Market snapshot – Ann Arbor/Saline

Market snapshot – comparing Ann Arbor and Saline

Prologue

I admit it; I am a data junkie. There is something about graphs and charts that I just get all-geeked out about. Maybe it is simply having too much time on my hands, or maybe it is a thirst for knowledge (hoping for the latter, but with understanding it may be the former).

Without further ado, I offer my recent take on the comparison of two markets, because they often compete with each other.

The data below is run as one years’ worth of data at a time, but compared month over month (so if you see a comparison from June 2012 to June 2013 each of those sets has an entire years’ worth of data leading up to the date.  In this first graph, I have compared the cumulative days on the market of sales in Ann Arbor school district, as exposed through the Ann Arbor Area Board of Realtors MLS, compared to the same in Saline. I took all sales and looked at the median. In both segments, days on market declined to a low point in May/June 2013, and have since risen and then stabilized. Saline had longer median days on market but shows as stable compared to Ann Arbor, which is slightly increased over the past couple of months.

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What about price?  On the median price, Saline is ahead of Ann Arbor. On median price per square foot, Ann Arbor is ahead of Saline. Why is this? It is related to median size. The median size of a house in the Saline market is greater than the median size of a house in the Ann Arbor market. As price per square foot is normally higher as size declines, it makes sense that you would see that.

If you compare month to month, for the past five months, the closed sales in the Ann Arbor market show as flat (although that is changing now) whereas Saline has been rising. If you skip down to the price per square foot, the rising prices in Saline are at a slower rate than just by the median price.

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Inventory levels as of 4/8/14: Ann Arbor had 152 active offerings in total, compared to 1,176 sales the year before, or 1.55-months’ worth of inventory (not much). Saline had 50 offerings compared to 297 sales in the year prior, or 2.02 months’ worth of supply. In both instances, supply was quite limited, and this limited supply does appear to be driving many multiple offer situations.  In both markets, the contract-to-listing ratio shows as favoring seller’s, with Ann Arbor at 40.16% and Saline at 41.18% as of the 4/8/14 run date.

When the contract-to-listing ratio and low inventory favor sellers, prices typically increase. When they favor buyers, prices typically decrease. Markets are very fluid and changeable, and what is apparent a week ago, may well change dramatically a month from now. The market is sensitive to interest rates, employment rates, income changes, and national news, among other issues.

Epilogue       

Appraisals are “opinions” of value by educated professionals. They are opinions based on factual data, but in the end of the opinion of a professional. Not all appraisers have equal qualifications and experience, and therefore not all opinions are equal. If you are shopping for an appraiser to help provide you an independent opinion of value, base your selection on the breadth and depth of that appraiser’s knowledge and experience, not the price of the appraisal assignment. After all, it is typically your largest investment, and does it make sense to be penny-wise and pound-foolish?

Rachel Massey, www.annarborappraisal.com

Latest comparison to online valuation models

Latest comparison to online valuation models

It is quite frustrating to see how many people rely on these online value estimators to either price their home, or use it for marital dissolution, or other reasons. As will be shown in a minute, these can be off by a significant amount, either low or high.

I just ran sales in Ann Arbor, in the 48103 area for the past couple of weeks. I then compared the sales prices to two online value estimators and State Equalized Value times two. The only consistency to the information is that these online value estimators overestimated on houses in need of work and underestimated on those houses that were remodeled. In only a small percentage of cases, were the value tools within five percent of the actual sales price.

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Appraisals are “opinions” of value by educated professionals. They are opinions based on factual data, but in the end of the opinion of a professional. Not all appraisers have equal qualifications and experience, and therefore not all opinions are equal.

If you are shopping for an appraiser to help provide you an independent opinion of value, base your selection on the breadth and depth of that appraiser’s knowledge and experience, not the price of the appraisal assignment. After all, it is typically your client’s largest investment, and does it make sense to be penny-wise and pound-foolish?

Rachel Massey, www.annarborappraisal.com

 

Appraising the right way – Part 1 Requiem for a Dream

http://3approaches.wordpress.com/2014/03/23/appraising-the-right-way-part-1-requiem-for-a-dream/

Reposted with permission from the 3Approaches blog post  from Woody Fincham, SRA and Rachel Massey, SRA, AI-RRS

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We are two appraisers separated by a three- hour flight or a nine-hour car ride.  We have never met in person, but have come to know one another through social media.  We are designated and recognized experts in residential valuation in our respective regions; both have had successful careers working in various positions within the profession; we are separated by enough distance that we experience completely different market stimuli.  We subscribe to doing valuation work the right way.  The way it should be done: defensible and well supported. Yet, we (and many others in the profession) are watching it being dismantled by the lenders, appraisal management companies (AMCs) and even from within the profession itself.  This is not the way that it should be, yet we still stick to our guns and we dream about how it should be regardless of the present reality.

We share a dream:

Like any great dream, it is lofty, challenging and worthwhile. We dream that we can make a living as fee appraisers, doing our jobs the proper way. The dream is to take the time to analyze the problem to be solved; research the market thoroughly including market trends; interview the market participants; analyze the sales and extract market adjustments; and then report  the opinion of value  in a way that the client can understand the  thought processes. Within this, there will be good support for conclusions and the appraisal will make complete sense to the reader. It will not leave gaping holes or questions. The opinion of value will be well supported by sales that are both inferior to the subject as well as those that are superior (and ideally equal). The appraisal will address the current market conditions and the active competition as well as the closed and pending sales.

Analysis is what we do, refined by the appraisal process, tempered by ethics and integrity all rounded out by participation in a profession that is carried out by like-mined and well-intentioned practitioners.

The dream continues:

Our clients  will truly care about the analysis and it will be meaningful to them. They need something of substance, and not simply paper for a loan closing package, or simply a report for a divorce or bankruptcy proceeding. The client understands that the valuation is based on fact, but in the end is an educated and well-supported opinion. The client understands that each report is a unique and extensive research project that is custom designed. The client is comfortable with the opinion of value because they reached out to a well-qualified and experienced appraiser; one that is rewarded the report because they are respected professionals, not just another step in a loan closing process or the cheapest one they could find.

Prologue:

We realize this is getting into the lofty and idealist side of things, hence the title of the blog.  What this series is going to focus on is some of the challenges appraisers face, and how we should handle them.  There is constant pressure on appraisers to adhere to scope of work enhancements from clients.  While we may mention customary and reasonable fees and the dynamic that the cost of business plays in the appraisal process in the course of this series, this is about what appraisers should be doing after they accept an assignment.

Rachel has years of experience reviewing appraisal reports working within the lending world as a staff reviewer and manager, and in the fee world through her private practice. Rachel has recently earned the new residential review designation with the Appraisal Institute.  Woody has been doing private fee review work for years and also has to review reports for tax assessment appeal as part of his position within the assessor’s office in Albemarle County, VA.  Between our combined experiences, we will focus on some issues that we see pop up repeatedly throughout various reports that have made their way across our respective desks over the years.