Friday, 04 September 2009 00:00
Warren Buffett says he likes to invest in, and acquire, companies which have durable competitive advantages over entities providing comparable products or services.
In fact, Buffett’s Berkshire Hathaway Web site has a letter from the 79-year-old Oracle of Omaha himself, explaining why three Berkshire subsidiaries – one offers auto insurance, another sells jewelry, and the last one annuities contracts sold over the Internet – offer such great deals to consumers. The durable competitive advantages for these businesses are innovative underwriting (auto insurance), economies of scale (jewelry), and low overhead (annuities), Buffett explains.
The economic forces driving the residential real estate market, such as the quality of a community’s public schools, are often intangible and therefore harder to quantify.
But in reading Forbes magazine’s just-released list of the nation’s 500 priciest ZIP codes, as defined by the average median sales price for a home sold there for the year ending on Aug. 14, 2009, one theme emerges when reviewing the first 10 Nassau communities which had their numbers called by Forbes. Residential property along the Long Island Rail Road’s (LIRR) Port Washington branch has shown resilience amid the economic downturn.
Three of the top 10 Nassau ZIP codes Forbes identified are situated along that LIRR line, and they’ve retained their value in a way other high-end communities have not, Forbes’ numbers indicate. Bypassing the LIRR’s Jamaica station for a relatively quick trip into Manhattan is a huge selling point, especially if the potential buyer is a current LIRR commuter who changes trains at Jamaica, or is on a line where the rush-hour trains arrive every 45 minutes.
Moreover, the LIRR’s Port Washington branch is the only one which travels directly to Citi Field and the U.S. Open tennis championship in Flushing Meadow.
Mill Neck (ZIP code: 11765), Old Westbury (11568), and Glen Head (11545) were the magazine’s highest ranked Nassau communities as defined by median home sales prices, coming in nationally at No. 27, No. 50, and No. 59, respectively. Yet Mill Neck saw its real estate sales prices drop an average of 6 percent since August 2008 while Old Westbury (-10 percent) and Glen Head (-12 percent) realized year-to-year dips, too.
The next seven most expensive Nassau ZIP codes as of last month, in descending order, from higher-priced to lower-priced residential properties, were: No. 74 Great Neck (11024, Kings Point), No. 101 Locust Valley (11560), No. 116 Manhasset (11030), No. 140 Point Lookout (11569), No. 155 Oyster Bay (11771), No. 164 Woodbury (11797), and No. 173 Great Neck (11020, Lake Success and University Gardens).
The three ZIP codes on the Port Washington branch saw their home values remain steady over the past year, with 11024 seeing a 5 percent increase, 11030 unchanged, and 11020 showing a 3 percent decrease.
With the exception of Woodbury, where the median sales price of a home was unchanged over the past year, the other six ZIP codes in Nassau’s Top 10 saw price reductions since the summer of 2008: 11560 (down 6 percent), 11569 (minus 4 percent) and 11771 (off by 20 percent) as well as the aforementioned Mill Neck, Old Westbury, and Glen Head.
To see the full story, log on to www.forbes.com, and look for ‘America’s Most Expensive ZIP Codes.’
Mike Barry, a corporate communications consultant, has worked in government and journalism.
Mike Barry, a corporate communications consultant, has worked in government and journalism. Email: MFBARRY@optonline.net