The first question local friends and neighbors ask when the subject of real estate comes up is "how much are prices down"?, which is a simple question that can lead to complicated answers.

The answer could be different depending on the type of home you are talking about.

Conventional wisdom says that the high end homes have taken a bigger hit because the volume of buyers at that level has fallen off.  Conventional wisdom also says that lower priced homes have held up better because there is still demand at the low end (more so now with first time buyer tax incentives).

There was a headline in the New York Times recently saying that Phoenix is the first major real estate market to make a 50% drop from the market high prices of 2005 to current market values.

With that in mind, I thought I would review how prices have behaved in the Davis, California real estate market over a similar period to see how we compare.

I took the average sale price per square foot for home in the third quarter of 2005, which seems to be about the top of the market here.

The figures then are broken out according to the size of the home, from small 950 square feet up to home in the 3,000 square feet and above category. The data includes only single family homes, no condos.

Then we look at the same information for homes sold Year to Date through April 20th, 2009, to see how far home prices have fallen, when expressed in price per square foot.

The results show two interesting facts;

1) Davis has been spared the steep price declines that other markets have suffered. The biggest drop in home prices from 2005 to 2009 is just 21% for the smallest homes, while homes of most other sizes dropped in price in the 14% to 19% range.  This is not bad for a a 3 1/2 year price change.  There are many factors that contribute to the resilience of real estate prices in Davis, the lack of new home inventory being one of them, as Davis is a "slow growth" town without the sprawl development of other areas (... like Phoenix). I have written previous blog posts about the factors that make Davis a unique real estate market.

2) There is not a huge disparity between the price drop of large homes vs. the price drop of smaller homes. The common wisdom that higher end home prices were suffering more are not born out by these numbers.

There is one anomaly in the numbers. At the 2,200 to 2,500 square foot range the data shows that prices have dropped just 6%. But only one home  showed up in the 2009 data, so that price per square foot number is not necessarily an accurate representation.

Having seen this information, I feel relieved, as I am a Davis homeowner. It also makes me feel for those folks in Phoenix, Las Vegas, and Florida whose markets have not held up as well.

Davis is a vibrant community and a great place to live. As proof, I offer my previous blog about Davis being one of the Five Friendliest Cities in the US and also my Top Ten Reasons to Live in Davis.  And now we have reason #11...Davis has a relatively strong real estate market, when compared to other California cities and many markets nationwide.