Blog

RAC Appraisers Provide High Ceiling Insights To Wall Street Journal

wsjlogo

The Wall Street Journal reached out to RAC appraisers Michael Hobbs and Jonathan Miller for their valuation insights on high ceilings in new luxury towers.

Wall Street Journal August 11, 2016 For Ceilings, What a Difference a Foot Makes
Buyers of luxury condos will pay a premium for ceilings that are even just a foot higher than the standard, but tall rooms pose challenges

While ceilings are rising throughout new luxury towers, the tallest ceilings are typically found in the highest, most expensive apartments, says Michael Hobbs, the owner of PahRoo Appraisal & Consultancy in Chicago.

High ceilings are often found in apartments that offer other luxury amenities, such as tall windows and concierge service, which bolster their value, says New York appraiser Jonathan Miller—but not in every case.

Chicago Market Summary

Mobility Magazine of Worldwide ERC, June 2016

By Kevin P. Maloney

The northeastern Illinois market is made up of Cook County, which contains the city of Chicago, and five surrounding “collar counties” of Lake, McHenry, DuPage, Kane and Will. The city of Chicago, with a population of around 2.7 million, is the area’s primary economic engine.  This report focuses on Cook and DuPage counties, as they are the most populous counties and see the greatest amount of relocation activity.  These two counties contain more than 6 million residents and account for around 80 percent of the population in the northeastern Illinois market.

LOOKING BACK

Housing prices in the northeastern Illinois market increased from 1997 through 2007. Some areas saw market peaks in 2007, while others continued to see appreciation through the third quarter of 2008.  The Great Recession hit in earnest in September 2008 and brought value declines to all markets.  However, the magnitude of the decline varied significantly.  The greatest percentage losses were typically seen in communities that entered the recession with a median home value that was below average for the region.  Some communities began to see values move upward in 2012.  However the most severely impacted areas did not see an upward trend in value until early 2014.

market-snapshot

The rate of recovery in Cook County for detached home values varies dramatically from one area to another. High-demand areas in the city of Chicago have seen the strongest recovery.  For example, the Lincoln Park neighborhood had a median detached home value of $1,425,000 in 2007.  The median value in this neighborhood dropped 11 percent by 2011.  However, by 2015 the median value was more than 11 percent above the prior peak in 2007.  Median detached home values above the prior peak in 2007 can also be seen in other areas of the city of Chicago, such as West Town and Lincoln Square.  These locations all have strong transportation links to the central business district, and residents have rising levels of disposable income.  The availability of vacant land in the high-demand areas of the city of Chicago has kept additions to the detached home supply at a relatively low level, and most building is on an infill basis.  The city of Chicago is seeing the greatest competition from new construction in the upper end of the market (homes priced above $1.5 million).

 

None of the suburban areas of Cook County have seen median home values push back up to the prior peak levels. The highest-demand areas in suburban Cook County typically remain approximately 8 percent down from the peak.  The worst-hit communities often still have median home values down more than 40 percent from the peak.  An example of a community that continues to be profoundly impacted by the great recession is the town of Cicero, which had a median detached home value for the year of 2015 that was 45 percent below the median value in 2007.

The DuPage County market shows the same broader pattern as Cook. Communities that entered the recession with high median home values typically saw a lower percentage drop during the recession.  For example, the city of Naperville had a median detached home value of $452,000 in 2007.  The median value fell 16 percent below the 2007 number by 2011 but recovered to only 9 percent below the prior peak by 2015.  The village of Hanover Park, on the other hand, had a median home value of $238,000 in 2007.  The median value was 46 percent below the peak by 2011 and by 2015 the median value remained 27 percent below that of 2007.

statistical-snapshot

The condominium market in DuPage and Cook counties has seen appreciation flatten over the past year. Condominium construction remains limited throughout the entire market area.  A large number of rental units are being built in the city of Chicago, and these units may ultimately be converted to condominiums.  However, any major addition to supply will be at least three years down the road.  The limited levels of new supply in most market segments should keep values stable to moderately increasing over the next 12 months.  Higher-priced attached properties face the greatest downside risk, as much of the impending supply is focused at the upper end of the market.

In Cook County, distressed sales (short sales, foreclosures, and bank-owned properties) made up 42 percent of the total sales volume reported in the MLS for the year 2011. Distressed sales in Cook County for 2015 fell to 22 percent of the total sales volume.  In DuPage County, 34 percent of the total sales volume consisted of distressed transactions in 2011.  The number slipped to 15 percent for 2015.  While the numbers above clearly show that the Chicago region is heading in the right direction, the number of distressed sales still remains drastically higher than normal.

LOOKING FORWARD

The hope is that the dynamic growth seen in some areas of the region will exert a positive secondary impact on communities that continue to struggle. While major political and economic challenges still occur, the city of Chicago clearly remains the Midwest’s cultural and economic hub.

Kevin P. Maloney is a certified general appraiser with Maloney Appraisal, Inc., in Chicago and is a member of RAC (Relocation Appraisers & Consultants). He can be reached at +1 773 281 6013 or maloneyappraisal@comcast.net.

California loses another company to North Texas

C-130North Texas says “Thank you”

Another company has decided to move its corporate headquarters to Fort Worth to take advantage of the Lone Star state’s business friendly environment and the city’s longtime history in the aerospace industry.

The move is historic for Burbank, California-based C&S Propeller — an FAA and EASA certified repair station for propeller and airplane maintenance — which has been in California for nearly five decades.

See the full story in the Dallas Business Journal.

Customary and Reasonable Fees: The Elephant in the Room

Appraisal Buzz, Spring 2016Ernie Durbin

By Ernie Durbin, SRA, CRP, RAC Member

Wikipedia describes the metaphor “the elephant in the room” as, “an obvious truth that is either being ignored or going unaddressed. The idiomatic expression also applies to an obvious problem or risk no one wants to discuss.”

Somehow, recent events in the valuation space have deflected attention away from the elephant in the room, customary and reasonable fees. Real estate appraisers are resilient folks. They can adapt to change as well as any other professional. But like everyone else, they don’t want to do more work for less pay. Most of the issues facing the valuation space today point to one simple problem- customary and reasonable fees. It’s time to address this obvious problem and the risks that it poses to our industry.

Enjoy the full article here.

 

Worldwide ERC and RAC Appraisal Report Writing Contest

WERClogoRAC Logo - New Design

We’re excited to announce that RAC and Worldwide ERC are partnering up to hold an appraisal report writing contest, where relocation appraisers can showcase their professional expertise to the world. The winners will be announced to members of Worldwide ERC® and RAC as well as their constituents. The contest will provide terrific exposure to the best relocation appraisers in the business.

You can get all the details here: Worldwide ERC and RAC Appraisal Report Writing Contest.

“Jamba Whirl’d Center” – Coming to North Texas

jambaJuiceLogoEmeryville, California-based Jamba Inc. — which owns and franchises Jamba Juice stores — plans to relocate its headquarters to Frisco’s Hall Office Park, which will bring 100 corporate jobs to North Texas.

Jamba has signed a lease for about 25,000 square feet of office space at 3001 Dallas Parkway in Hall Office Park, which will include about 19,000 square feet of office and meeting space, as well as about 6,000-square-foot test kitchen and retail store front.

Read the entire story at the Dallas Business Journal.

Salt Lake City Market Summary

Mobility Magazine of Worldwide ERC, April 2016

By Don Mueller, CRP, RAC Member

Northern Utah, aka the Wasatch Front, is a metropolitan region in the north-central part of the state, consisting of a chain of cities and towns stretched along the Wasatch Range from approximately Nephi in the south to Brigham City in the north.  Roughly 80 percent of Utah’s population resides in this region, as it contains the major cities of Salt Lake City, Provo-Orem, West Valley City, West Jordan, and Ogden.

The Wasatch Front is long and narrow.  To the east, the Wasatch Mountains rise abruptly several thousand feet above the valley floor, climbing to their highest elevation of 11,928 feet (3,620 m) at Mount Nebo.  The area’s western boundary is formed by Utah Lake in Utah County, the Oquirrh Mountains in Salt Lake County, and the Great Salt Lake in northwestern Salt Lake, Davis, Weber and southeastern Box Elder counties.  The combined population of the five Wasatch Front counties totals approximately 2,125,000 according to the 2008 census estimate.

Although most residents of the area live between Ogden and Provo – a distance of 80 miles – which includes Salt Lake City proper, the fullest built-out extend of the Wasatch Front is 120 miles long and an average of five miles wide.  Along its length, the Wasatch Front never exceeds a width of approximately 18 miles because of the natural barriers of lakes and mountains.

The region on the other side of the Wasatch Range, including cities such as Park City, Morgan, Heber City, and Midway, sometimes referred to as the Wasatch Back, has recently shared in the rapid growth of the region.

Utah’s first settlers of European decent were the Mormon pioneers, who migrated from the Midwest in 1847, led by Brigham Young, the prophet and president of the Church of Jesus Christ of Latter-Day-Saints.  Upon entering the Salt Lake Valley, Young made this declaration:  “This is the place.” (Some say he said, “This is the right place.”) The famous statement still holds true today in regard to real estate values and investment in the Wasatch Front.

LOOKING BACK

The trends noted here are for Salt Lake County but also reflect the adjoining Wasatch Front area.  A report in February by the Salt Lake Board of Realtors notes that real estate agents in Salt Lake County sold 13,323 existing single-family homes last year.  This is a nine-year high surpassed only before the Great Recession with 15,317 homes sold in 2005 and 15,283 the following year.  The combined value of single-family homes sold in 2015 rose 22 percent over the previous year, to $4.1 billion.   The upward trend in housing prices persisted last year, logging an increase of almost 7 percent over 2014 for a single-family home, to a $272,000 median sales price, and 8 percent for a multifamily unit, to $189,000.market-at-a-glance

“There is still room for moderate house-price increases, provided mortgage rate increases are gradual,” says Cheryl Acker, president of the Salt Lake Board of Realtors.  The board report characterizes real estate in Salt Lake County as “still relatively affordable” for qualified buyers, as a family earning the median household income and devoting 30 percent of its income to a mortgage payment could afford 56 percent of the homes sold in the county in 2015.

LOOKING FORWARD

The Salt Lake Board of Realtors expects an 11 percent gain in total residential home sales of all types this year in Salt Lake County, to more than 19,000 units.  An increase of 5 to 7 percent in the median single-family home price, to $290,000, is predicted as housing demand continues to exceed available inventory.statistical-snapshot

The number of homeowners with negative equity has now dropped to 2.5 percent of all mortgages.  In previous years, homeowners were locked in to their current home and could not move up.  Hence, in 2015 the move-up market was again supporting higher levels of sales, which put upward pressure on prices.

Another benefit of improving market conditions is the huge reduction in the sale of distressed homes (short sales and foreclosed properties).  For five years, the “fire sale” prices of distressed homes dragged down overall housing prices.  In 2011, one-third of all homes sold in Salt Lake County were distressed properties; it’s no coincidence that 2011 was the year of the largest decline in prices, 9.5 percent.  The near elimination of short sales and REO sales by 2015 was also a contributing factor to the acceleration of price increases in 2015.

There is no sign of a bubble – both prices and sales are sustainable.  There is very little inventory, and prices are increasing.  The market is free of REO and short sales.  From a market perspective, Utah and Salt Lake County seems to be “the right place” to buy and invest in a single family home.

Don N. Mueller, CRP, is a professional appraiser and real estate consultant based in Ogden, Utah, and a member of RAC (Relocation Appraisers and Consultants). He can be reached at +1 801 479 6123 or donm@mstar.net.

“It was really about affordable housing.”

Toyota LogoSure, the low taxes, relaxed regulatory environment and Central Time Zone are nice. But none of those factors tops the list of reasons Toyota decided to plant its North American headquarters in Plano, bringing in more than 3,000 jobs, mostly from California.

The main driver of Toyota’s move from Torrance, California, was housing costs, according to Albert Niemi Jr., dean of the Cox School of Business at Southern Methodist University, who has inside knowledge about the move. Niemi shared the anecdote at an SMU Cox Economic Outlook Panel on Friday morning.

“It wasn’t so much that we don’t tax income,” he said. “It was really about affordable housing. That’s what started the conversation. They had focus groups with their employees. Their people said, ‘We’re willing to move. We just want to live the American Dream.’”

Toyota did the math and found that housing costs in Los Angeles County, where Torrance is located, are three times per square foot the cost of a house in Dallas-Fort Worth.

“They’re paying the same salary,” Niemi said. “So in real terms, they’re going to triple the affordability of housing they can buy if they move to Texas.”

Read the entire article at the Dallas Business Journal.

Texas Keeps Getting Bigger – “Four Texas metro areas together added more people last year than any state in the country”

Texas Keeps Getting BiggerU.S. Census Bureau – MARCH 24, 2016 —

Four Texas metro areas together added more people last year than any state in the country except for Texas as a whole, according to new U.S. Census Bureau population estimates released today. The population in these four metro areas increased by more than 400,000 people from July 1, 2014, to July 1, 2015.

The Houston-The Woodlands-Sugar Land and Dallas-Fort Worth-Arlington metro areas added about 159,000 and 145,000 residents, respectively — the largest gains of any metro areas in the nation. Two additional Texas metro areas adjacent to each other — Austin-Round Rock and San Antonio-New Braunfels — were each also among the 16 nationwide to gain 50,000 or more people over the period.

These four Texas metro areas collectively added about 412,000 people. Texas as a whole gained about 490,000.

The statistics released today provide population estimates for our nation’s 381 metropolitan statistical areas, 536 micropolitan statistical areas and 3,142 counties.

Eight counties drove Texas’ metro area growth and were among the 20 counties nationwide that gained the most population between 2014 and 2015. Altogether, they added 306,736 people:

  • The Dallas metro area contained four of these counties: Tarrant, Dallas, Collin and Denton.
  • The Houston metro area contained two: Harris, which led the nation by gaining more than 90,000 people, and Fort Bend.
  • Bexar, in the San Antonio metro area.
  • Travis, in the Austin metro area.

AMERICA’S 100 LARGEST LANDOWNERS

Land Report 100While not related to the relocation industry, I found this very interesting and wanted to share it with everyone.  I hope you enjoy.

Few material possessions speak to “having” as do acres upon acres of one’s own land. Land to ranch, to fish, to hunt, to farm, to grow timber, or merely to wander over or gaze upon is like almost nothing else. It concretizes place-ness in most of our minds, and it’s the finite raw material without which we’d have no home building or residential development.

Here’s the 2015 Land Report 100, a 5th annual analysis that profiles America’s 100 leading individual landowners. It’s a production and publication of Fay Ranches Inc., a land broker.

Researched by Jeremiah Jensen, Lisa Martin, Katy Richardson, and Roxanna Thompson, the piece profiles John Malone, Ted Turner, and the 98 other families, dynasties, and individuals who own the millions of acres of America’s most pristine tracts, whatever the purpose.