Property Value/Appraisals RANT

[MossRoad]

When people start looking at a home as an investment (something to be sold later at a profit) people tend to start getting greedy, looking for big bucks. So they take bigger risks if they think there is bigger reward. They hear about people making huge money on real estate deals, so they buy into the thought that they can do it, too. The trouble is, just like the stock market which most people are not good at, most people are not good at mortgage speculation. They play their mortgage like they play the stock market. Unfortunately, the worst stock market strategy is to attempt to time the market, guessing when to buy low and sell high, instead of slow, steady, dollar cost averaging.

No one should treat their primary home as an investment to be speculated on.

 

[vtsnowedin]

I always thought a house was worth what a buyer would pay or it.

Your both right. A home or anything else is worth what it will bring from a willing buyer. But a buyer has to have income from somewhere to make the purchase with and the vast majority of income comes from yearly employment so some multiple of yearly income is what a buyer is willing to pay as that is what he has in hand or can expect to come up with over the life of a mortgage.
In a suburban market with some industry within commuting distance the wages paid in that industry are the source of what the workers are willing to pay. Let the factory close and the payroll is gone and the willingness to pay goes with it. My own area is corrupted by retirees coming up from the city paying city prices for trophy homes or last extravagances and young people with a trust fund that want to "live closer to nature" . The first good snowstorm where no one comes to plow the driveway until they call and "Pay" someone to do it is quite a revelation to some of them.

 

[two_bit_score]

When people start looking at a home as an investment (something to be sold later at a profit) people tend to start getting greedy, looking for big bucks. So they take bigger risks if they think there is bigger reward. They hear about people making huge money on real estate deals, so they buy into the thought that they can do it, too. The trouble is, just like the stock market which most people are not good at, most people are not good at mortgage speculation. They play their mortgage like they play the stock market. Unfortunately, the worst stock market strategy is to attempt to time the market, guessing when to buy low and sell high, instead of slow, steady, dollar cost averaging.

No one should treat their primary home as an investment to be speculated on.

You are correct, in my opinion. I see people doing it all the time. I've been in the rent house business for over 30 years and I've had rental houses that were much nicer than the one I live in. People would occasionally ask me why I would live in the house I did and rent out nicer places. They just didn't understand the concept that you just so ably described.

 

[ultrarunner]

You are correct, in my opinion. I see people doing it all the time. I've been in the rent house business for over 30 years and I've had rental houses that were much nicer than the one I live in. People would occasionally ask me why I would live in the house I did and rent out nicer places. They just didn't understand the concept that you just so ably described.

I'm in exactly the same situation... except I have lived in several of my rentals.

My tenants have much better than myself and I say god bless them. It's the new cars, latest electronics and nice vacations that keep them from home ownership... who is to say they are wrong and I'm right?

Heck... I would rent if I could find a landlord as good as I am.

My home is very much circa 1950's... linoleum, Formica, ancient applicances. My tenants have granite and new applicances.

A gave a co-worker a washer/dryer for her daughter... she commented on how nice the rental house is and the great views from the living room. I told her that was a big reason why I bought the property... she was surprised because she thought I was the handyman...

 

[Tomtint]

For decades, homeownership has been a good investment people buy a home, live in it and build equity. This formula worked well. Then....Wall St needed another boom. The .com bust, among other things went bust and the suits needed to create another pay streak. They did and we now know the result of that. The towns where building boomed loved the new McMansions because of the big tax bills they were able to hand out. Problem is, they are not worth now what they were then and in many cases the towns won't take a 50-60% hit on the tax rolls that represent true market value.

 

[zzvyb6]

You should just be quiet. When I moved to our area, it was very rural. All the development has done is raise my taxes. New folks means new schools, new roads, new fire department stuff, more police, all paid for at todays prices. And a lot of development never pays for itself. We have had a bunch of small factories locate here over the years. All of them get tax deals to locate here, low cost development loans, training funds from the state, all for $8 per hour jobs. And these places are owned by big corporations, not little businesses. And usually by the time the tax breaks run out, the companies come up with a deal: give us more or we will leave for someplace that will. Or they just walk away, send the jobs to Mexico.

So, lets build that new Latson road expressway interchange so we can get ANOTHER Home Depot, CVS, Walgreens, a new fast food court, another outlet mall, a trailer park, a condminium association and a new State Police post. These are needed because people here in Howell and Brighton are so fat that they can't fit into Super Duty trucks to travel the 7 miles between existing facilities. (Better put an EMS play station in there, too, while I'm thinkin of it). Their government/Medicare provided scooters need charging stations and heavy duty 6 bag mix cement pathways to get there, too.

The 'Developers' are already lining up at the tax abatement trough.

 

[two_bit_score]

So, lets build that new Latson road expressway interchange so we can get ANOTHER Home Depot, CVS, Walgreens, a new fast food court, another outlet mall, a trailer park, a condminium association and a new State Police post. These are needed because people here in Howell and Brighton are so fat that they can't fit into Super Duty trucks to travel the 7 miles between existing facilities. (Better put an EMS play station in there, too, while I'm thinkin of it). Their government/Medicare provided scooters need charging stations and heavy duty 6 bag mix cement pathways to get there, too.

The 'Developers' are already lining up at the tax abatement trough.

Thats something that should be stopped.

 

[300UGUY]

I always thought a house was worth what a buyer would pay or it.

Yes, but what he can pay is determined by what his income is. So as long as the wage level is depressed, so will housing prices.

 

[300UGUY]

[/B]


Thats something that should be stopped.

It won't. The local developers have been trying to get this built for 20 years. What really gets me is that the vacancy rate on commercial property along Grand River near Latson is 30% or more. And they are going to build some more. And they will get lots of tax incentives.

 

[newbury]

<snip>
Sticking to the 2010 Appriasal, and the 2013 appraisal only. CLEARLY the 2010 appraisal was wrongly inflated. AG zoned land has NOT dropped from $4,500 per acre to $3,000 in 29 months. <snip>

The 2010 appraisal may not have been inflated that much. When I just called up Ladysmith, Va on a realty web site it showed a LOT of foreclosures.

Have you gone down to the tax assessors office and compared values of other similat tracts of land?

The ASSESSED value of one of my houses went from about $450K to $250K in 2 years.

But when an appraiser appraises he has to take in PAST sales. When they did the one for my home in Mississippi the guy had to go back about a year for comps. So your appraiser may have been looking at sales well before the market bottomed.

Have you cut much lumber since the first appraisal?

I'm AMAZED that forested Ag land was appraised at $4.5K as Ag land in 2010 unless it had fully mature trees about to be clearcut for timber at 2007 prices. I'm amazed that it still appraised at $3K. I paid about $1K and acre for the last 73 I bought in Mississippi, and there's some next to me that's almost ready for harvest and they are only asking about $2K.

I'd be surprised if you'd get much relief from the bank but they might let you do a refi at todays rates.

Hang in there, keep improving the property