Numbers can tell us anything. For instance, we can look at median price or price per square foot for a particular neighborhood or zip code, but these figures do not necessarily reflect specific market value for a specific property, do they? For example, let’s glance at a condominium subdivision in the 95825 zip code of Sacramento as an illustration. The median price for the year for the entire subdivision (all sales listed below) is around $70,000. However, this figure alone does very little to help us understand the market because there is a clear distinction between 1-bedroom and 2-bedroom units, isn’t there? You can see below that 1-bedroom condos are bracketed between $45,000-$65,000 whereas 2-bedroom units sold between $75,000-90,000 more or less (with only one 2-bedroom condo above $100,000).

So how much is the market willing to pay for an extra bedroom in this complex? Before reading the next few sentences, you be the appraiser and tell me. Based on the graph above it looks like the difference in price between 1 and 2-bedroom condos is generally about $25,000-$35,000 (plus or minus). Other factors to consider in the valuation process of course would be floor location, condition, level of upgrades, location of the unit (next to swimming pool, secluded, backs busy street, interior unit, etc…). 

Why do you think the market is willing to pay so much more for a 2-bedroom unit? What advantages does a two-bedroom have that a one-bedroom does not? I’d love to hear your insight.

If you have any questions about the appraisal process or condominiums in the Greater Sacramento Region, give me a call at 916.595.3735, email me, or catch me on Facebook.