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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.

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?

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.

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.

Vernon Downs

Situated north of Scio Church Road and south of Avondale, on Ann Arbors West Side, Vernon Downs is a long popular development built in several phases between 1955 and 1965 by George Airey. The houses are well-built, and a mixture of ranch, split-level, capes and colonials. The majority of houses are ranch style, between 1,200 and 1,400 sqft in size. The oldest parts of the subdivision along Winsted, Sanford, Weldon and Waverly are primarily smaller ranches with varying degrees of off-street parking including carports, detached, attached, and no garages. The later part of the development along the west side, towards Maple Road (Waltham, Agincourt, Covington, and others) have more mixture and larger houses, with attached garages standard. The primary school is located on the northwestern side of the subdivision, and the area high school is less than one mile east across Seventh.

The Ann Arbor Area Board of Realtors no longer retains hardcopy MLS books, but does retain fairly robust data back to 2005, and in some instances earlier. Doing a search for the word “Vernon” in the legal description of all sales found online, and then restricting these to ranch style only, it is easy to track movement in price over time, including the Great Recession that hit Ann Arbor as well as the nation in general. The first graph shows price reductions for individual sales over time. This was included as price reductions are a leading indicator of a changing market. Using this information, it was clear that price reductions had started in 2005-06, and that they had increased in number between 2007 and 2010, then a second spike in 2012.

The next data run was related to net sales price over time, showing increases at a significant level over the past few years, and the largest dip in prices here between 2009 and 2010.

Because there were varying size houses in the mix, and because the neighborhood is spread out in phases with the newer larger houses tending to sell at higher prices, price per square foot was also run. This data also shows a dip in prices in 2009 and 2010.

Because there were so many sales using this method (204 in total), it was also broken out year by year, and finally comparing current activity in the neighborhood using the same criteria of “Vernon” and ranch style houses. This is displayed in average price over time, as median and averages were largely similar.

In observing this data, what is particularly noted is that right now, there is only one active and one property under contract, but both are lower priced than the past two years sales. Of course, the contracted property is smaller than the averages and likely in the older section, but it is worth noting.

Using the data above on a yearly run, It is easy to see how the list price to sales price ratio widened over time to a low point in 2005 (too few sales) and 2010, and rose over 100% in 2016 and 2017. So far, 2018 is lower, just over 97%. Part is likely due to the increasing prices however. Again, this could be a bellwether indicator of a market in transition.

Average sales price over time shows a decline from 2004 to 2005, but again there were too few sales in the MLS at that time to be meaningful, and an increase slightly in 2006 and 2007, followed by a decline to a low point in 2009. Because markets are very location specific, this is very interesting to observe, as the condominium study that was completed last week showed a decline in prices starting in 2005. Those condominium properties are on the southwest side of Ann Arbor, only a couple miles from Vernon Downs. It actually makes a lot of sense to see rates of decline and increase at different times, because so much of what we see related to price fluctuation can be related to supply and demand. In areas with ample supply, the market may change at a greater rate, and at an earlier time. The average sales price per square foot ratio is much the same as the average price ratio, so is not posted in addition, but there is a leveling of price per square foot noted between 2017 and 2018.

For the real estate professionals reading this blog, how does the current market “feel” to you? Does it feel like a normal winter slowdown, particularly with some early cold snaps we have had, or are the interest rates and price increases over the past couple of years perhaps taking a toll? Probably none of us can pin this down at the moment, but it is worth watching what is going on with the market, particularly the properties that are on the market and not going to contract, the price reductions, and the list prices of the contracted listings.

Hope everyone had a great Thanksgiving, and be safe out there!

Rent versus buy?

Real estate social media shows a constant narrative about the benefits of owning a property versus renting. This brief synopsis addresses how this is not always true.

In real estate, it is location, location, location. What is true in one area may not be true in another, and renting is not always more expensive than owning. So many articles that compare ownership versus renting costs do not account for the necessary set-asides that have to be factored into homeownership. They do not address the flexibility of renting; meaning that if someone is still in an upward career trajectory, they may not want to be tied down to a property. They do not factor in what could happen if markets change and prices move downward. Of course, values could continue to rise and rents could continue to increase, so each person considering owning versus renting needs to consider their own unique needs, as do the professionals assisting them.

To make a comparison, look at the most recent rentals within a series of condominium complexes, and compare them with the most recent sales. The data is segmented into three different unit sizes and uses the rental cost versus the cost of ownership with a 20% down payment and 4.5% interest rate. Many buyers are not going to have the 20% down payment, so the cost would be higher, as the loan payment would increase not only by the amount of the mortgage, but with the added cost of private mortgage insurance (PMI).

The above table shows rents between $1,400 and $1,700 per month. The yellow highlighted properties are the ones that are compared to cost of ownership, as there were sales of the same models available in the same period.

The next chart shows the sales, with the stated homeowners association fees and monthly tax burden, plus what a 30-year, 4.5% interest rate mortgage at 80% loan to value would equate to. The “total” column is the mortgage plus taxes and HOA. Insurance is not factored in as it is variable. These stated taxes were largely incorrect however, as they were the seller’s taxes, not the taxes that the buyer would be paying once the property reset to the State Equalized Value as opposed to the lower Taxable Values.

Factoring in the reset to taxable values for the properties that were highlighted above shows a different scenario. In this scenario, the actual tax burden was added, plus a 10% set aside for repairs and upgrades, and a “true total” comparison made. Because the 1,126 sqft unit was renting for $1,500 per month, the difference is only $1 per month in savings. The 1,376 sqft units showed a better buffer of between $76 and $140 per month, but the larger 1,382 sqft unit would have been more expensive to purchase than rent.

It bears repeating that the data above factors 20% down payment, and not everyone who is looking at renting versus buying, has these resources. Not every situation is the same, and it is very important to look at each case individually to make comparisons between renting versus owning. Although national data can be enticing to make a case that one is better than another, it is not the case in every situation.

Consult your local professionals for advice related to what works best for your situation.

The boomerang

Condominium developments offer a perfect opportunity to measure what has occurred in the market over time. Ann Arbor has four condominium developments that are adjacent to each other, built in rapid succession between 1991 and 2000 by the same builder. They have largely similar floor plans and amenities. Although the properties within the developments vary somewhat, they are not too varied for comparison purposes. The only exception to this being properties that have attached garages. The units on that street were eliminated from the study to retain better consistency. In total, 506 sales were used to conduct this market study.

In short, this particular market has boomeranged and is now higher than it was at the apex pre-crash.

The Ann Arbor Area Board of Realtors MLS retains data robustly to 2005/06 at this point, but there is still information available online in some instances as early as 1998. Running a map search of the developments turned up sales as far back as 1998, which offered an ideal dataset to show trends in this market over a longer period of time than normal.

The data above shows that the number of listings retained do increase in 2005, but there were sufficient sales prior to that to show the run up in prices between 1998 and the peak around 2004 for these condominium units. The trend towards declining prices is clear by 2006, and the lowest point of the market is between 2010 and 2011.

If sales are arrayed by average and median price per year, the differences become much starker. Bear in mind, that the data up through 2002 was spotty, but trends can still be determined, showing the height of this market in 2004, starting a decline in 2005, and then rising again starting in 2012. The blue bar is the average price and orange bar the median prices. While the mortgage crises were largely said to have started in 2008, in the Ann Arbor market, the decline was evident much earlier, easily seen with the data below.

This is another example of why national trends cannot be used uniformly, and why each market has to be looked at on a local basis, even hyper-local. This is because condominium properties do not necessarily move at the same rate as single unit properties. Different price ranges may have different market trends, and different property types different market trends. Trends can also reverse quite quickly, therefore paying close attention to current activity is important.

There are currently 11 condominium units on the market in these developments, with three under contract. The average asking price of the units available is currently $200,025 while the median asking price is $196,950. The average asking price of the units under contract is $194,617 while the median is $194,000. This indicates preference to the lower prices in general.

What is particularly interesting in this data, is that only three of eleven are under contract, meaning the contract-to-listing ratio is 27.27%. That is stable market activity. In the past twelve months there were 30 sales (excluding the garage unit street), meaning that there were 2.5 sales per month, so the eight remaining units not under contract would be expected to absorb in 3.2 months, again a balanced market. The interesting piece of this puzzle is that the average sales price of these 30 sales was $202,037 and median sales price was $195,500, with list prices a fraction higher.

If the units that are under contract have lower asking prices than the previous twelve months sales, are we starting to see a shift occur again? After all, the properties on the market, and particularly those under contract, are leading indicators of where the market is going. Couple that with supply of over three months, and normal contract-to-listing ratios, and the market could be showing softness above the normal autumn slow-down.

Affordability in Chelsea Fairways

Affordability and rising prices

We have seen rapid price appreciation from recent market lows in 2007-10 in this particular submarket. Rising prices are great for sellers, but are they good for buyers? How do the increasing prices affect affordability?

Chelsea Fairways is a newer subdivision on the southeast side of Chelsea in Michigan. It has had a handful of developers active over the years, with the initial sales starting in 2002 and stalled around 2006 when the market slowed down locally. The final build out was completed in 2016 by a different builder, but throughout, the housing stock remained similar in quality and scope. Arraying the sales by price less concessions, it is easy to see how the bottom of this market was towards the 2008-10 period, with rapid increases from 2014 through 2017.

Other than completing the build-out of the development, not much has changed in the subdivision. The houses remain similar, the housing stock has aged somewhat, but the area is well maintained and continues to be a popular subdivision.

How do the increases in price affect affordability? We hear arguments about how the low interest rates made payments much lower, allowing buyers to stretch their housing dollars, but interest rates have been increasing slightly over the years based on the data found through Freddie Mac (see link below) which references historic interest rates by month.

One sale sold and resold a few times during this period, and is a good indicator about how payments would change over time with the hypothetical same buyer, with 20% down payment and prevailing interest rate for the time. In June 2012 the house sold for $226,200 and had taxes equivalent to $427 per month. Interest rates showed as 3.68% at that time. In May 2017 it sold for $335,000 and taxes of $493 per month. Interest rates showed at 4.01%. In July 2018 it sold for $359,000 and had taxes of $480 per month. Interest rates showed at 4.53%.

Based on the old rule of 28% housing-debt to income ratio, the following tables shows how the increasing interest rates and mortgage payment, increases the amount of income necessary to afford the same house. Although the 28% rule no longer applies, it is relevant in gauging changes in affordability. The same house purchased today would have an increase of almost $500 per month compared to six years ago. Does the typical buyer have the additional $500 per month to spend on mortgage payments, and would it affect the amount they could set aside for eventual needed repairs on the house? The increase in the properties sales price in six years was 58.71%. The rise in property payments over the same period was 54.25%. Have incomes increased over 50% in six years?

Of course, this example may be extreme, but since the sale was recent, and it sold several times over the past six years, it was germane. Interest rates rose, taxes declined slightly from the 2017 to 2018 period, making the payment a bit less than would otherwise be expected. In 2012, most of the houses sold were in the mid $200,000’s. There were a few REO sales that brought median and average lower, but the five non-distress sales had an average price of $236,274, therefore the sale used as a test was in the range of the others. In 2018 there were five sales with an average price of $372,300, also indicating an increase of over 57% in that same period.

Is this type of increase, coupled with the increasing interest rates and increasing taxes (for the most part) partly responsible for the current slowdown we are seeing? Is it just that we are entering a traditionally slower time of year? I do not have a crystal ball for the future, but throw out the question about affordability, since most people I know did not have a 50% increase in income over the past six years that would be what is needed to afford the same house.

Historic interest rates found through the following website:

http://www.freddiemac.com/pmms/pmms30.html

What is a comparable sale?

You have been working with your buyer now for five months. They have written six offers and have lost out on each in a bidding war. A new house comes on the market which meets their needs, and frankly, they are tired of making offers and losing out on the deal. This time they decide to come in with an offer substantially above asking price in order to beat out the myriad other offers they expect are coming. The strategy works and they win the deal. Trouble is, they still have to obtain financing. The offer does include a three percent concession for closing costs, which the seller was happy to agree to considering they accepted an offer that was twelve percent higher than asking price. They were particularly happy as the only other offer they received was slightly less than asking. This happens. The seller’s agent is not under any obligation to say how many offers were received nor what the offer prices were. The weary buyer offered in good faith to secure the property. They simply did not want to lose out on yet another property.

Along comes the appraiser for the buyer’s mortgage lender. The appraiser studies the market, notices that the market has started to cool, and that instead of houses receiving ten or more offers at a time, now they are receiving only one or two, if any. Houses are starting to remain on the market a bit longer than they were. The sales the appraiser analyzes are good comparable properties, but they all sold slightly lower than the asking price for the property, and 12-14% lower than the agreed upon sales price. After analyzing the market and the sales, the appraised value falls short of the sales price by 12%, in line with the asking price. The question is, do you try to renegotiate the contract immediately, or do you take the route of requesting a reconsideration of value claiming the appraisal was inaccurate and submit several sales that you say are better than those included in the report?

How are they better? Is it just that they sold higher than any of the sales the appraiser used, or are they actually comparable properties? Are they already addressed in the appraisal report? Sometimes there is a narrative section which addresses sales that were considered and were not included in the comparable sales grid for one reason or another. If you have the opportunity, read the appraisal report in its entirety first, as you may find the report had a compelling discussion related to why the sales included were the best available and how the value was arrived at.

A comparable property is one that is a substitute for another property. It is uncommon to have properties that are directly comparable since every house has something unique about it. A car analogy might help you in choosing comparable properties for your market analysis, or to provide appraisers on your sales when you meet them at the property (and no, we do not mind having sales offered as long as there is no expectation that we are going to use them, just consider them).

Most people will want to buy as much as they can for as little as possible. If you have a budget for a new car of $25,000, it is unlikely you would be out looking at BMW’s or Mercedes, whereas if you have a budget of $60,000 and want a German car, you are unlikely to be looking at VW Bugs. Is the VW Bug comparable with a BMW 5-Series? Not likely. Are they both German Cars? Of course. Would the buyer of a VW Bug choose a BMW 5-Series if they were the same price? Most likely. Would the buyer of the BMW 5-Series buy the VW Bug if they were the same price? Highly unlikely. You get the picture.

This is the same idea with comparable properties. While a buyer of a good basic 1,500 square foot tract house would likely jump at the chance to buy a 2,500 square foot semi-custom house if they were the same price, in equal locations, the converse would not be the case. The reason for these basic terms is that we have all seen agents provide appraisers “comparable” properties that are anything but. To be comparable, the likely buyers of one would have to consider the other, so it is not only that the buyer for the subject will consider a far superior property, but the buyer of that far superior property would want to be reasonably considering the subject.

What does this mean when you provide sales to an appraiser? First, look for what the typical buyer for your property would truly look at as a substitution. When you do that, look at those sales in the same vein, as whether your property would be a reasonable substitution. Sometimes there is nothing even approaching comparable to your property. In this instance, look to what else has sold that has some element of comparison, such as location, or quality and size, and then try to find something that is obviously not as good as your property as well as something that is better. In that manner, at least you will know that the property should be worth more than something and less than something. Appraisers will do this on those unique circumstances when there is truly no comparable property to chose from.

This bit of wisdom will help you choose the comparable properties for your market analysis, and give you a good basis of comparable properties for the appraiser should you wish to share them.

Saline MI market trends

While the market appears to be moving at breakneck speed in parts of the country, even in some of the most popular markets, it is not exactly so. Changes occur constantly, with submarkets having different appeal at different times.

The data below is that of my community, Saline MI, just south of Ann Arbor. Although the data presented does not break out submarkets within Saline, what it does is break out by price range. I could have expanded the price range above the $501,000 mark, but chose to keep it at this level for simplicities sake. The way the data reads is as follows:

The chart shows the number of total active listings, then those under contract, one years’ worth of sales, and supply compared to the past year. Finally, it shows the Contract-to-listing ratio (CTLR) of percent of properties on the market that are under contract. This is relevant as it gives an overall pulse of what is happening in the market, with 20% or less being a buyers’ market based on my experience, and over 35% a seller’s market. I have run these in price ranges as shown below, and have been tracking occasionally to see any changes. This particular grouping is interesting because what we are seeing is the early spring market, the height of the market, the early fall market, and now the late fall market. I will keep running these types of studies throughout the year to see if we have changes that start to happen, but what I am seeing from this is the expected slow-down as we head into winter.

Comparing March to June, the rate of absorption overall has increased and inventory in general has increased. The price range between $201,000 and $300,000 showed a slight slow down in absorption, while anything over $301,000 showed an increase in activity.

Compare early fall to late fall and the market again is changing, with the CTLR dropping and showing more balance. The greatest absorption has generally been in the $401,000-$500,000 range based on this information, with the exception of the current activity in the under $200,000 range. In both of these cases, over $501,000 is much lighter absorption in general.

We have gone from 34.58% CTLR in March, to 41.29% in June, then 29.35% in September and 28.88% as of today. That is for the entire Saline market, with different price ranges showing different absorption rates depending on when the data was run.

What does this all mean? Long and short is that it shows how the markets change as far as activity based on the time of year, as well as in what particular price ranges the market is hottest at each one of these periods. It shows that although the market may be “hot” in one segment, another may be quite cool. Of course, this is by price range as opposed to an actual submarket, but the logic behind it remains the same.

Hope everyone finds this interesting. If you have any questions about appraisals in the Washtenaw County market and beyond, please let me know. Feel free to visit my website at https://annarborappraisals.com for the types of services provided and the coverage area.

Data culled from the Ann Arbor Area Board of Realtors MLS