In this article written in 2008 I discussed how the price per square foot was over inflated in most area's of the country. I stated that 90-100 dollars was a good price per square foot for the average single family home and that prices would drop in the next 4 years to reflect that.
Metro Areas: Most Expensive to Least Expensive (Price Per Square Foot)
|Rank||Metro Area||PPSF||Year-Over-Year Price Change|
|1||San Jose, CA||$418.54||-8.8%|
|2||San Francisco, CA||$367.28||-13.3%|
|3||Los Angeles, CA||$325.42||-16.6%|
|4||New York, NY||$292.07||2.0%|
|5||San Diego, CA||$264.17||-21.2%|
|14||Las Vegas, NV||$136.61||-25.4%|
|20||St Louis, MO||$105.66||-3.0%|
As you can see, As I predicted most of the country with the exception of NYC and California has dropped below the 100 dollar per square foot threshold that I stated indicated where housing should be in terms of inflation. However, I feel that when you look at places like Ohio/Michigan for example you can see that some area's are selling for 60 dollars a square foot now which is far below where prices should be historically.
In most places the "housing crash" simply took house prices down to normal...Florida and Phoenix for example now have a healthy real estate market in terms of affordability and price per square foot just as I predicted would happen in 2008.
The key though...Is that the industrial Midwest has crashed to 1980's level prices, and based on my analysis they are a screaming buy at these levels. Purchasing a house in Ohio or Michigan for 60 dollars a square foot almost guarantees you will make a 30 dollars per square foot profit when prices return back to the historical average adjusted for inflation (IE 1999 Prices). A 1000 sqft house in Michigan now lists for about 65000, In a normal market this house would sell for 90000. That is a 25000 dollar projected profit. And remember that this profit is not based on another housing bubble occurring (2005), it is simply based on the real estate market coming back from the grave and returning to (1999) prices.
Detroit house prices will return to the magical 90-100 dollars per sq foot price where they should be. And those who are in the financial position to buy a house now, at about 40% off their regular price, will be glad they did when this occurs.