts 11 and 49, many buyers are first time home buyers who purchased homes with subprime loans and are now in default.  Another possibility is junior enlisted in the military having to transfer and sell their homes short.

Academy School District 20 buyers are typically of a higher economic status, often professionals who have previously purchased homes, used a conforming loan, and probably purchased the home with a down payment resulting in instant equity in the home.  The likelihood of defaulting is lower with those who purchase their home with a down payment for two reasons; 1) those who can save for the down payment typically have other funds to draw on to make payments when they are in a financial bind and 2) having the equity in the home would allow them to sell the home below market, though at a personal financial loss to them, before going into foreclosure.

Seller concessions are very popular during a buyer’s market.  To improve their chances of a sale, sellers frequently offer to pay a portion of the buyer’s closing costs or for other improvements.  Higher concessions are indicative of the desperation of the seller and also an indication that the seller is willing to give up equity in return for selling the home. 

For Academy District 20, Seller concessions dropped significantly, 57% from one year ago, another good sign.  It is an indication that sellers in District 20 are 1) finding buyers that don’t need the concessions and 2) may be receiving multiple offers and selecting the one that impacts their net the least.  We have personally experienced this recently, particularly with bank owned properties.  When a property is priced well below market value, sellers are receiving multiple offers within days of listing, which drives the sales price up closer to market value.  This strategy works for bank owned properties, but not advised for the traditional seller, unless they are willing to sell the home below market value.  Concessions are relatively unchanged for District 49 and increased 8% for District 11.

In summary, it is our opinion that based on the January 2012 housing statistics, Academy School District 20 remains a better investment than the other two school districts, this is demonstrated by the price/sq ft, lower percentage of distressed properties, average sales price and median sales price.  It is noted that we are seeing positive signs of recovery across all three school districts.

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