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ParticipantMy use of the word [“loss”] did include [“”] for a reason.
ParticipantAppraisers make a distinction between “price” and “value”. A house that’s overpriced is one in which the price is not supported by the current sales data.
A house can be very fairly priced and still be horribly overvalued. Or undervalued, for that matter. We would say that most sales that occurred in 2005 were probably fairly priced at the time but have proven to have been overvalued relative to the economic fundamentals.
ParticipantI think we’re a lot more likely to see $4/gallon gas than $2/gallon gas.
ParticipantWe treat it almost casually: “40k below an offer they turned down a few months ago.”
What a difference a year makes. For someone who needs to sell to “lose” $40,000 at this point of the downcycle is a huge loss. Just to put it into perspective, that $40k could represent 6 months of wages for a mid-career professional in this region. That $40k is equal in amount to the cumulative losses suffered during the entire 90-95 meltdown for an entry level tract home in the N.County area during that period. Many wage earners in this region could not save $40,000 if their life depended on it.
People in RE and related businesses get so accustomed to dealing with big numbers all the time that I think it’s easy to lose perspective of what those numbers represent. We’re talking about the same dollars we use to balance our checkbooks and pay our groceries. This ain’t Monopoly money, it’s the real thing.
ParticipantChange of subject:
The other day I drove by the La Costa Oaks area and saw markers for a new development. They weren’t using a sign or a sign-twirler, but instead were using a PVC upright with about 7 multi-colored baloons attached. There were two of them; one for each side of the intersection on Rancho Santa Fe Road. They both looked kinda like a bunch of grapes. I thought that was an effective alternative to paying some kid $10/hour to stand out in the sun and dance for the traffic.
ParticipantYour question is about the distribution of the data between the current batch of sales and the prior batches of sales that contributed to their respective medians.
Price/SqFt is not that useful because the “price” part of it includes the value of the site as well as the improvements, which can vary tremendously. For example, a 2,500 SqFt home on a 6,000 SqFt lot that sold at $600,000 would result in a $/SqFt indicator of $240; You’d get the same indicator off a 4,500 SqFt home on a 15,000 SqFt lot but that sold at $1,080,000. The $/SqFt indicators are the same but the effects of those sale prices on the medians would be much different.
The way I’ve been analyzing data distribution among the various zips is to separate them using age ranges as the primary and size ranges as the secondary. That works pretty well, but it’s labor intensive.
ParticipantSan Carlos is pretty central to employment and services. When they’re taking a beating you know we’re in some real trouble.
ParticipantOne of my friends told me that house on the corner originally belonged to some TV star and ended up being subject to some legal problems. I don’t know if that’s true or not. I do know they did a lot of work to the outside.
ParticipantI basically know most everything there is to know about that house short of stepping inside myself. The Zestimate is wrong by a huge margin. That house sold for more than double in 06/2006. The $115k is not the sale price.
The house a couple doors down sold a couple years back and is now being rebuilt and enlarged. It has a 1 acre lot and doesn’t side the public stairwell for access. It’s going to end up being a much better home. They’re a ways off from finishing it though.
ParticipantI love the aura of mystique he imbues our market with. He as much as said “I don’t know how they do it but they just do and so that’s why RE will continue to be a good deal”. It’s soooo special here.
He can’t understand how it works, ergo nobody else can either.
August 28, 2006 at 6:38 PM in reply to: “A History of Home Values” graph by Robert J. Schiller #33794ParticipantThat time span represented the single largest shift in homeownership in our nation’s history. That same spike fueled the baby boom and ushered in the era of car ownership for everyone. Despite this, the breadth of that increase still pales in comparison to our latest spike. Has anyone here taken note of any fundamental changes in our society that would indicate we had an superabundance of pent-up demand coming into 1997? I haven’t.
ParticipantWithout a doubt there are weaknesses to the methodology of using the most recent and proximate sales as indicators of the “most probable value”. However, there are very few properties that cannot be bracketed with superior comps or with listings. By the time the appraiser gets done with these other comps, the supposedly superior subject still sometimes comes up short.
What’s killing a lot of appraisals now is when there are comparable listings at or below the contract price. The closed sales may support the price but these listings don’t. By the time an appraiser gets done laying out the relationship between listing prices and sale prices for the comps, it becomes obvious that if the listings sell at all they won’t sell higher than near the bottom of their listings ranges. If the original appraiser doesn’t catch that the lender’s review appraiser generally will. Either way, the result is the same.
ParticipantThere are probably a lot of people who believe that appraisers have a certain amount of legitimate discretion as to where an appraised value can come in, but that’s really not the case. An appraisal is supposed to call it straight down the middle, not favoring one side or the other. An appraisal that does otherwise is substandard and should be considered by all to be intolerable.
What appraisers can do is to play the odds as to what a lender will accept. When times are good and the lenders don’t care, the appraisers can abuse the lax level of oversight and review and submit overvalued appraisals. When the lenders look more closely then even the most crooked appraisers have to clean their acts up.
August 28, 2006 at 11:17 AM in reply to: “A History of Home Values” graph by Robert J. Schiller #33691ParticipantThat graph shows it on a national basis, ya? If so, using the same 1890 baseline for this region would probably look even more extreme.
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