Which local cities and neighborhoods trail in annual price appreciation?

Two weeks ago we looked at the local Top 10 neighborhoods or cities in annual price appreciation from 1994, 2000 and 2005 to present.  This week we'll look at the Bottom 10 for the same periods.

First, 1994 to 2011. 

What do these Bottom 10 markets have in common?  The list has a few of the usual suspects, affordable SFR markets that were pumped up by funky underwriting from 2005 to early 2007 and deflated catastrophically when reality reasserted itself.  But the list also has a few surprises.  Belmont?  Really?  And the similarly-priced and quite pleasant San Mateo neighborhoods just to Belmont's north?  Distressed sellers haven't been common in either area.  Even Redwood City west of El Camino is a mild surprise.  A word of caution:  Belmont's stats include an affordable area east of El Camino that's been hit hard by the downturn, as has every affordable neighborhood on the mid-Peninsula and in the South Bay, and Redwood City west of El Camino includes entry-level neighborhoods east of Hudson that have also been hammered.  But San Mateo's midrange neighborhoods west of El Camino are fairly consistent—there really aren't any bummers.  So let's contrast and compare and see if we can learn any lessons.

First, let's compare Belmont with its neighbor to the south, San Carlos, which has appreciated well enough to make one of our Top 10 lists. 

Next, let's compare Redwood City with San Carlos, its neighbor to the north:

Now let's look at the Bottom 10 in annual price appreciation from 2000 to 2011.

This list also has some of this area's most affordable SFR markets, but also a few of its most unaffordable.  Why the huge variation?  Because we've had two bubbles, subprime in the mid-2000s, which inflated home prices in entry-level neighborhoods, and dot-com from 1998 to 2000, which inflated prices in some of our most prestigious neighborhoods.  Lesson, if any?  In a moment.

Finally, the Bottom 10 for 2005 to 2011.

Lots of condo and townhouse markets here with, again, the remainder the most affordable of our local SFR markets.  We're looking at the biggest beneficiaries, then biggest casualties, of loose underwriting. 

So here are the likely lessons our Bottom 10s teach us:

• look for better-than-average infrastructure—highly-regarded schools, a happening downtown—and consistent (and consistently appealing) neighborhoods
• beware of incongruous buyers buying in incongruous neighborhoods:  the credit- and income-challenged suddenly turning second-choice neighborhoods into hot neighborhoods, and customer service reps and junior assistant programmers with suitcases full of cash buying homes in prestigious communities

Two very good lessons.  And as always, it's best to learn them as you just did—at a safe distance. 

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