Does Turnover Rate Affect Appreciation Rate?
I’ve been showing some first time buyers homes in a neighborhood called Country Club Manor. It’s a decent sized neighborhood, about 860 properties or so, and is often attractive to first time buyers on a budget. The homes were built in the early 1950s, and are usually 2-3 bedrooms, with a single bathroom. Average prices run in the mid $160s.
Because these are classic “starter homes,” the turnover is a bit high, at 2.97 years on average. Typical turnover for Tucson is somewhere between 4-6 years, I’m told.
My Buyer is a bit concerned that high turnover means low appreciation. Instead of guessing, let’s look at some actual numbers.
Here’s a chart of price per square foot for single family homes from 2000 to present. The black line is a smoothed trendline for Country Club Manor only, the red line is for all of Central Tucson.
To my eye, Country Club Manor appreciates just as well as the average home in Central. You can see it lagged a little in early 2005, but quickly caught back up. It’s a little cheaper to purchase a Country Club Manor house than the average Central house - but we knew that already! That’s why we’re shopping in the area.
An interesting exercise, nonetheless. Perhaps we’ll compare rates for the other neighborhoods with contending properties. I looked for a large Central neighborhood in a similar price range with a lower turnover rate, but didn’t have much luck. In that price range, homes just change owners more frequently.
