Carhart Mansion duplex

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The bigger they are, the harder they — rise?

Large single-family homes generally have higher property appreciation rates than their smaller counterparts, says a new report by mortgage technology company FNC.

The Examining Residential Home Sales report analyzed the characteristics of residential home sales such as property age, living area size, ownership duration, loan origination vintage and home foreclosures.

“A profile of long-term trends in how different types of properties have appreciated over the years shows that larger homes have generally risen in value faster than smaller homes both before and after the last boom-bust housing cycle,” Robert Dorsey, FNC co-counter and chief of data and analytics, said in a statement. “The gap persisted, although narrowed quite a bit, during the worst of the housing recession.”

As shown by the chart below, homes measuring more than 4,000 square feet enjoyed a 2.7 percent appreciation rate in 2014, as opposed to 2.1 percent to 2.3 percent for smaller properties. In fact, since 2000, properties in the 4,000-plus-square-foot club have routinely bested their more petite counterparts.

FNC appreciation home size

Image: FNC

The median sales price for normal sales was $208,000 in October 2014, a 30 percent increase from $160,000 in early 2011. The latest October figures show that price per square foot among normal sales is $120.3, compared to $73.2 for foreclosure sales.

More facts:

Normal-sale properties are typically larger and newer than foreclosure sale homes: 1,690 square feet versus 1,450 square feet, and 25 years old versus 30 years old.

Sorted by loan origination date, homes mortgaged during the 2002-2005 housing boom still make up the largest share of foreclosure sales at 25.9 percent, although dropping from 42.5 percent at the beginning of 2010.

Homes mortgaged prior to 2002 were 22.8 percent of foreclosure sales, and homes mortgaged in 2006-2007 were 20.1 percent, followed by 2010-2011 at 19.2 percent and 2008-2009 at 8.8 percent. Properties with loans originated in 2012 and after made up just 3.3 percent of foreclosure sales.

Foreclosure price discounts are significantly slimmer among higher-priced homes — 6 to 7 percent for homes with a prior purchase price more than $500,000, compared to 17 to 19 percent for properties previously priced between $150,000 to $350,000.

New homes, age 5 or younger, experienced “abnormal accelerations” in appreciation rates during the 2002-2005 housing run-up, followed by the fastest slumps in the bust. Homes aged 6-10 and 11-15 tend to experience the lowest price appreciation; vintage homes aged 41-70 and older generally appreciate faster than other groups, with the exception of new homes.

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