Editors Note – this article was originally posted March 1 and the market has moved slightly forward since that date.  If you are interested in the data used in the computations for this article, you may request a client gateway here.  Additionally, inventory statistics that auto-update every 30-45 days, may be found here…

Earlier today, Scott Garnett (Associate Broker and one of One South’s ‘Original 5’) called me and asked my opinion on the pricing of a home his client had made an offer on.  The home was purchased in the spring of 2006 and was located in the Near West End.  The home had not sold in 2 weeks it had been on the market and his client’s offer was approximately 95% of the asking price.

He asked the simple question, ‘How are we on pricing now compared to 2006?’

Sometimes the simplest questions are the best questions.

After looking at a few metrics and doing some quick ‘back of napkin’ math, we arrived at the answer of $5/SF less.  I found that a bit surprising…so I tested another area and found quite a different answer.   It got me thinking that it would be very valuable to know how each individual area had recovered from the roller coaster that 2004-2013 had been.   I decided to task myself with figuring it out.

This ‘Back to the Future’ series/study will examine multiple areas of Richmond to see how pricing has rebounded.  This methodology of the study is either quite appropriate of hugely flawed depending on how many graduate degrees in statistics you have.  I happen to think that while it is a very primitive comparison, it is revealing and will tell an interesting story about the RELATIVE strength of each market.  If you really study the Richmond housing market (or any market for that reason) you will know that all segments behave differently based on a set of dynamics unique to each.  Suburban housing behaves differently than historic housing than condos than waterfront…and so on.

So here goes with installment number one…

Richmond’s Fan District – Where Are We Now?

I wrote a piece called ‘How Did The Fan District Survive The Bursting Bubble‘ a while back that discussed the market dynamics driving values in the Fan District.  As a mature neighborhood with excellent walkability and proximity to entertainment and culture, The Fan is underpinned by more stable inputs (mostly the inability to add NEW inventory easily) than many suburban neighborhoods.

[ For a list of homes for sale in the Fan, click here ]

The chart above is the gold standard for home pricing.  The Case Shiller Index measures both the Top 10 and Top 20 largest metro markets in the US and tracks both the prices of the homes as well as the appreciation rates in each market. It should be noted that Richmond is NOT one of the cities in the index (the two geographically closest markets that are measured are Washington DC and Charlotte NC, in case you were wondering…) It is also worth noting that the CS Index measures home pricing and not the Price Per SF.  When the market soared, many large homes were built that skewed the appreciation and depreciation within each market.  Secondarily, some of the largest price increases occurred in markets that became the most overbuilt, also skewing down the average.

While the latest press release from CS shows the national average at a 2003 level, the per foot data of Richmond’s Fan District suggests something different (and by different, I mean BETTER…)

The Fan, as defined by a boundary line drawn down Harrison, Main, Broad and the Boulevard for this exercise, yielded the following ‘Per Square Foot Averages’ by year from 2005-2102:

• 2005 – $170/SF
• 2006 – $185/SF
• 2007 – $194/SF
• 2008 – $186/SF
• 2009 – $171/SF
• 2010 – $178/SF
• 2011 – $172/SF
• 2012 – $180/SF

This would suggest that by the end of 2012, prices in Richmond’s Fan District were approaching the prices we saw between 2005 and 2006.  This is 3 years ahead of the national average.

Seriously?

Now get this – tracking the pending inventory from January and February in 2013, there have been 19 properties pend and sell.  If a the properties going under contract are selling at 97% of the asking prices (the data suggest is could be closer to 98%), then the average Per Square Foot price in 2013 is $198.85 (using the $205 per foot price x 97% ask/close ratio)…  As anyone who has helped a client buy a home in the Fan recently would tell you, the spring of 2013 has felt a lot like 2007 with multiple offer situations common and ‘Days on Market’ well below the Metro average.

Has pricing returned to 2007 levels in the Fan?  I am not ready to admit that we are back to the top of the curve in Richmond’s Fan as this is partially…or perhaps largely…driven by lack of inventory but it does warrant discussion when pricing the property for sale.

Overall, the takeaways are as follows:

• Pricing property correctly requires far more analysis than it did previously
• If you bought prior to 2007, you are pretty close to being back where you started
• If you live in the Fan District, you are probably better off than in may other areas of the country

Next up, Midlothian.

America is getting older and younger at the same time.

The effect of the baby boomer population explosion during the post war period of the 1940’s and 1950’s is now being felt as strongly as ever.  It is manifesting itself in a need for housing for the younger demographic now entering and the retirees now exiting the US workforce.

Lets look at both groups…

• What mentality do they both share?  Environmental responsibility.
• What cost do they both bear?  Expensive gasoline.

Both the Boomers and the Echo Boomers, despite a generation of age difference, share much in common.  The Boomers (and their ‘Echo’ counterparts) enter the 2010’s seeing the world through the filter of the 2008 bubble collapse.  From 2008-2010, both groups saw the financial landscape change…dramatically.  The excess in the middle 2000’s marketplace became the norm and when the market collapsed, a debt-ridden and excess-filled middle class collapsed along with it.  Left in the market collapse’s wake was a feeling of disenfranchisement and distrust and a vow that to never allow it to happen again.

Enter the Fan District.

Built largely in the early 1900’s, the Fan was designed to accommodate a lifestyle NOT dependent on automobiles.  Corner markets and service providers interwoven into the fabric of the neighborhood have survived nearly a century of change due to balance and proximity.  Having many options for dining, entertainment and daily needs close by meant walkability.  When gas was $1.00 per gallon, walkability was less important.  With gas prices approaching (and sometimes exceeding) $4.00 per gallon, living in walkable neighborhoods and close to mass transit has become a strong market preference.  No neighborhood is as walkable as the Fan.

While the Fan is the most walkable neighborhood in Richmond, it is also one of the most responsible.  While being ‘Green’ can mean many things as it relates to energy efficiency and the use of better and more responsible materials, the ultimate green technique is using (or re-using) what has already been built.  The Fan District, despite some older homes that could use some extra insulation and upgrades in mechanical systems, taxes our planet the least in that it is already built.  No new trees need be harvested, no new roads built, no highways expanded and no landfills crowded because of the Fan.  In many ways, it is the ultimate ‘Green Richmond Neighborhood’ and both Boomers and Echo Boomers see Green as mandatory.

The Fan District, with its smaller and more responsible footprint for its homes and its walkable elements, make it a neighborhood that will be increasingly more in demand than any other Richmond neighborhood for the foreseeable future.  A combination of reasonable home size, retail services close by, cultural and entertainment options throughout and authentic feel mean Fan homes will continue to rise in value relative to the rest of the market.

This combination of factors will mean many segments of the buying public, both young and old, will seek the benefits provided by neighborhoods such as the Fan.

Seaming new flooring into old flooring will minimize (but not completely hide) the impact of the repair.

Floors are incapable of lying.

Wood floors, especially those in homes as old as the homes in The Fan District, tell a story. The large majority of the homes in The Fan were built in the period between 1900 and 1930 making these homes literally a century old. Over their lifespan, a home will have had multiple owners and each one will have cared for the home differently.  The floors will go a long way in telling you about the how the home was treated and what has been done to the home throughout its history.

Using the floors as a guide will help an inspector in identifying potential issues during the course of the inspection.  The first thing floors will indicate is whether a space is part of the original home or if it was added and/or captured.  For the most part, it is impossible to perfectly match floors.  New wood does not match old wood and the new stain never quite matches the old stain.  Likewise, where the floors meet, usually near the door jamb, will show either a transition strip (always a giveaway) or a different pattern than elsewhere.   When an inspector sees a change in floor patterns, they know to pay special attention to how the space is heated, cooled, insulated and how the roofs are joined.  Additions, if not properly integrated into the original envelope, will tend behave differently from a temperature standpoint.  Likewise, the roof, if over an addition, will usually be a different age or type and will require different maintenance techniques or schedules.  The floors will tell you that some additional sleuthing is required.

Floors will also indicate whether a home had a catastrophic event occur and/or a prolonged period of neglect.  If a large swath of flooring differs from flooring near by, then do some harder looking.  Fire, water or termite damage is a most often times the culprit.  Examining the flooring system from beneath will usually tell the rest of the story and most importantly, what was done to remedy the problem.  Floor joists that have been repaired are common in older homes but how the repairs were made is the main issue.  Expecting a century old home to not have needed repair at some point is naive, but expecting those repairs to be made using best practices is not.  Let the floors be your guide.

The last thing to note when looking for clues about a home is to look at the floor where it meets the base trim.  The number of times the floors have been refinished will be evident in the corners.  The floor sanders can never quite get into the corners and the amount of flooring that has been sanded away will be best illustrated there.  If there is a great difference in depth, then the floors have been refinished multiple times and may lack the depth to be refinished again.

Nothing is time proof.  Buying a home in a mature neighborhood like Richmond’s Fan District means accepting age in exchange for proximity, culture and walkability.  Inspect your home well and use the clues provided to help understand what you are buying.

Rick Jarvis is one of the Founders of the One South Realty Group in Richmond, Virginia. He can be found at Google+ and Twitter

You might think that you can’t make a difference or help change things in your community, but I’ve learned that this can’t be further from the truth.

Prior to moving to “The Fan” almost 20 years ago, I had never joined a Civic Association or thought that being involved could really make a difference…but I was mistaken.  Becoming an active civic member was the best thing I ever did.  It “fast tracked” me into meeting and making many of the friends I have today and afforded me the opportunity to be part of the continuing process of making my neighborhood the wonderful place it is to live in, work in, and play in.

Being Secretary of the Fan District Association and on the board of the West Grace Street Association enabled me to help introduce and affect changes important to both me and the other members of my neighborhood.   Traffic calming measures, which helped create more of a neighborhood feel and decreased the fears families felt in raising their children, helped provide stability to The Fan.  Providing input for ordinances which helped preserve some of the most beautiful  homes in the nation is also something I took great interest and pride in.  Being an advocate for Urban Business overlays on both Main and Broad Streets helped bring many small businesses to these areas to restore fabric to urban experience.  Also, engaging VCU in an effort to have a more complimentary influence on the neighborhood is both ongoing and incredibly important.

There are many reasons why people choose to live in an urban environment —  the interweaving of all sorts of places such as eateries, shops, places of worship, and of course the enjoyment of walking their children to school.  It is the job of any civic organization to help improve the experiences of those that seek to make the neighborhood their home.

Urban living is unique and rewarding!  It offers a diversity of people bringing  different backgrounds and walks of life, young and old,  varied economic levels, and supports an exciting entrepreneurial  spirit.  Residents who get involved in their city’s life come together as one to make their neighborhoods the best they can be.

Linda Urgo is an agent with One South Realty, has lived in many neighborhoods and a 20+ year resident of Richmond.

The short answer is ‘pretty well.’

Beginning sometime in 2007 and lasting into early 2011, market values fell, often dramatically, across the board with no one asset or area being immune.  By the time the dust settled, property values had fallen anywhere from 20% to 50% depending on wide and diverse set of factors.  All neighborhoods felt the effect and The Fan was not immune.

In 2011, those that study housing began to change their tone and use words that indicated the market was shifting yet again (and this time, to the positive.)  Markets that had been in freefall were flattening and those that had flattened were showing small levels of appreciation.  The “Sand States” (Florida, California, Nevada and Arizona) were still years away from recovery but the denser, older and economically healthy areas were far better off.

The hardest hit areas during the crash shared a common characteristic: excess.  These excesses in the market took the form of excess size, features, purpose or inventory (and sometimes all of the above.)  The truly large homes that were built on expensive lots throughout the suburbs lost great value.  Likewise, the excess inventory of second homes and resort condos also took a huge beating.  Those homes built with every imaginable bell and whistle became another harshly punished sector of the market.

What forms of excesses are prevalent in The Fan?  Few, frankly.

The Fan is a mature urban neighborhood of large but reasonably sized homes whose scope, while upscale, largely eschews excess.  With parking at a premium, the homes in The Fan do not have 3 and 4 car garages to house multiple cars.  With 2500-4000 SF footprints, the ability to dedicate 1000 SF to a master closet or bath is hard justify.  Likewise, game rooms or other singular purpose entertainment rooms, so common in the McMansions of the suburbs, were not introduced to the homes in the Fan.  Lastly, and perhaps most importantly, with no real land available for expansion, Fan inventory is effectively fixed.

These factors, combined with the fact that The Fan is the most walkable and culturally engaging neighborhood in Richmond, meant that when values fell, Fan District homes held their values at rates far better than the rest of the market.  As we navigate the recovery, those who chose to call the Fan their home will be well rewarded.
Rick Jarvis is one of the Founders of the One South Realty Group in Richmond, Virginia. He can be found at Google+ and Twitter