Appraisers' Free Forum

For the past 4 days I've been working on a subdivision appraisal... it's going to the steps. Seems strange because the builder sold 10 units out of 49 since Sept, is still actively and building, and has a pending sign one of his other units. So I guess with what little they have coming in, they're playing cash flow boogie... a little here, a little there. Anyhoo, I'm working on absorption rates, and found in 2005-2006, builders were taking lots at 5-10 per month. Then in the end of 2007, I saw builders taking 8-10 lots every 3 months. From the end of 2007 to now, they are buying ala cart... one lot at a time, one lot per month. Where before, we could easily justify 5 or more units per month, I'm going to hard pressed to find any S/D unloading more than 2 per month. At that rate, it won't pay the interest. About the only thing I can tell the bank is find a cash buyer who can sit on it for 3+- years, I'm already killing it because they over paid for the land. A couple months ago, we met one investor who bought an 80 lot S/D at $94,000 per acre. That is what the raw dirt cost in this area!! What a hell of a deal, he bought it for the dirt and got 5mil worth of improvements for free... it's ready to be built on. Eyez spyz the deal all of the time, but me eyez are bigger than me wallet.

Killed a nerdin today... some dude decided to try and flip land, and got caught right at the end. Bought 3 parcels of Ag land at a little over $110,000 per acre, spent $$$$$$$ to re-zone, and they might be lucky to get $95,000 per acre in the next couple of years with the residential zoning.

Free Fall!!!!

M L wrote:At that rate, it won't pay the interest. About the only thing I can tell the bank is find a cash buyer who can sit on it for 3+- years, I'm already killing it because they over paid for the land.

It's always good to see an appraiser doing his job... even if it is tough.

WM wrote:Free Fall!!!!

For land, hell yeah. Existing house are still moving, new are slow, but last years land speculators are roasted, toasted, and dun fer!

Interesting stats from SE Joplin:

2006: 361 sales - MLP $89,900 MSP $88,000 Delta% -2.11; ALP $109,969 ASP $106,583 Delta% -3.08

2007: 362 sales - MLP $92,700 MSP $90,603 Delta% -2.26; ALP $114,883 ASP $110,904 Delta% -3.46

April 1, 2007 to April 1, 2008:

Y-T-D: 357 sales - MLP $94,900 MSP $90,206 Delta% -4.95; ALP $115,627 ASP $111,696 Delta% -3.40


Average Sale Price (ASP) percentage difference 2006 to 2007 = +4.05

Median Sale Price (MSP) percentage difference 2006 to 2007 = +2.96

ASP Delta% 2006 to YTD = +4.80

MSP Delta% 2006 to YTD = +2.51

This small area of the market is apparently not increasing as fast as it was a year or so ago. Seems like the average difference in LP to SP is a little higher than it was before, too. Would you call this market declining? YTD average DOM is 100 2006 was 95 days and 2007 was 101. Current active inventory is somewhere between 6.12 months and 7.91 months, depending on whether last month's sales are used (higher figure) or whether YTD monthly sales are used (lower figure).

OFHEO says MSA (whole area, not small area listed above) has one year appreciation of 2.77 percent and quarterly increase of 1.44 percent and five year increase of 19.34 percent.

You make the call.

That doesn't seem so bad to me.

M L wrote:That doesn't seem so bad to me.

Remember that it is only one of about 15 MLS areas that make up our MSA and surrounding territory.

It doesn't seem so bad, and so the question is whether to check declining. It is clearly less good than it was. For reference look at the same area in calendar year 2004. There were 367 sales.

MLP was $82,500 and ALP was $97,995; MSP was $81,000 and ASP was $94,854. Average DOM was 96.

No, I would not call it declining. While the marketing time has extended a little, and owners must have their houses in top shape to compete, the prices have not fallen. In fact, your numbers shown they have risen slightly... probably in line with inflation, so I'd say stable. But I'd also include some discussion of what has happened over the last 12-20 months with quarterly stats, so the reader can see the decline, see the bottom, and that you are now stable with increases being in line with inflation.

BTW, I'm seeing the same thing in my area with existing housing less than $300,000. The top end is still hurting, and buyers are bargain shopping big time. So we aren't buying and flipping anything over $150,000... $200k tops. Our area is still growing in the job market, and we have done well with our $100-150k homes. People coming in have got to have a place to live, and they are buying the most basic house to ride out the storm.