Conejo Valley: A Wise Investment

by David Bartels on July 2, 2015

I’m always looking at market data to learn as much as I can about how our Conejo Valley real estate market behaves.  The more I study the better I can anticipate what’s coming!  I came across some interesting data the other day: 30 years worth of appreciation data on various marketplaces around the country.

Unfortunately, data for Westlake Village, Thousand Oaks, Camarillo, Simi Valley, Agoura Hills and most of the Conejo Valley was not included in the study.  However, the data on Los Angeles/Long Beach/Glendale would mirror our own marketplace pretty closely when looking at it with a thirty year perspective.

Here’s what I noticed:

Between 1984 and 2014, the median home price in the area increased 167.36%.  So your $800,000 house probably could have been bought for about $300,000 30 years ago (assuming it even existed!).  In contrast, most of the rest of the United States saw a median price increase of about 100% through the period.

Our average appreciation rate is 5.58% per year.  Again, we are looking at 30 years of data, so that’s a pretty reliable figure.  Yes, we have boom years like 2013 where we gained more than 16% and 2004 when we gained about 27%, but we also have slower, even down years.  Again, most of the nation averages about 3% annual appreciation.

When the market drops, however, it tends to drop dramatically here.  During the last big downturn – 2007 through 2011 – our median sale price fell 39.2%!  Many of us in $700,000 homes at the end of 2006 woke up at the beginning of 2012 to find they were worth just $425,600!  And since many owed more than that on those homes, foreclosures and short sales became the order of business.

Before that, the last big downturn we had was in the 90s, and though the drop wasn’t as severe, it lasted longer.  Between 1990 and 1996, our median price fell 21.73%.  When I look at the appreciation rates leading up to both of these market downturns, I see the same thing:  wildly inflated appreciation rates.  The three years leading up to 1990 saw rates of 16%, 23% and 20%.  In other words, home values rose 60% in just three years.  In the three years prior to 2006, appreciation rates were 18%, 27% and 24%.

We all love to see those big appreciation rates . . . but, as history demonstrates, they are not sustainable.  In both instances our market – under pressure from other forces – corrected itself.  In fact, double digit appreciation over a period of years is a bit of a red flag.

I could become concerned about 2013, when we had an almost 17% appreciation rate.  After a 39% drop in values, we recovered almost half in that one year!  But in the next year, 2014, appreciation slowed to a snail pace – something less than 2%.  For those of us wary of another real estate ‘bubble,’ that was a good thing!

The bottom line is this:  our Southern California real estate market is a little more volatile than some others.  Our prices are higher and market fluctuations can be more severe.  However, over the long haul, houses in our market produce a very nice return in appreciation approaching 6% a year.  My advice to anyone who doesn’t already own a piece of this little corner of heaven is:  get busy!  Buy a home now so that you can begin to build equity and benefit from rising values.  It is how we build wealth in America!  And let us help you!  It’s what we do!

Help-U-Sell Conejo Valley is a progressive full service real estate company saving buyers and sellers thousands in Westlake Village, Thousand Oaks, Oak Park, Camarillo, Oxnard, Simi Valley, Los Angeles  and all of the Conejo Valley.  You may reach us at (805) 379-3300, or by email to davidbartels@helpusell.com.  Visit our website:  www.helpusellcv.com.

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