Trends Archives - annarborappraisal

Uncertain future, forgetting the past

Our collective memories tend to be short. Maybe it is human nature? I cannot even pretend to understand why we forget the past or how it may predict the future.

Not that long ago, the United States in general experienced a significant decline in property sales prices due to the Great Recession and the mortgage market fallout. Ann Arbor, the general community I have called my home for over 55-years, was not immune to the fallout. Ann Arbor is somewhat insulated from national market forces in that we are a university community, and the university brings with it a lot of stability due to student life, research and development, and the industries that tie in to the university. That said, we are not immune.

In June 2019 I wrote a piece about Ann Arbor for Mobility Magazine. In it I included a year over year chart of all sales through the local MLS back to 2005. This information clearly shows a declining trend from the 2005 data down to a low point between 2009 and 2011. Price increases both with single-family houses and condominium units started in 2012 in earnest. As of a 4/9/20 data run, there are signs of a leveling of prices as a whole, and a minuscule decline in prices with condominium units.

Year to year trends. Houses in blue, condominium units in orange, new construction included

With the World Health Organization officially announcing on 3/11/20 that the Coronavirus was a pandemic, our world started to change. On 3/23/20, Governor Gretchen Whitmer announced a “stay at home” order affecting all non-essential businesses, which included real estate showings. On this date, our world changed even further.

Buyers, sellers, and the Realtors who work with them are adaptable, and some transactions have continued via virtual showings. Many agents have noted that their buyers are reticent to purchase in this manner. This is logical, as anyone who reviews MLS photos will realize photos are often not truly representative of a properties condition due to enhanced photography, and the allowance (in our MLS at least) of virtual staging. Photographs of detrimental conditions are not usually front and center. Therefore, although there is still activity with some buyers and sellers who need to move, for the moment we are largely on hold.

Where will prices go when the stay at home orders are lifted? To me it is anyone’s guess, although there are factors that we should consider. One factor to consider is that prices show as already flattening by the 4/9/20 data run (not the same period as previously, but only two months and a couple days off, still containing one years’ worth of sales). For example, for all Ann Arbor sales, the median price increase was only $3,000 from $390,000 to $393,000, and condominium units saw a very small decline from $238,000 to $233,000 in this same period. If prices had already started to level even with an extreme shortage of inventory, what will happen when the market unfreezes and buyers and sellers are free to move around again? What happens if the unemployment rate tops 30%? What happens if it only tops 15%? Will interest rates be reduced even further to spur activity? What about property taxes and their effect on affordability? Will buyers reduce their price range so as to be better able to withstand future catastrophes? Will the stock market continue to be mercurial and buyers feel more comfortable having assets in something solid, like real property?

Agents in my market are largely optimistic. The very tight supply compared to heavy demand over the past few years had driven prices higher, but being a numbers person, it does not show in the data that I ran through the MLS as noted above. Granted, the data that I culled from the market included all sales within the district, and different markets within the wider school district have moved at different levels, but overall, this is meaningful information.

Optimism is a good thing; it beats being Eeyore. That said, our market is not immune to declines in pricing, as evidenced by the simple chart shown above.

My crystal ball is broken and I cannot predict the future. If I could, I wouldn’t be writing this particular blog post. The idea however, is we should examine different forces within the market and not only focus on positives or negatives, but take a more balanced approach. As appraisers, we let the market tell us what is happening, and just over two weeks into our States shutdown, it is simply too early to call.

Stay well my friends. Take care of your health, stay home and save lives. Collectively we will come through this, we simply cannot predict where prices will be when it is done. At least I cannot.

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.

Westridge of Dexter

Westridge in Dexter

Pass under the historic Dexter Railroad Bridge heading west, and on your right, along the curve towards Pinckney, is Westridge subdivision. Like many developments that took place during the housing boom of the late 1990’s and early 2000’s, this development was a roaring success until the local real estate market started to hit the brakes in 2005. Most houses in the development were built between 2000 and 2006, although there were a handful in 1999 and 2007. The remaining lots started to be sold off to individual builders and new construction began again in 2010. The development splits between these older and newer houses, with the newer houses primarily situated on the northern side of the neighborhood, although there are scattered newer houses throughout. Only a couple vacant sites remain at this writing.

Houses are tract built, but with variety. There is ranch style, colonial, and some transitional houses with first-floor owner’s suites. Many have walkout basements and back to wetlands or wooded areas. Some back to walkways or parks. There are smaller houses, just north of 1,300 sqft, as well as some larger houses closer to 3,000 sqft. The newer houses tend to be higher priced and with modern upgrades as expected.

Westridge has a fortunate location adjacent to the Huron River and attendant park systems. It is along the Border to Border trail, offering easy access to both recreation and to the city center through a well-maintained pathway. This is particularly attractive in that there are no walkways along Island Lake Road, near the Railroad Bridge, making pedestrian traffic potentially life-threatening otherwise. The pathway that connects the subdivision to the downtown core requires only a few blocks walk, and many buyers consider this a particular selling point for this development.

Newer subdivisions appear to have been hit fairly hard during the Great Recession, at least locally. Westridge was no exception. The Ann Arbor Area Board of Realtors, from where my research is gleaned, maintains listings back in time, but only in a robust manner to 2006. In a map search (above) of the development, I found sales back to 2001, but only a limited number. The data that follows is a scatter graph of all sales at their adjusted sales price, over time. Following that, is a yearly chart showing differences in sales prices per year, and at the end is information about current activity.

As is seen in this scatter graph, the market declined to a low point between 2008 and 2009, and current prices are well above the prices seen in 2001-2006 before the decline.

Laying this out in a yearly manner makes this information a bit more readable. The data below shows only median adjusted sales prices and price per sqft for simplicity purposes. Caveat on the data is that between 2001 and 2003 there were only minimal sales retained, and the number of sales started to increase in the MLS in 2004. Nevertheless, this information shows how the market declined over time and how it has recovered and exceeded previous prices. In the median adjusted prices, there is a blip upwards in price in 2005 followed by a decline to 2009. The 2010 price jump relates to size, therefore the next chart that follows shows price per square foot.

Looking at price per square foot the data shows the peak in 2003, declining steadily from 2004 through 2009. In my experience as a local appraiser, this appears more reasonable. I recall, in mid-2006 telling my husband the market had dropped around 10% and I didn’t see it going much lower. Oops.

The median Sales price since 12/5/17 (one year to the date of this writing) was $400,000 and the median asking price $420,000 on a 2,145 sqft house. There are currently two offerings in the development not under contract. The median asking price is $372,450 and a median 2,047 sqft house. Asking price is lower than the previous asking price of the sold properties by 11.32% and median size difference is 4.57%. Therefore, this information shows that prices may be down, as the asking prices are lower still than the difference in size. There are two properties under contract, and their median asking price is $369,900 and size 1,967 sqft. That means the asking price is 11.93% lower and the size is 8.3% lower, still indicating there is a decline potential.

Until we have a bit more data it is hard to call, but as an appraiser this information is meaningful, and I would not be calling the market increasing in spite the recent price increases noted in the charts above. For those of you actively participating in this market, please pay attention to “chatter” from buyers, sellers, agents and appraisers. Who knows exactly what will happen going forward, but there are indications that the market is changing.

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!

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

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

Dissolution appraisal reports

Appraisals for marital dissolution

There are many reasons to obtain a professional valuation on your property. One of the most difficult and sensitive reasons is for marital dissolution. Since the marital home is normally one of the most valuable jointly held assets, taking on an appraiser to do the work should never be done lightly.

As in all appraisal reports that are completed, utmost care should be taken in considering factors that influence the value of the property. Knowledge of the local market, including understanding supply and demand, absorption into the market, and pulse within the subject’s submarket is very important. Equally important is an understanding of buyer preferences in the submarket which the property operates within. For example, if the market expects two full bathrooms but the property has only one, how does that affect the value as well as the marketability of the property? If buyers expect a three-car garage in newer homes, but the subject has only two, does it change the buyer pool altogether? Is the market slowing; is it increasing; are buyers out in droves looking at properties or are they pulling back and waiting? These are some of the types of questions appraisers examine as they study the market related to the appraisal report.

The written communication, the appraisal report.

When we think of the word “Appraisal”, we often think of the communication of the appraisal. The appraisal is actually the act or process of developing that opinion of value. What you, the consumer, will see, is the “Report”. The report is the communication of the appraisal (or appraisal review), which is transmitted at the completion of the assignment. As a party who is not typically reading appraisal reports on a daily basis, the communication should be addressed in a manner that is clear, understandable and not misleading. This means that jargon should be minimized, or if used, explained. It means that there may be no need to provide a mile-high analysis of the nation’s economy, but stick with specifics that relate to the property itself. Of course, it is important to discuss what is happening with the market, but for a single-unit residence, what is happening in California will not be relevant to what is happening in Ann Arbor, in most cases.

The report should contain enough information that, you the client, can understand completely how the appraiser arrived at their opinion of value, whether or not you agree with that conclusion. Sometimes clients will not agree with the conclusion, but it is critical that they understand the logic and reasoning behind it.

There are many steps that are taken to arrive at an opinion of value, and to communicate that opinion in a manner that is clear and understandable. Choosing an appraiser to handle this very important piece of the dissolution problem should be done with care. Your attorney should have suggestions for whom to use. If you are not working with an attorney, consult those who do see appraisal reports with regularity such as REALTORS, loan personnel, and other appraisers. In fact, one of the best ways to hire a competent professional to handle this sensitive need, is to ask other appraisers whom they would recommend. Time and again, a couple names will surface. Interview those appraisers and go with whom you feel most comfortable. Other avenues of finding competent appraisers is to search appraiser databases from different appraisal organizations. The Appraisal Institute has the Find an Appraiser search function found here The Relocation Appraisers and Consultants has a directory search found here , and the American Society of Appraisers has a search section here.

Fees and turn times.

Every appraiser sets their own fee schedule and turn time for completing assignments. Considering the time that is involved in properly identifying the problem to be solved (which includes the different factors that influence value), determining what is necessary to solve the problem, implementing those processes, and then communicating the findings, do not expect the appraisal report to be an inexpensive part of the dissolution process. Given the hourly rate of most attorneys, expect to pay somewhere between two and five hours of your attorney’s fee for the appraisal report itself, and an hourly rate for any testimony that is needed in the event of a court or deposition appearance. If the marital home is the greatest asset that is jointly owned, this is a small price to pay for peace of mind of a job well done.

Bromley Park updated

Bromley Park is a subdivision developed and built by Pulte Homes from 2002 through 2004, south of Geddes, north of Clark and east of Harris in Superior Township in the Willow Run Public school district. It encompasses the streets East and West Avondale Circle, Ravenshire, High Meadow, Wexford and Glenhill Drives. The subdivision has open green spaces to the west and to the north up to Geddes Road, and along the south and east there are many wooded views. Along the interior streets there are some areas with woods and walking paths. The development has a shared pool with the condominium development to the west. There are 266 homesites within this detached single-family development.

Further information about Bromley Park can be located by accessing the development website at
http://www.bromleypark.org/

In 2015, dues were $425 for the year.

On 1/13/14 I ran statistics related to changes in the market from 2011 through 2013 in Bromley itself, showing a decline in short sales and foreclosure properties and an increase in arm’s length sales, as well as an increase in sales overall. Sales prices also showed as on the increase, rising from a median price of $135,500 to $169,500 over that three-year period. That information is found on an earlier blog post found here.

So how is this development faring in todays’ market? Recent sales are higher than the previous peak around 2005 (or statistics do not go back adequately that far and I ran 12-years’ worth of sales). The low part of the market in this development is between late 2009 and late 2012, and prices reached previous peaks around 2015-16, rising since then as shown by this chart.

Over the past two years, the increase has been strong as well, rising from an average sales price of $229,315 to an average of $254,167 from one year to the next (10.84% increase). The median price has increased from $225,000 to $250,000 (11.11%) with the same information, with similar average and median gross living area.

Currently there are three houses offered for sale in the development with a median asking price of $279,900 and an additional one house under contract, which has an asking price of $244,900. The gross living area for the house under contract is 1,795 sqft, which is in line with the median and average sizes of the sales in the 2-year study. The median size of the active properties is higher, at 2,156 sqft, which may account for the higher asking prices. With only one out of four houses under contract, the market shows 25% absorption, which is not robust and could indicate a shift, in particular as the one listing under contract points to a lower price than average and medians.

As there were 12 sales in the past 12-months, the current inventory indicates a 3-month supply. These factors point to a stable market, to possible pressure downward due to the one pending sale. This means, that although the trend lines show increasing, the market could be changing. Looking deeper into the sales that sold last year and the current contracted property, shows similar style houses in the same price range overall, indicating stable. An appraiser would not be faulted for calling the market either stable or increasing based on all of this information.

For any questions related to this, or other information on this website, please contact me at rachmass@comcast.net