In the above histogram, pay particular attention to the maroon bar, representing neighborhoods whose median sale price in 2019 was <$200,000. You can see that this price point represents just under 300 neighborhoods (or a bit under 25%) of total neighborhoods in the sample. This makes sense. The US median home price in 2019 was approximately $275,000, which falls into the large green bar above.
What I found interesting, however, is that the maroon bar is BY FAR the largest bar in the histogram on the right, representing the 200 neighborhoods seeing the largest increase in median sales price. In other words, the neighborhoods with lower-than-average median sales prices in 2019 were the best performing during the pandemic.
This, by itself, might not be that surprising to keen observers. After all, lower priced neighborhoods typically see the most price volatility, which would have been to the upside in such a rallying market. What’s wild about these numbers, though is the magnitude. The census tract with the largest change, for instance, saw its median price increase from $115,750 to $631,250, a 400% increase!
To be clear, these are median sale prices, not paired sale indices. In other words, we are not saying that home prices in this part of La Quinta, CA quadrupled in the past year. What we ARE saying, however, is that a formerly sleepy community, where presumably most of the real estate activity occurred among the locals employed by the nearby golf communities, found itself the recipient of an out-of-town buying windfall that wildly changed the mix of homes being sold.
Imagine being the local realtor used to selling this: