Category: News

RAC Member Francois Gregoire Named to the Appraisal Foundation Board of Trustees

 
Washington, DC (November 22, 2019) — The Appraisal Foundation announced the 2020 Officers and members of the Board of Trustees (BOT). The BOT is responsible for the governance of the organization, and appoints members and provides financial support and oversight to two independent Boards: the Appraiser Qualifications Board and the Appraisal Standards Board.

“The Foundation is fortunate to have distinguished leaders in the appraisal profession step up at this critical time to protect and advance the public trust in valuation, ” said David Bunton, president of The Appraisal Foundation. “The 2020 Officers and Trustees bring a wealth of knowledge and expertise to their roles on the Board. The appraisal profession is fortunate to have their service.”

The 2020 Officers to the Board of Trustees are:

  • Leila Dunbar of Washington, DC was appointed Chair.
  • Jeremy Gray of Pleasant Grove, Utah was appointed Vice Chair.
  • Lisa Hobart of of Birmingham, Mich. was appointed Treasurer.
  • Emerson Sutton, Jr. of St. Louis, Mo. was appointed Secretary.
  • Ronny Johnson of New Braunfels, Texas was appointed Immediate Past Chair.

Trustees who will serve in 2020 include:

  • Cindy Charleston Rosenberg of Huntingdon Valley, Pa.
  • Michael Christensen of Salt Lake City, Utah
  • Jeff Dickstein of Lake Forest, Calif.
  • Shaun Fitzgerald of North Easton, Mass.
  • Peter Fontana of Great Falls, Mont.
  • Dave GaNun of Denver, Colo.
  • Chris Greenwalt of Greeley, Colo.
  • Francois Gregoire of St. Petersburg, Fla.
  • Lawrie Hollingsworth of Annapolis, Md.
  • Tracy Johnston of Phoenix, Ariz.
  • Randall Kopfer of Galveston, Texas
  • Dayton Nordin of Boston, Mass.
  • Robert Taylor of Glen Allen, Va.
  • Raymond Wagester of Greenwood Village, Colo.
  • Jennifer Wagner of Morgantown, W.Va.
  • Edie Yeomans of Toronto, ON, Canada

Officers were elected at The Appraisal Foundation’s recent Board of Trustees meeting on November 16, 2019 in Kansas City, Mo. Officers and Trustees begin their one-year term on January 1, 2020. 

 

2019 Relocation Appraisal Report Writing Contest

Worldwide ERC® and RAC announce the Winner of their 2019 Relocation Appraisal Report Writing Contest is: 

 

Michael S. Cook, MAI, SRA

McKinney, TX

 

On Thursday, September 19, 2019,  Worldwide ERC®, the international workforce mobility association, and RAC, a premier organization providing valuation solutions for relocation and complex residential properties, announced and congratulated the winner of the 2019 Relocation Appraisal Report Writing Contest.   

The winner was chosen from over 20 entries from across the United States.  The appraisal reports were redacted so that the judges, who were report reviewers from relocation companies and appraisal management companies, did not know the identity of the contestants.  The redaction was also done to protect private information about the subject properties.

Each section of the report was evaluated for the following:

Completeness (whether all necessary information was included, and if exhibits were useful and comprehensive)

Clarity of communication (descriptions were required to render a good understanding of the elements being defined, in complete sentences with appropriate grammar)

Thoroughness (whether the appraiser researched all of the important market factors that impact the analysis)

Internal consistency (ensuring that the facts presented in the report led to the conclusions and recommendations expressed by the appraiser)  

Complexity of the assignment (determining if the report identified and communicated unique marketing challenges, and offered adequate justification for adjustments for unique/unusual challenges)

About Worldwide ERC®

Since 1964, Worldwide ERC® has been committed to connecting and educating workforce mobility professionals across the globe. A global not-for-profit organization, we are headquartered in Washington, D.C., with offices in London and Shanghai, and are the source of global mobility knowledge and innovation in talent management from Europe, the Middle East and Africa, to Asia and across the Americas. For more information, visit www.WorldwideERC.org.

About RAC

Founded in 1990, RAC continues to be the premier appraisal organization whose members focus on complex residential properties for relocation, litigation support, testimony and reviews.  RAC Members provide valuation solutions, benchmarks and insights to enable their clients to make informed decisions.  The organization is comprised of the best residential appraisers in the U.S. and literally wrote the book on relocation appraising.  Please visit www.rac.net  for additional information.

 

 

RAC Authors Featured in Mobility Magazine

Delaware Market Summary

Tom Reynolds, SRPA, CRP, has written about his home state of Delaware, the Diamond State.  Learn more about the real estate market in the first state to ratify the U.S. constitution (in 1787) and  the corporate home or place of incorporation for more companies than any other state.  See the entire article here.

The Relocation Appraisal

Paul M. Lewis uses his 25 years of residential appraisal experience to offer some perspectives on the fundamental differences between a relocation appraisal and other residential appraisal types.  Don’t miss the feature on the annual Report Writing Contest, which will kick off this summer.  This contest is a joint effort between Worldwide ERC and RAC to find and recognize the best relocation appraisal report writer.  Paul Lewis won the contest last year and the 2019 winner will be announced at the RAC conference in Plano, TX, held September 19-20th.  See the full article here.

RAC Members selected Fidelity Appraisers of the Year

Fidelity Residential Property Services Division (FRPSD) announces their 2018 Relocation Appraiser Awards.

Each year FRPSD reviews the performance of their appraiser network by analyzing volume, turn time and variance, as well as the working relationship with the FRPSD team.

A special recognition this year went to three Relocation Appraiser & Consulting (RAC) members who were the award recipients of their region:

Southeast Region – John Warren

Mid-West Region – James Gargano, Jr. IFAS, SCRP

West Region– Marie Robbins-Marine, SRA, CRP

FRPSD is thrilled when these appraisers are chosen by homeowners, as their files are consistently on time and well written; additionally, these appraisers are easy to work with and responsive. FRPSD customers appreciate the timeliness, professionalism and accuracy of these reports as well.

Blockchain and crytptocurrencies

 

By RAC member Ernie Durbin, SRA

Not a day goes by without multiple news stories about cryptocurrency. Numerous cryptocurrencies are active in the marketplace but the oldest and most well-known is Bitcoin. Cryptocurrencies, like Bitcoin, all rely on the foundational technology known as Blockchain. Cryptocurrencies are disruptive and have created a great deal of excitement, however, the Blockchain technology they are based on promises to revolutionize any industry that relies on big data. Some have said that Blockchain technology will transform our lives the same way the Internet has over the last several decades. So, what exactly is Blockchain technology?

At its heart, a Blockchain relies upon a system of “ledgers,” which is certainly nothing new. Ledgers have been around since clay tablets were used to record financial transactions. Double entry accounting is based on permanent ledgers where new entries are added, and previous entries are left unmodified. Each transaction builds upon previous transactions. Blockchain technology takes a simple ledger to a whole new level, one that is completely decentralized. A Blockchain ledger system is distributed over a peer to peer network. Everyone in the Blockchain network has an instance of the same identical ledger. Rather than relying on one trusted entity to maintain the ledger, all participants have a validated record of every transaction. Transactions do not have to be financial in nature; they can be any digital data. Financial transactions, medical records, retail inventory, anything of value can be tracked in a distributed ledger via Blockchain technology.

Blockchain stores information in batches called “blocks.” These blocks are linked together in a chronological order creating a continuous “chain” of information. If you need to make a change in a previous block of information you do not overwrite it, you simply add a new block with the correct data. The new block records that “X was changed to Y;” all renditions of the chain of data are kept intact and distributed to everyone in the Blockchain. This is a nondestructive way to track data changes over time similar to the centuries-old general financial ledger. The big difference is no one entity is in control of the master ledger, everyone in the peer to peer Blockchain network has the same complete “master” ledger. In addition, each block contains a “hash” which is essentially an electronic fingerprint unique to that particular block. As blocks are added to the chain, they include their own hash as well as the hash of the previous block. Tampering with or changing the data changes the hash of that block. This ensures that data cannot be modified or changed on any one node in the computer network. Combination of immutability and the distributed nature of the Blockchain creates trust in the data without a central authority required.

Before a new block of information can be added to the chain, a few things have to happen. First, to create the block, a cryptographic puzzle must be solved by the initiating computer. Next, the computer that solves the cryptographic puzzle shares the solution with all the other computers within the Blockchain network. This process is called “proof of work.” The network of computers will then verify this “proof of work” and, if it is correct, the block will be added to the chain permanently. The verification process works by consensus, requiring a majority of the computers on the network to validate the information before it is added to the Blockchain. Combining a complex math puzzle with the verification by numerous computers ensures every block on the chain can be trusted. Trust in the data is fostered by the distribution of transparent peer-to-peer information, without a central keeper of data.

By establishing trust in the data, Blockchain technology removes intermediaries from the data verification process. Many transactions today require a trusted intermediary such as an attorney or financial institution. We rely on these intermediaries to keep our information confidential and to verify the information of the other person involved in the transaction. As an example, title companies verify the “chain of title” on a piece of real estate prior to transfer. If the verified information was available in a Blockchain network, a history of all transfers of title and other property rights would be instantly available and verified as accurate. Title companies serve market participants by reducing risk, but they do so at a cost of time and money. Removing intermediaries and relying on trusted data would greatly reduce transaction time and cost while also controlling risk. Blockchain provides a trusted interaction with data completely changing the way we access, verify and transact with other parties.

Blockchain technology is currently in its infancy. It has been widely deployed by cryptocurrencies and its use in this sector has demonstrated some of its weaknesses. The largest cryptocurrency, Bitcoin, has an enormous distributed ledger. Every transaction since Bitcoin’s inception is included in the Blockchain that is distributed globally. Since Bitcoin is a monetary transaction, very few data points are required to be added to each block. In spite of the small amount of data, each distributed ledger has grown to gigabytes of information. Bitcoin is demonstrating that a broad public Blockchain has scalability issues.

The Bitcoin Blockchain, because of its size, can only process approximately 7 transactions per second. Compare that to approximately 20,000 transactions per second MasterCard can process. Time to verify a transaction is prohibitive by modern standards. Imagine ordering your favorite coffee from your local barista and trying to pay with Bitcoin; it might take 30 minutes to complete the transaction! In addition to the slow verification process, the energy costs of maintaining a globally distributed network are staggering. Forbes Magazine reports that global Bitcoin Blockchain consumes enough energy to power a country like Switzerland each year or 1.5% of the energy consumption in the United States. Most of this energy is a result of the proof of work calculations, essential to the distributed ledger.

Technology advances will eventually solve some of the weaknesses of Blockchain and overtime, Blockchain will change the way we do business. Trusted data sources that do not require intermediaries in transactions will disrupt many industries including the real estate industry. In a future article, I will address how Blockchain is being used and might be used in the real estate industry. As with any application of technology, there are tremendous benefits and unintended consequences. The real estate industry is entering the era of big data and Blockchain technology will be a part of how we interact with that data in the future.

Republished with permission by Appraisal Buzz – found here
https://www.appraisalbuzz.com/blockchain-technology-data-can-trust/

This article was first published in the Appraisal Buzz magazine. Subscribe now to receive your edition of the Appraisal Buzz Spring 2019 Magazine!

West Virginia Market Summary

Mobility Magazine of the Worldwide ERC, November 2018

By Lori Noble

In West Virginia, geography and rugged terrain pose physical limitations that simply can’t be changed, but the mountain highlands and low river valleys are the character and charm that make Appalachia unique. The nickname “the Mountain State” and the state motto Motani Semper Liberi (“Mountaineers are always free”) are most appropriate, and the characteristics of the region prove the statement true.

West Virginia is not unique, as it shares similar demographic and market nuances with other natural-resource economies. It is true that nearly all rural counties across the U.S. face challenges with slow to no long-term economic relief. Historically, most economic growth has occurred in larger metropolitan areas, in contrast to the West Virginia economy. The constraints observed over time are best served in the long term by fiscal responsibility and a deep understanding of the economic differences that make up the Mountain State.

LOOKING BACK

West Virginia has received considerable press about the perils of coal and population declines. Coal exports were down a reported 40 percent by 2013 and nearly one-half between 2008 and 2016. Although the losses affected the state’s southern coal fields most, the energy sector is a main driver of West Virginia’s economy, and the downturn put significant strains on the economy and municipal governments. Steep declines in severance tax collections from the coal and gas industries created significant problems for government operations. On the commercial side, office buildings in major metropolitan statistical areas (MSAs) such as Charleston, the state capital, saw record-high vacancies due to big corporate bankruptcies and failures. It is also true, however, that economic performance varies extremely from county to county. The Northern and Eastern panhandles were not as affected by the downturn.

CURRENT TRENDS

West Virginia has lost more than 25,000 residents since 2012; this is the largest percentage of loss in population since the late 1980s. According to the U.S. Census, 47 of the state’s 55 counties lost residents between 2015 and 2016. The largest decline was in Kanawha County, home of the state capital. Charleston is addressing the gray cloud with optimism, however. The capital city is the second-largest MSA in the state, behind Huntington, and the decline wasn’t the fault of the city, but a commercial downturn brought on by the collapse of coal and many companies going out of business at once. To offset the woes, Charleston is laying the groundwork for a rebranding and expansion. The development strategy is long-term planning with a time frame most likely in 2020 to 2025 in the downtown area.

Although an economic uptick is showing, the downward population trends in certain regions can’t be denied. Additionally, the population losses and exits from the labor force have helped drive the decline in unemployment rather than actual job gains. Overall, total population trends for the state will continue to contract slightly, with most losses occurring over the next couple of years. An anticipated improvement in the state’s economic performance is likely to at least help slow the decline observed in recent years.

The seasonally adjusted pace of homebuilding has been volatile over the past several years, but residential construction activity shows an upward trend since bottoming out a couple of years after the Great Recession ended. The average rate observed in the first two quarters of 2017 is 11 percent ahead of the prior year’s and marks the best read on new single-family home starts since 2008. Multifamily homes are a smaller share of the overall residential market in West Virginia, due to low population density and a high homeownership rate. Overall, apartment construction peaked in 2007 and was relatively limited in recent years. Monongalia County saw the most notable increases in recent years due to several West Virginia University (WVU) housing projects.

The rate of home price deflation was much smaller in West Virginia than in most other U.S. states after the housing bubble. Since bottoming out in 2011, prices for single-family homes have rebounded about 13 percent. Given the deep population declines and slow recovery status, the state housing sector is about equal to pre-crash conditions and values.

Local house prices vary greatly throughout the state’s regions relative to local supply and demand. According to the Federal Housing Finance Agency, the Beckley and Charleston metro areas have seen price declines in the past two years, while the Morgantown, Hagerstown-Martinsburg, and Huntington MSAs recorded cumulative price gains of just 2 to 3 percent since 2015. These low rates reflect a slowdown in appreciation after significant increases in house prices in those regions from 2011. West Virginia counties in the Washington, D.C., metro area experience consistent and fast growth in house prices. Southern counties are in a different submarket where home values are expected to remain relatively flat, with no major trends anticipated.

West Virginia shows one of the smallest annual appreciation rates nationally. Residential permits are up from the previous year, mostly in metro areas. Home prices depreciated in the spring but are up year over year. Mortgage delinquencies are down from the previous year. Overall, small but distinctive positive shifts are occurring, with trends expected to proceed at a slow pace.

LOOKING AHEAD

Expectations for the U.S. and global economies will directly influence West Virginia’s economic performance. If global demand for the state’s energy commodities and manufactured goods deviates from the expected path, growth could exceed or underperform expectations. Natural resources are expected to see jobs increase 9.6 percent per year during the outlook period.

West Virginia’s construction sectors are expected to slowly recover from lackluster performance in the past several years. Activity is expected to grow at the fastest pace between now and 2020. The energy sector will drive most of the growth with several pipeline projects and natural gas-fired power plant that are expected to wrap up in the short term. Infrastructure has been depressed for an extended period due to budget challenges. Manufacturing is expected to show job growth of about 0.9 percent per year. The largest sources of job creation are expected in the chemical industry and general manufacturing sector. Income projections forecast an increase in annual wages of almost 2 percent per year through 2022 but still lag behind the national average.

There has been an upturn in recent coal production and job levels as the industry enters a period of relative stability. However, risks exist, as observed between 2008 and 2014. West Virginia’s population has declined significantly, and although a stabilization is anticipated, more loss is likely over the long term due to a larger share of elderly residents. A positive shock of inward migration would be highly beneficial, as would economic strategies to improve education and business retention in the state. Southern counties are expected to see some job growth during the next few years.

Commercial expansion outside the energy sector will bolster performance going forward. The $500 million Procter & Gamble facility in Martinsburg will continue to develop. The expansion by WVU Medicine as well as a buildings and athletic facility upgrade will help the Monongalia County region. WVU Institute of Technology also opened a campus this fall in the Beckley MSA, putting the university back on the map and making a great addition to the city’s landscape.

Lori A. Noble is a professional appraiser and consultant in southern West Virginia and member of RAC (Relocation Appraisers and Consultants). She can be reached at +1 304 573 2357.

 

 

Relocation Appraisal as market niche

 

Every appraiser has a type of assignment that is near and dear to them. One of my very favorites is Employee Relocation “WERC” work. These are a specialty assignment within the realm of the residential expert. They have long been a favorite type of appraisal work for me, because the relocation client has a real problem that needs to be solved correctly. Their problem relates to potentially purchasing the home of a transferring employee, which is offered to help make the transferee’s move more seamless and less stressful. This is a laudable goal, because anyone moving from one location to another is going to have many mixed emotions, and the stress of a home sale should not be an additional stressor.

Because of the real need for a supported answer, companies hiring appraisers to handle this type of work want to ensure that the appraiser they retain knows how to handle the problem correctly. There are differences between relocation work and most residential assignments. The differences largely relate to the definition of value, which on a relocation assignment is “Anticipated Sales Price” versus “Market Value”. Within the definition of Anticipated Sales Price, is the component of “Forecasting”, which includes the analysis of what has happened in the past, compared to the current market, and projecting out in time within a defined period (usually 120-days), in order to affect a sale within this period. This can be tricky in changing markets, as the past may not predict the future, and the appraiser has to be sensitive to what is happening, right here, right now.

This forecasting adjustment, whether it is positive, negative or zero, must be considered and made. In rapidly advancing markets, the prices may be rising at each sale, leap-frogging each other. The appraiser has to consider this as a possibility/probability, just as when the market is starting to retreat. Even when the market is balanced and stable, seasonality comes into play and may require an adjustment. For example, in the market in which I work, we tend to slow down after the Fourth of July, and the appraiser should consider that, just as much as they would want to consider how the market normally picks up in February. This is because we are projecting out in time to what the house will likely sell for within a marketing time of 120-days.

Another stark difference between the relocation assignment and a mortgage assignment is the detail involved in the market conditions section. The form, as developed, allows the appraiser to truly analyze the market segment they choose as representative of the subject’s competition. Appraisers can use whatever they consider relevant, and personally I like to lay this out as an annualized monthly data run. Some appraiser run it as quarter-to-quarter, others year-to-year, and so forth. This allows flexibility and can help organize the thought process to what is happening in the market as of the effective date of the report. In fact, this format is easy to use for any residential appraisal problem, and would be a benefit in lieu of the 1004MC.

In addition to the forecasting that is made, another difference in relocation assignments relates to décor, far more than with a mortgage assignment. The form guidelines specify that we consider the property’s appearance as it was shown, as of the date that we saw the property. Sometimes we are asked to value “as if vacant” – this is another challenge as the transferee may have a very coordinated color décor with wall hangings, furniture, and so forth, but when all of that is gone, what’s left may be personalized wall or floor coverings. Personalized colors and special design features that may be attractive to the transferee, may actually be a detriment to marketing the house. This needs to be addressed. For example, consider the built-in hot tub in the main bedroom (not the bathroom), or the 5,000 sqft house with pink vinyl siding, or the house where the teenagers thought painting the walls and ceilings black was a good idea.

Just as in a mortgage assignment, functional issues with a property have to be addressed. We have all seen houses with a captive bedroom which requires that you have to go through one bedroom to get to another, or where the bedrooms are on the second floor, and the only bathroom in the house is on the main floor, next to the kitchen. In an increasing market, the buyers may be more forgiving of these types of quirks in a property, but when the market slows, they can be make-or-break situations. As the relocation company and employer could well be offering a buy-out to the transferee on their property, it is of critical importance that these types of quirks are well analyzed and described.

Unlike a mortgage appraisal with the current UAD requirements, relocation appraisals require the appraiser to rate the quality and the condition based on relative versus absolute factors. If a house is almost new, and all the sales used are almost new, and the neighborhood consists largely of similar properties, then the condition is going to be “average” compared to these properties. If the house has amenities that are atypical for the market, then these may be “excellent” or “good” compared to others that compete. Or if there is a functional issue, this may or may not be average for that market, because other properties that are comparable may have a similar functional problem. The ratings are addressed in the Definitions and Guidelines page of the ERC form, and anyone who is considering completing this type of work should make themselves familiar with these guidelines, as well as with the definition of Anticipated Sales Price and Forecasting.

In relocation appraisal assignments, we are judged not only by the analysis that is presented in the report, but in comparison to another appraiser. It is quite common for the two appraisers who are completing the relocation assignment to use common sales or listings, but to include different information. This is common with items such as basement bathrooms, which the MLS may report as on the main floor, as opposed to a basement. Or maybe the ubiquitous days on market for the listings, when the reports were prepared at different times. If the Anticipated Sales Price for two reports are outside of a spread (commonly 5%), then the requirement is often a third appraisal report, allowing for possibly more noted discrepancies far after the fact. The appraiser handling relocation assignments has to be prepared to answer multiple questions from the relocation company in a prompt and professional manner. Appraisers who are not familiar with relocation appraisal guidelines can cause more call backs and requests for information. This is because of the compare-and-contrast function in the review of these assignments — one appraiser may consider a forecasting adjustment necessary and support it, while the other may not adequately address it. If you decide to do this type of work, educate yourself on the process and be prepared to answer questions on most reports that you complete.

If you enjoy the analysis, and describing your analysis and conclusions, then I would encourage you to explore the process in more detail. The Worldwide Employee Relocation Council has an introductory webinar series to relocation appraisal that is found on the website with the following link: https://academy.worldwideerc.org/relocation-appraiser-resources/
Chip Wagner has also developed and perfected a class on relocation appraisals which addresses unique situations that arise in this type of work. If you are interested in learning about relocation work, I highly recommend the class. You can also ask your local education provider to host it.

Of course, if your goal is to become the best relocation appraiser you can be, check out the RAC organization. RAC (Relocation Appraisers and Consultants) which is dedicated to advancing the relocation appraisal profession, but also includes members who specialize in appraisal of complex residential properties often involving litigation. First and foremost, however, it is a relocation appraiser organization, to which I am very happy to belong to. Each year, RAC hosts a 2-day conference dedicated to the residential appraisal profession, with emphasis on relocation appraisal. This is a great place to meet professionals in this field, and to learn more about this niche market. For more information about RAC, please visit the website at www.rac.net.

Relocation appraisal work offers the appraisal professional an opportunity to do their very best work, showcasing their writing and analytical abilities. Our conclusions have to stand up not only by way of comparison with another professional appraiser, but also with the eventual sales price. We will be measured on both of those fronts, as well as in our professional demeanor. There are few options available for this type of work outside of the litigation arena. In relocation work, we have the opportunity to do excellent work, as well as test it, and even more importantly, to serve those with a very real need.

This article first appeared in Appraisal Today, and was republished with permission.

Minneapolis-St. Paul Market Summary

Mobility Magazine of the Worldwide ERC, June 2017

by Byron Miller, SRA, AI-RRS, RAA

Minneapolis and St. Paul, Minnesota, represent a tale of two cities. Known to the locals as “the cities” or the “metro area”—“the metroplex” to hipsters—each city has its own personality and draw. Minneapolis is viewed as the younger city, with many modern skyscrapers, while St. Paul maintains an Old World charm in contrast to Minneapolis’ cosmopolitan feel.

Minneapolis is the largest city in Minnesota, with a population of 410,939 as of the 2015 U.S. Census estimate. St. Paul is the state capital and has a population of 300,851. Statistically the cities are known as the Minneapolis, Bloomington, St. Paul, Western Wisconsin Statistical Area.1 MN-WI MetroSA, as it is known, consists of 16 counties, including two in western Wisconsin, with 3.52 million people.

LOOKING BACK

Minneapolis and St. Paul are two very different cities, built by two different industries that share a common thread—water. The cities abut each other in some places and are separated by the Mississippi River in others. In the early days, the mighty Mississippi provided a means of shuttling flour and lumber from the city of St. Anthony, which would later become Minneapolis. Minneapolis’ development is tied to early milling and lumber companies that went on to become international powerhouses such as Pillsbury Company, as well as General Mills, which shipped more than 14 percent of America’s grain at its peak. Further downstream, St. Paul developed as a transportation center, first by shipping goods via the Mississippi and later by the vast railroad network built by James J. Hill.

snapshot

Minneapolis was influenced by early Nordic immigrants such as Norwegians, Swedes, and Finns. St. Paul was influenced more by other European immigrants such as French, Irish, Italians, and Germans. Both cities are influenced by an influx of immigrants to this day—Minneapolis–St. Paul has the largest Somali and Hmong populations of any U.S. city. This welcoming atmosphere still holds true for modern-day transferees.

TODAY

The cities have diverse industries as well as long histories of job creation and innovation. Sixteen Fortune 500 companies have a presence in the area, attracted to the highly educated local workforce. A partial list of major employers includes United Health Group, Honeywell International Inc., Cargill Inc., Target Corp., Best Buy Co., 3M Co., U.S. Bancorp, Ecolab Inc., Xcel Energy Inc., Thrivent Financial, Ameriprise Financial Inc., SuperValu Inc., General Mills Inc. (including Pillsbury), Land O’ Lakes Inc., Medtronic PLC, and St. Jude Medical Inc.

These companies make up key industries such as agricultural, biomedical, engineering, finance, health care, and information technology (IT). The diverse industries buffer the metro area from market cycles, providing economic stability. The climate can be challenging. However, for those who enjoy the outdoors, the area has much to offer. More than 10,000 lakes offer fishing, hiking, and water sports in summer, and skating and skiing in winter. Hunting options are available in each season.

market-at-a-glanceThe Twin Cities host major professional teams for baseball, basketball, football, hockey, and soccer. The cities have much to offer culturally as well. The Minneapolis Institute of Art has a permanent collection of famous artists and hosts traveling art shows from other major metropolitan art institutes. The Walker Art Center has its own permanent collection and hosts more contemporary art exhibits. The cities have well over 100 theater companies, ranging from the world-renowned Guthrie and Fitzgerald theaters and the Ordway Center for the Performing Arts to smaller regional theaters. There is a wide range of live music options as well—after all, the cities are where Bobby Zimmerman, aka Bob Dylan, and Prince first played before stepping onto the national scene.

The local economy is still recovering from the mortgage meltdown of the mid-2000s. Like most of the country, the cities have seen both high and low economic tides over the past decade. However, variations in this area have not been as dramatic as in the rest of the country, due to industry diversity. At the market’s peak in 2007, the average sales price was $302,845. In contrast, the market’s low sales price was $211,580 in 2011. Recovery from the low point continues today, and the market has increased over the past three years. For example, the average sales price (ASP) of a single-family home in 2016 was $282,997, up 4.1 percent from 2015. Year-to-date ASP for 2017 is showing another 5 percent increase over 2016, with an ASP of $297,230. Days on market have decreased over the same period, from 83 days in 2015 to 68 days in 2017. Similarly, inventory has decreased from 4.2 to 2.7 months over the same period. Local unemployment has been steadily decreasing over the last decade. The seasonally adjusted unemployment rate for February 2017 was 4 percent, in contrast to the national rate of 4.7 percent.

Additionally, since the bottom of the last recession, the cities have seen a significant increase in new construction, from starter homes in suburban development to the high-end condo segments in the downtown districts. While there is some multifamily construction, affordable multifamily housing continues to be in short supply.

LOOKING FORWARD

Although still in recovery from the last recession, the cities’ vitals look promising. Low interest rates and unemployment, zero inflation, and a recovering housing market fuel an optimistic tone. However, the caveat to the recovery is that rising interest rates and prices of key staples such as food, clothing, and energy could stall the recovery in the next chapter of this tale of two cities.

1 MN-WI MetroSA: State of MN Employment & Economic Development:

en.wikipedia.org/wiki/Minneapolis%E2%80%93Saint_Paul#Counties.

2 A portion of these statistics supplied by BM Appraisals.

3 Unemployment data: mn.gov.

4 North-Star Multiple Listing Service, February 2017 (Single-Family Homes).

Byron Miller is with BM Appraisals in Minneapolis and is a member of RAC (Relocation Appraisers and Consultants). He can be reached at +1 612 822 5985 or byronmiller@rac.net.

 

Dallas-Fort Worth #2 in Growth

DFW #2 Growth 2010-2016The U.S. Census Bureau estimates that the Dallas-Fort Worth Metroplex has grown by almost 2,500 persons per week since April 2010.

Eleven major metropolitan areas, led by the Texas duo of Houston and Dallas-Fort Worth, are growing at a pace of more than 1,000 persons per week, based on population estimates issued this morning by the U.S. Census Bureau.

See the full story at the Dallas Business Journal.

1/3 of Texas Sales in February were in North Texas

Sold House 2017About a third of all Texas home sales in February took place in North Texas, according to the MetroTex Association of Realtors. Using the dollar volume metric, Dallas-Fort Worth accounts for about 35 percent of total state sales.

For reference, Dallas’ population of just above 7 million represents about 25 percent of state’s population.

There were 6,909 homes sold in Dallas-Fort Worth last month, the report said, a 5-percent increase from last year. Both the average home price and median home price, $285,940 and $235,000, respectively, were up 13 percent from last year.

See the complete article at the Dallas Business Journal.

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