It’s unbelievable to see how much prices have risen lately. Today I want to share one quick visual to show you exactly what I mean. Then I have a couple photos to share based on a conversation my wife and I had about the Gilmore Girls.
BIG POINT: The median price is about $40,000 higher than it should be.
RAPID APPRECIATION: This visual helps show the median price rhythm throughout the year. Normally we see prices go up for about half the year and then they soften during the second half of the year. Well, 2020 was abnormal because there was an uncharacteristic price dip in April (beginning of the pandemic) and then prices basically went up in the fall instead of softening like they should have. In short, if we had a normal year in 2020 it looks like the median price should have been closer to $445,000 for January 2021, but it’s now $485,000 (orange line).
Crazy growth, right?
IT’S THE GILMORE GIRLS NEXT DOOR
The other day I was walking with my wife and we were admiring a brand new contemporary listing in the middle of an older neighborhood (Fair Oaks Village). Then when seeing a Craftsman home on the adjacent lot, my wife said, “Look, it’s the Gilmore Girls next door.” This made me laugh because she doesn’t work in real estate, but she clearly recognized the contrast in design.
Here is a brand new contemporary listing in an older neighborhood.
The contemporary home is located next to much older homes.
SOME QUICK TAKEAWAYS:
1) Gilmore Girls: First off, sorry if you don’t get the Gilmore Girls reference. My wife has been streaming this show over the past few years, so I know quite a bit about it (don’t judge me). Anyway, this show is about twenty years old and it took place in a fictitious town called Stars Hollow. This town is older and has many Victorian homes, which is why my wife made the comment she did. By the way, Sebastian Bach, the lead singer of Skid Row (80s hairband), was actually an actor on the Gilmore Girls.
2) Eclectic neighborhoods: Some areas are eclectic, which means it’s completely normal to have a variety of housing designs. Thus it’s acceptable to see brand new contemporary units mixed in with stuff one hundred years old. It’s like vintage and new coexist and people are good with it.
3) Contemporary vs modern: The words “modern” and “contemporary” are often used interchangeably, but there is actually a difference. Here is a Houzz article if you want to read more (and maybe still feel confused). This blog post is also worth reading and maybe a little easier to understand. In truth I was torn whether to call this home contemporary or not, but I went with contemporary because it seems to blend some styles. Let me know what you’d call it.
4) The principle of conformity: There is an idea in real estate that homes ought to generally conform to the design of surrounding units in order to maximize value. In other words, when a home is so different it could lead to a lower value because it will stand out like a sore thumb. In many cases we accept this as a market fact, but it’s really not true all the time. For instance, in Fair Oaks Village there are many different types of units and the market embraces the diversity. Also, in Midtown we see a variety of newer modern units mixed in with Victorians and buyers are okay with that. Obviously in a cookie cutter stucco box tract it could be awkward to see something else, so it’s possible in some situations to see a negative reaction to different architectural types that just don’t fit. All I’m saying is it’s easy to assume a property takes a hit to value because it’s different, but that might not always the case.
I hope that was interesting or helpful.
Questions: Does someone in your household watch Gilmore Girls? What’s happening in your area with price growth?
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Impressive’80s hair band knowledge on top of your usual real estate wisdom.
Thanks Joe. I used to love Skid Row. My brother and I had their album (vinyl).
Just for your my friend… http://www.gilmoreguysshow.com/
Haha. There is truly something for everyone. Wait, how do you know about this? 🙂
I wish we could see the chart from 2005-2009 just before the Big Crash……Our crash in the SE was probably a little later than some other areas of the Country. Great Blog!
Thanks so much Pierce. You know, I’ve been getting asked about comparisons to the previous bubble quite a bit lately, so I may have to do a post. Thanks for the idea. I wonder what this visual would look like if I put 2004 to 2005 in there. The top of the market in Sacramento was the summer of 2005 actually. That’s when prices started to turn technically, though they saw massive declines in 2007 especially. I see you’re an appraiser, so please share insight and speak up anytime. I’m always anxious to hear what colleagues are seeing in their markets or how they might think differently about something.
In my area, Augusta, GA, the decline started in early 2008 and peaked in 2010 with declines of +/- 1% per month in 2010. The decline lessened in 2011 and values started a modest increase in early 2012. The total decline was 20-30% depending upon the area. There are some areas that I cover in South Carolina that are just now getting above 2008 values.
Fascinating. Thanks for sharing. Our market sort of flatted out in 2011 also and started upward again in 2012. Our median price in Sacramento County declined a whopping 59% during this time. Not a typo. 🙂
Okay so I read the blog by design group and I am now more confused. If a new home is not like all the rest and has open floor plan throughout. Combine that with lots of glass and you would have modern, except that based on descriptions on the blogs it would be contemporary. Hmmmm or is it Modern. Okay I am going to take my Stetson off as my head now hurts and its not because my head got bigger. Or wait maybe it did. I’m confused. Okay so I will stick with my interpretation of modern. I have a 50/50 chance of being right depending upon, which article I read. I think I will ask Charlie, Bella and Gypsy their thoughts. (Horse, dog, dog) I am sure their turned heads and blank stares will match mine….
Ryan as always thanks for great stuff.. I am a little worried about your hair band reference. Had no idea after meeting you. Go figure. All my best to your family and especially your bride/caregiver she deserves a medal……. ? take good care my friend
Haha. I know, Brad. It’s unfortunately not so clear cut. I think there are technicalities about what modern means (1900 to 1950 basically),but something can still be called modern today if it resembles that period even though it’s new construction. So just because something is new doesn’t mean it’s contemporary. I won’t pretend to be the master of these details and I certainly welcome any clarification and expertise in the comments. Yes, my wife is amazing.
Hope you are doing well. Blessings to you.
Great article and points of thought Ryan, by the way the Hozz link takes you to a wikipedia Skid Row info page.
Oh shoot. Thank you so much for the heads-up on that Michael. I fixed it. Haha.
Hard to imagine a scenario where a new-built house didn’t have a positive impact on surrounding prices.
I hear you. I tend to agree. Though imagine a new house that was in the shape of a large shoe or something odd. 🙂
also believe that each sale in the region of a Bentley Continental pushes the value of my Scion xB up a couplea bux !!
Hey, that would be nice. I’m looking for more Lambo sales to make my Camry worth more…
It takes skill to combine number crunching with Gilmore Girls fun facts. Thanks for sharing!
Thanks Rose. I’ve reached a new level in my career today… 🙂
Love me some GG! And yes, Bach was the singer in Rory’s BFF’s band, love it! Anyway, I really DISLIKE when people build homes like this in areas like this. If it was more blended, I could maybe like it. I see a lot of this done in Carmichael also, due to larger lot sizes and people are able to rebuild larger homes than what was there originally(in my opinion). In mixed areas, like your downtown reference, yes its more acceptable. I could go on and on haha.
Tell me how you really feel Stephanie. 🙂 Yeah, this is not for everyone and there are definitely strong opinions about anything modern / contemporary from the get-go. It’s funny because I know lots of characters in the show simply because it’s been streaming in my house for years. Can I be honest? Luke is really anal and just not a nice guy. 🙂
I think that the principle of conformity holds up if it is normal in a neighborhood to have a diverse mix of homes. In that case, the homes are conforming with the neighborhood and not necessarily with the property next-door.
I like that Gary. Thanks. I guess we just have to watch when a neighborhood begins to transition. We are definitely seeing more modern / contemporary homes pop up in quite a few areas, so it seems like expectations are changing. Moreover, one of the related elements to consider is single family zoning morphing to see four units allowed on each residential lot. I know this is planned in Portland and it looks like it may pass in Sacramento (not for sure yet). My sense is the knee-jerk response when talking through this issue is to say the principle of conformity suggests the highest value is going to be seen with allowing only single family units within residential tract areas. Ultimately I think this change is going to challenge some of the ideas held to be true in the real estate community.
I got the Gilmore Girls reference right away – my girls and I are big fans!!
So awesome. Thanks so much Stacie. I think the show has outstanding writing. Honestly, it’s SO much dialogue for me personally, but the whit is on point. It’s funny how big this show has become in recent years.
Dude, Sebastian Bach! ???
Yep. Haha.
Ryan, from one Gilmore Girls watcher to another I feel for you. I’ve been pulled into Stars Hollow as well since my wife and daughter watch it too. I’ve seen some of these houses as well in the Birmingham area and they are in neighborhoods you would not expect. I will say that there is a variety of other homes as well so the variety seems to work. Your graphs have made me curious as to how the Birmingham area compares so I might also be doing a post about this.
Haha. The Gilmore Girls have invaded our homes… Thanks for the kinds words. I hope you visualize your market like this. I suspect many areas look like what I shared, but I’d love to actually see.