Belser Estates and Chelsea Ridge

Belser Estates and Chelsea Ridge

Description
Belser Estates and Chelsea Ridge are connected to each other through common streets, and tend to function as one neighborhood. The neighborhood is made up of two phases of Belser, plus Chelsea Ridge site condominiums. Belser Estates had 28 sites in the first phase and 46 sites in the second phase. Cook Builders developed Chelsea Ridge to the immediate east which contains an additional 60 sites. There may be additional land to the east but not part of this brief neighborhood description.

The oldest houses I found in the Belser Estates was from 1989, and newest in 1997. The newer houses in the of Chelsea Ridge began around 2002 up through 2005. One newer house in Belser was noted, built in 2015. The housing is a mixture of single-story ranches, colonial style, some contemporary properties and a couple Cape Cods. Chelsea Ridge mainly has colonial style around 2,000-2,500 sqft but with variety.

The northern boundary of the neighborhood is Dexter-Chelsea Road and the Railroad tracks adjacent to it. The railway is active and includes both Amtrak passenger trains, as well as freight trains. The southern boundary is a field south of Darwin, and Meadowview Dr just south of that. To the west is Freer Road, and to the east is undeveloped land which appears to have been slated for an expansion of Chelsea Ridge based on street extensions. This neighborhood is on the far east side of the city of Chelsea, within city limits, and serviced by the municipal water and sewer lines. Schools are proximate with the middle school around a half mile west, and high school about 0.75 miles south. The downtown corridor is less than a one-mile walk.

Changes over time
So, what has happened in this local market over the years? I took information from the Ann Arbor Area Board of Realtors MLS through a map search and laid out the adjusted sales price and adjusted sales price per square foot since 2005. The data is presented in two graphs below. Both show a dip in prices from 2005 through 2010-2012, and then increases since that time. Overall, both are showing higher today than prices from 2005. The earlier top of the market seems to be 2006 related to price per square foot and 2005 on sales price. This does follow what most area agents and appraisers have tracked, that of the market starting a decline in late 2005 locally, although it appears slightly later in this neighborhood based on these sales.


Only MLS sales were tracked as I do not have the ability to pull information on for sale by owner data onto the spreadsheet. Normally most sales do go through the MLS. The most recent sales closed in August and September 2018, at $334,900 and $325,000. Two houses are on the market within the development, both under contract, both have asking prices above that of the recent sales at $349,000 and $349,900. We have to wait and see what they sell for. The fact that houses are under contract with higher asking prices than the recent sales can again indicate an increasing market.

There are indications that our local market is quite active again, including the number of properties under contract in addition to any changes in price (there were two sets of properties in Chelsea Ridge that sold and resold between 2017 and 2018 which indicate an increasing trend in that period but do not necessarily equate to today). Open house activity can give a great view of how active the market is, as do absorption rates. Lack of inventory can cause overbidding when there is simply not enough supply to meet demand. Every market segment can be different, and one market within the same community may have adequate supply and not be experiencing overbidding, while others may exhibit a shortage. With only five MLS sales in Belser and Chelsea Ridge in 2018, it is not showing as a very active market, but with both listings under contract, there is no supply either.

When in need of valuation services, consider contacting your local appraisal expert. Appraisers provide unbiased, independent, and competent researched opinions.

March 1, 2019 Washtenaw County update

Washtenaw County market activity as of 3/1/19

Hello Ann Arbor area Realtors! In some of our markets, it is evident spring has sprung and agents are busy and the market hopping. In other markets, there does seem to be less activity, but overall, we are off to a great start of the year. Since I started keeping track of the supply and demand factors on residential single-unit housing six months ago, I now have enough information that I can start to run trend to see whether we have change occurring, and that information was run on one of the markets, that of Ann Arbor as a whole, and presented later in this narrative.

The chart below is today’s snapshot of how many houses sold through the Ann Arbor Area Board of Realtors MLS in the past year in each major market, compared to how many are available (not under contract). That provides the supply based on a one-year history. Additionally, the contract to listing ratio (CTLR) provides a snapshot of how many properties are under contract compared to the total number of listings in each major market. These contracted properties are bellwethers of the coming months sales and are meaningful in understanding how active a market is.

Across the board, supply is fairly low. The exception is Saline, but this is really related to many offerings of “to be built” properties that are not truly on the market. Saline does seem to have the most robust new construction activity at present. Many of our markets are showing inventory below two months supply, and the remaining, other than Saline, show close to that two-month mark. This is an undersupplied market.

Contract-to-listing-ratios are showing the greatest activity currently in Ypsilanti, followed by Manchester and Ann Arbor. Ann Arbor is normally busy, and Manchester is rather unusual at the moment as it has not routinely had this high a CTLR. Ypsilanti has been “hot” since I started measuring monthly for the area agents.
The data that follows below are charts showing activity month-to-month in the Ann Arbor school district. It is apparent that the number of sales has been declining over the past six-months. The declining sales in larger part appear related to lack of inventory. We simply have a problem with sufficient properties coming on the market to satisfy demand.

The next graph shows inventory compared to the last years sales each month. As the number of sales declined, supply could normalize by a similar number of properties being available for sale, but it appears that the supply is also dropping. Lack of choice, coupled with high demand most often causes increasing activity and prices.

The contract-to-listing ratio has been firmly in seller’s market territory since I began measuring this monthly for the area agents. Using a trendline, it shows as increasing, meaning as spring emerges, we are having more properties on the market under contract.

I wish I had a crystal ball on where we will be in a few months. We definitely have a problem with inventory, and based on agents responses when asked about the shortage, it does not appear an easy fix. The inventory shortage is really concentrated in the lower priced, starter markets, and normally new building can ease some of the shortage. The problem is related to costs of development and the inability to bring on lower priced new construction on a larger scale in the market to meet the demand. There may be projects in the offing, but that does not solve the problem at hand today.

Saline MI – Wildwood

Every town seems to have a neighborhood which has broad appeal. In Saline, Wildwood is one such neighborhood. Here occupants find wooded lots, walkout basements and proximity to many area amenities. What I thought my readers would find interesting is how this specific market has changed over time, measured over the past 12 plus years as well as what I see happening now. The sales information is gleaned from the Ann Arbor Area Board of Realtors MLS and does not include For Sale by Owner properties.

This first image is a scatter graph of the adjusted sales price of each sale from 2006 to 2/28/19. Prices are clearly trending upward.
The next graph shows the adjusted price per square foot in the same period. Price per square foot is meaningful, in that in a data set that contains different size properties, it can normalize some of the increase that might show if the recent sales are larger properties.

This graph also clearly shows an upward trend in price in Wildwood.
Another way we could look at this is with a chart laid out in how many sales per year occurred, what the average and median sales prices were, the average and median sizes, and average and median price per square foot. This type of information could be useful in showing where the majority of change occurred. So far 2019 has only two closed sales, but these were on average, smaller houses.

The graph that follows uses the average and median sales prices compared to each other from the data above. The blue bar is the median, which is my preference in measuring a market. This layout is helpful in seeing there was a slight dip in the market between 2008 and 2011, with the greatest increase in 2016.

Continuing in the same vein, price per square also shows an increase, but with 2018 running slightly below 2017 in general. If an appraiser indicated the market was slowing, based on this data, they would be correct, to an extent. The past three years showed similar gross living area both in the average and median sizes, with 2017 having slightly smaller sales than 2016 and 2018, meaning the expectation is that the price per square foot range would be higher. That is precisely what shows below, while the graph above shows an increase.

What is the saying? There are three kinds of lies: lies, damned lies, and statistics.

As of 3/1/19, the MLS showed no active available listings in Wildwood. There were three properties under contract. The lack of available properties in a subdivision that has steady turnover, indicates higher demand than supply, which in turn tends to drive prices upward.

All of this information is to help the consumer understand the various elements of the market an appraiser may study to measure what is happening with the market at any given time. Since appraisals are snapshots in time, understanding the market is a major component of the analysis.

You can access my website for information about appraisals, and what services I can provide. Please think of me for your private appraisal needs. https://annarborappraisals.com

For my appraiser friends

I wrote this piece for WorkingRE as I figured the reach would be great there. Seems it has had limited reach as well, so am pressing it here too.

Private appraisal work

What is important to remember is that people who use our services directly normally have little experience with the appraisal process, so we have to craft our work in such a way for them to understand our reports. In my opinion, we owe our customers a very high level of due diligence, and of reporting.

Go forth with competency

Monthly market snapshot

Mixing up the way I do the monthly report a bit. In addition to the normal information about the absorption rates and where activity is as of a certain date, I have also included a two-year summary of price changes in each area. Hope that you all find this interesting, and as always, if you have questions, reach out to me, either via phone or email.

Without further ado, the monthly inventory in each market is showing from as low as 1.13 months, to as high as 3.56 months depending on the area. The area with the most inventory however, is actually showing as such due to the abundance of new construction exposed as “to be built”. This means the properties are not immediately available. Since I have run this data in the same manner consistently, I am carrying on with including all market exposed properties through the MLS, but Saline is not as saturated as it appears at first blush.

The market overall is undersupplied, with most areas around two months or less. Since this data includes every listing and sale within each school district, for submarket data, it does not apply. It is useful in measuring where activity is, but as always, you have to look at the market segment in which a property operates.

Based on the contract to listing ratios (CTLR on grid), the greatest activity is in Lincoln school district, followed by Ypsilanti and then Ann Arbor. The areas that are showing as leaning towards a buyers’ market are Manchester and Dexter. Saline is tilting towards a balanced market. Chelsea, Whitmore Lake, Lincoln, Milan, Ypsilanti and Ann Arbor are in seller’s market territory again.

It looks like spring may have sprung.

What about changes in price over time? Again, this is larger market data, not specific to any particular submarket section. These are arrayed by school district, and each data point is one-years’ worth of data at a time, moving forward in a monthly manner. This eliminates seasonality and is useful in seeing more nuanced changes. Looking at this information, it is easy to see that Dexter increased, but there is a decline over the past couple of months. Stability in pricing is seen in Chelsea, Saline, Ann Arbor and Ypsilanti based on the trend lines over the last four or so months. Prices have increased across the board in the past two years but also have slowed or even declined in places. Still, in comparison with two years ago, we are increased on the macro market segments.

If I take this information and put it on an easy to read grid and it is easy to see that over a two-year period, most of the markets are in the double-digits in increases, however the past year was not so kind to Manchester, Dexter, Saline and to an extent, Ann Arbor. The increases in these areas were smaller, and in some cases, negative. The largest increases in the past year were found in Milan, Ypsilanti and Whitmore Lake. This makes sense when observing the median prices, which are lower in those areas, with the outlier being Manchester. My take on this is that as some markets have become expensive for the average buyer, they have moved into different, lower priced markets, which are putting pressure on increases in those areas.

I am continuing to observe our market on every appraisal I develop and communicate. Markets can change quite rapidly, and each market will have a number of submarkets within it. All of this information is presented in a broad manner for ease of reading. All information is culled from the Ann Arbor Area Board of Realtors MLS and is assumed accurate.

Is the sky falling?

Is the sky falling?

 

As an official geek, I really like looking at what is going on in the market by numbers. One simple way to look at this is through a one-year data run that moves forward one month at a time. This is an annualized monthly trend, and it helps to eliminate the seasonality that is seen through analyzing data presented one month at a time. That method is also valid, in particular in measuring when the market is most active.

 

Take a look at the information that follows. The columns refer to the date range, number of sales, median list and sales price, median size, and price per square foot. This is useful in showing how much a market has changed and is one way an appraiser may base a market conditions adjustment they make, or don’t make, on an appraisal report.

 

 

This chart is the Saline market, Ann Arbor Area Board of Realtors MLS data with all sales exposed through this source only. The to be built and new construction properties are excluded. I excluded these new houses, as the trends did seem to be a bit skewed due to the number of new houses that are being placed in the MLS at this time, many of them not immediately available for occupancy.

 

January 1, 2016 through January 1, 2017 there were 310 sales with median sales price of $335,000 and median price per square foot of $152.13. One year later the median sales price was $358,875 and price per square foot median was $162.46.  This means that in this one-year period, the market increased 7.13% in price, and 6.79% in price per square foot. The change from 2016 to 2017 in this market could be easily measured through this method, and correlated anywhere between that 6.79% and 7.13% range. Of course, markets do not move on a straight-line basis, therefore depending on where a sale fell in that period, the appraiser could use that information for an adjustment.

 

Between January 1, 2018 to January 1, 2019 the market showed a median sales price of $360,000 and median price per square foot of $168.86.  Based on the previous years data, this means the median sales price increased 0.31% and the median price per square foot increased 3.94%. Neither of these shows much of an increase, in particular as the median size of the most recent period is 3.49% lower than the previous year. Because smaller houses tend to sell at a higher price per square foot due to the cost of land and development, and diminishing returns, this means there could be little to no movement in price. If the 2018 inflation rate is 1.9% (based on the US inflation calculator), did properties even increase at a rate equal to inflation? What about the current sales price median lower than the last eleven months?  Even the past three months before showed a lower median price. Are we seeing a correction?

 

Considering there are 18 properties under contract with a median asking price of $364,950, it is in line with the last four months asking prices, but the median size has jumped by 11.30%!  To me this indicates the market is not going up in general, and could be pointing downward. Hard to tell until the contracted properties sell, but it is worth watching.

 

 

 

Respect

On 12/27/18, I was assigned an appraisal order from an Appraisal Management Company (AMC) I am not registered with. This order was for an FHA foreclosure assignment with “as is” value and repair estimate requirements. First, this is not an area I cover, second, the fee was about $75 below what is reasonable and customary for an FHA appraisal in this market, let alone one with required repair estimates on a foreclosed property. Third, I don’t do FHA work because I am vertically challenged (cannot reach the attic even on a ladder).  The due date was 1/4/19, therefore one week after assignment, during the holidays where many are not working.  I declined the assignment as it is out of my area of coverage and the fee was inadequate.

 

On 1/4/19 I was assigned the same appraisal order but they increased the fee by $25. It was still $50 under typical for the area, and I still don’t handle that area. The due date had been extended to 1/14/19.

 

Why do I write about this?  I do because this is an example of an AMC that is not paying attention to the comments from the declination. If an appraiser declines due to coverage area, then it should not be reassigned. But also, if appraisers decline because the fee is inadequate, is upping it a paltry $25 going to cut it?  In the time between the initial order and the subsequent, ten days passed. Had the AMC picked up the phone and started calling appraisers, they may have had much better success at finding someone who first of all covers the area, and second of all, would tell them how much it would take for them to take on the assignment.

 

I write this as well as I am trying to figure out how they are benefitting their client, the lender, with this method of locating an appraiser?

 

If we are to believe there is a shortage of appraisers in a market, consider this as well: I used to work for a small mortgage lender. We needed a field review completed in a rural market and had two AMCs that were trying to find appraisers to handle it. After two weeks of trying, both turned it back and said there were no appraisers available.  Frustrated with their lack of progress, I got on the Appraisal Institute “Find an Appraiser” page, located four appraisers within 20-miles of the property, and had agreement from two of them that they could handle the assignment. We ordered and received the field review within a week.  So how was I successful in finding an appraiser and obtaining the order? Simply by being respectful of the appraisers I contacted, and asking them what they would need to complete the assignment. Instead of blindly sending an email with an order to someone who doesn’t cover the area and dictating their fee, I called, listened, and was able to get the review in an area which was not as sparsely covered as stated by the AMCs. In my mind, what happened was simply they did not get bites on their offers, and used the excuse that there were insufficient appraisers to handle the work.

 

So, next time you hear that narrative of a shortage of appraisers in certain markets, think instead that the shortage is only that of those willing to work for substandard fees.  A little bit of communication goes a long way, and respect in dealing with others goes even further.

 

Appraisers do NOT have to stay within one mile

Jamie Owen, appraiser and author of Cleveland Appraisal Blog, had a really pertinent blog post that I wanted to share with my readers.  Please click this link to read his piece.  In short, the requirement to stay within one mile for comparable sales is a myth.

 

As always, comparable choice is that of the appraiser, but the appraiser should choose sales that are most comparable in terms of being logical alternatives to the subject property.

Appraisal process for consumers

Consumers see only a small portion of the appraisal process. What consumers often see is the appraisers visit to the property, and the written communication. They do not see the process that the appraiser goes through in developing their opinion of value. My hope is that this piece will help consumers understand a bit about the appraisal process, beyond the number that is of vital importance to almost everyone who picks up an appraisal report.

 

Appraisers start with identifying the problem to be solved, including who the client is, and what the intended use of the assignment results are. It includes the type of value; the effective date of value; the characteristics of the property that are relevant to the problem; and whether there are any conditions that are placed on the assignment that need to be considered. These include extraordinary assumptions (assumed to be true specific to a property, but not known for certain) and hypothetical conditions (contrary to fact).  Clients can be lenders, they be attorneys in litigation or consumers who need a problem solved among others. The intended use can be for mortgage financing, for establishing a value in an equitable dissolution issue, or it can be for buying a house without a loan. There is a myriad of reasons someone may wish to have an independent opinion of value. Characteristics of the property that are relevant are those elements that an appraiser considers as contributing to the value of the property. They can be quite varied, and are truly the appraisers call.

 

From this initial identification flows the appraiser’s decision on what needs to be considered in developing their opinion. Does the appraiser need to visit the property? How detailed an observation do they need to make? What types of sources are they going to consult in the research? These all form the scope of work determination.  After that, the appraiser needs to consider data collection and property description, including analysis of the market area, the subject property itself, comparable sales, listings, cost and income if they are relevant.

 

After collecting all of this information, the appraiser analyzes the data. They analyze the market, including supply and demand factors, and any marketability issues. They study the highest and best use of the property. They research the site value and the different approaches to value are considered.  After all of this is completed, the appraiser takes the data and approaches and reconciles it into one or more value indications, and then to one final value conclusion (which may be a point value, or a range, depending on the client’s needs).

 

The final step in the process is the report. This is where all of the analysis that took place comes together in what you see and read.  Reports can be very brief, addressing only the points that are required to be addressed per our standards, or the report can be detailed and address everything under the sun. Of course, the report can be in between as well. The point is that the report should not require the client to take a “leap of faith” to understand how the appraiser got from point A to point Z. It should be completed in a way that is meaningful to the client and does not mislead them with erroneous or incorrect information. Ideally the report will take the client on a journey to understand how the appraiser looked at the data and how they came to their conclusion.  Appraisal reports should be clear and help lead the client to a logical conclusion. Even if the client does not agree with the results in the end, they should always be able to understand how the appraiser got to their conclusion.

 

If you have any questions, please feel free to contact me.