Article 401

Suburban Home Prices May Fall
As Demand for Urban Living Grows

By Lauren Baier Kim
Here's a look at what's new in real-estate markets across the U.S. from around the Web.
McMansion neighborhoods -- slums of the future?
Are Americans becoming disenchanted with car-based suburban life and McMansions out in the middle of nowhere? That's the premise of an article by Christopher B. Leinberger in the Atlantic. Mr. Leinberger points to research by Arthur C. Nelson, director of the Metropolitan Institute at Virginia Tech, who forecasts a surplus of homes built on a sixth of an acre or more by 2025.
Developers have responded to this trend, Mr. Leinberger says, by building mixed-use developments with faux town centers -- like Virginia's Reston Town Center and Belmar in Lakewood, Colo. -- and condo and loft complexes in major cities.
Mr. Leinberger points to recent research that found that one in three homeowners said they would prefer to reside in a community with a walkable urban center. The article also notes that urban residential space tends to sell for a 40% to 200% premium over traditional suburban houses, and that in places like Windy Ridge in Charlotte, N.C.; Florida's Lee County; and Franklin Reserve in Elk Grove, Calif., a rash of vacant houses has resulted in a rise in suburban crime.
As more wealthy families opt for a more-urban lifestyle, there will be trouble ahead for the suburbs, Mr. Leinberger says. Dwindling tax bases can result in a decline in safety and school quality, he adds.
Study reveals pricing trick
Researchers at Cornell University have found a pricing strategy they say results in higher home selling prices, says Sandra Fleishman of the Washington Post. To get house hunters to pay more for your house, don't ask for a round figure like $326,000 -- instead, go for a more "precise" sum like $325,425, she says. While the difference between the two price tags is less than $600, such a price tag makes buyers think that your home is significantly more affordable, she says.
That's because consumers are used to thinking of lower-priced items in exact numbers and high-priced ones in round numbers (e.g., $.95 for a candy bar versus $550,000 for a new home), she says.
The researchers examined housing data from South Florida and New York's Long Island and found that homes with zeros at the end of their asking prices tended to sell for less than ones not priced with round figures. In South Florida, having at least one zero at the end of an asking price lowered sale prices by 0.72% while having three zeros at the end of a price resulted in a 0.73% drop -- the impact was smaller in Long Island, Ms. Fleishman says.
She notes that per the study's findings, a house listed at $484,700 will sell for about $1,380 more than one with an asking price of $485,000.
Desert sales dry up
In Phoenix's West Valley suburbs -- homeowners are discovering that selling a home has become quite tough, writes Carrie Watters of the Arizona Republic. Many of these residences sprung up in the desert during the housing boom, and while they are a longer commute from the city, are now priced about the same as closer-in properties, Ms. Watters says. To make matters worse, foreclosures are flooding the market -- in parts of the valley, foreclosed properties count for about 14% to 21% of all homes on the market, she says. Prices for suburban homes are dropping as a result -- for instance, one Valley home that recently spent nine months on the market sold for $290,000, while it would have sold for $385,000 a year ago, the article notes.
Subsidized housing for six-figure families
Home prices are so high in the resort town of Jackson, Wyo., that even families whose incomes reach $100,000 qualify for subsidized housing -- the town's manger, who earns $125,000 a year, lives in such housing, according to an Associated Press article published by CNN.com.
Because the median price in this Rocky Mountain vacation spot -- which is known for its skiing and is surrounded by national parks -- is $1.2 million, the town subsidizes some of the housing to prevent flight from middle-income residents like teachers and other needed personnel, the article says.
The article highlights the story of one couple -- a local teacher and his family -- who were able to purchase a Jackson town house with a market price of $750,000 for $230,000.
The town limits property appreciation for homes entered into the program, and sellers who buy a home through the program can only sell it to a program-approved buyer, the AP says.
Ms. Kim is a senior editor at RealEstateJournal.com.