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Copyright © 2011 by the first tuesday Journal Online - firsttuesdayjournal.com;
P.O. Box 20069, Riverside, CA 92516
Readers are encouraged to reproduce and/or distribute this article.
Readers do not have to request permission to reprint items, however all reprinted items must bear the following attribution: Reprinted from the first tuesday Journal Online — firsttuesdayjournal.com P.O. Box 20069, Riverside, CA 92516
The Return of Square Foot Pricing
By ft Editorial Staff • Feb 3rd, 2009 • Category: Charts, February 2009 Journal, Journal Articles
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For Corona Del Mar
1988 to 2008
The return to fundamentals for property evaluation has begun. The fundamentals of replacement cost analysis of a property’s price will likely have greater influence during this recession than the fundamentals of a present worth analysis of a property’s rental income, be the rent actual (tenant occupant) or implied (homeowner occupant); or comparable sales. Buyers and lenders collectively are in control of the demand for homes. But for FHA-insured lending shifting the risk of loss to the government, sales transactions will require buyers to have at least a 20% downpayment and stellar credit strength.
Replacement cost is comprised of the price for a lot (or teardown) and the cost of labor and material for constructing improvements on the lot. The combined costs to reproduce a home within a fixed socio-economic region, say Corona del Mar in Orange County, can be reduced to a dollar amount of cost for each square foot of the improvement on a lot — a rule of thumb for price setting
Corona del Mar — Past, present, and probable future average square foot costs of homes
The average cost per square foot for a home in Corona del Mar has dropped around 25% during the past two years (2006 & 2007) from roughly $2,350 to $1,700 per square foot based on prices paid for homes.
The average square foot price of a Corona del Mar house was flat in 1999 and 2000 at $700 to $800 per square foot of homes sold just prior to the onset of the recent real estate bubble. During the last recession’s recovery period (1995-1996), roughly $450 per square foot was paid on average.
Prices based on square footage will probably bottom in 2011 and remain there for a couple of years, most likely at 1999-2000 per square foot costs which probably will be below actual replacement costs of new construction. Square footage prices will begin rising for the first time in 2013 and beyond, timing which took place in the 90s recession and recovery period.
Time is needed for agents to mentally adjust to large amounts of property deflation as the dollar buys more square footage, or put another way, fewer dollars buy the same square footage than they did just a few years ago.
Want to see an analysis of a specific California community? Leave a comment!
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Copyright © 2011 by the first tuesday Journal Online - firsttuesdayjournal.com;
P.O. Box 20069, Riverside, CA 92516
Readers are encouraged to reproduce and/or distribute this article.
Copyright © 2011 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.
ft Editorial Staff is the writing staff comprised of legal editor Fred Crane and writer-editors Connor P. Wallmark, Giang Hoang-Burdette, Bradley Markano, Jeffery Marino, Kelli Galippo, Tara Tran, Mary Balash, Carrie Bruner and Sarah Cantino.
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Corona del Mar is obviously a very expensive area. I would be very interested to know what the square footage analysis that you are using would say about a less expensive area, such as San Luis Obispo.
Thanks for the insights. (I wish I could print out this page for future reference, but can’t.)
Thanks,
Steve Nelson
805-441-0336
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would love to know what El Dorado County square footage will be.
This to was at one time a very expensive place to live.
thanks for the information
Michelle Valencia
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Interesting analysis. I’d like to see La Jolla, 92037. Thanks.
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Thanks for the feedback – we’re working on the requested areas and will release some new data in our March 2009 issue.
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would like to know S.F. for SAN PEDRO,CA 90731,90732
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I would love to see a chart for Woodland Hills, Calabasas, or the entire San Fernando Valley.
Thanks. This is very good information.
Corrine
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Would love to see similar analysis of Santa Rosa 95402
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so……I would luv to hear what you think of the trends in Santa Cruz County, CA—specifically, Santa Cruz,
Capitola, Soquel and thank you for your insight
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Hello everyone – just letting you know we’re still working on this. Some of the data will not be available, unfortunately, but we’ve already got one report ready to go for the April Issue. Thanks for reading!
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I would appreciate the data/trends for Santa Clara County and if you can do it more locally, for 95070, 95030, 95032 and 95008. Thanks.
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How about an analysis for Avalon, CA….first time I have ever seen short sales and foreclosures in the Catalina Island market.
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