How much does a busy street impact the appraised value?

How does a location on a busy street impact value? It’s sometimes easy to think a busy street might have only a minimal effect on value of $5,000 to $10,000, but it can actually be quite significant. Let’s take a look at the Arden Manor neighborhood in Sacramento for reference. What do sales on Watt Avenue, a busy 4-lane street, sell for compared to the rest of the neighborhood?

Watt Avenue street view

Arden Manor Neighborhood and Watt Sales - 530 - by Sacramento Appraisal Blog

What do you see when looking at sales over the past ten years?

Arden Manor Sales Since 2008 - 530 - by Sacramento Appraisal Blog

The best way to determine an exact value adjustment for sales on Watt Avenue is to compare similar sales on Watt Avenue to similar sales in other parts of the neighborhood. For instance, if a 1081 sq ft model sold on Watt Avenue, how much did a competitive model sell for on a more standard street without an adverse location? When we find a few data points like that, we can begin to get a sense of a percentage adjustment. However, let’s make some general observations so this doesn’t end up being an exhaustive blog post.

Observations about Value on Watt Avenue:

  1. Sales on Watt Avenue tend to sell at the bottom of the market unless they are updated.
  2. Even when properties on Watt Avenue are upgraded, they don’t sell at the top of the market. You might see the one sale in 2005 though that closed at $385,000. I’m not sure how that happened, but I will say this same property actually just sold the day after I made this graph for $155,000 (not at the top of the market).
  3. If an appraiser or agent adjusted $5,000 for the location difference, do you think that would be enough? Would you only pay $5,000 for the difference? That’s probably not very close, right? For instance, currently there is a renovated listing on Watt Avenue at $169,000, while other competitive sales on standards streets have closed on the lower end at $180,000, but mostly between $200,000 to $212,000. This means a quick conservative adjustment would be closer to $10,000 (6%), but otherwise there are quite a few sales that sold for $30,000+ more (15-20% easily). A reasonable adjustment could only be narrowed down with research, but at face glance $5,000 doesn’t look like it cuts the mustard so to speak.

The houses literally across the street: Arden Park

Arden Park and Arden Manor Sales on Watt Avenue - 530 - by Sacramento Appraisal Blog

The interesting thing about Watt Avenue is that the Arden Manor neighborhood on one side of the street has profoundly different values compared to Arden Park that is literally on the other side of the street. For the most part it looks like there is a difference of close to $100-150K, right? Some properties have sold at similar levels of course, and we have to consider the impact of low-ball bank-owned sales and/or aggressively priced short sales in 2010-2012, but otherwise the value difference is striking.

Things to Remember About Location Adjustments: 

  1. The best way to find out how much a busy street (or any adverse location) is worth is to start comparing sales on a busy street with other similar sales on standard streets.
  2. There is no adjustment that will work for every neighborhood because real estate adjustments are about location, location, and location.
  3. Location adjustments tend to get larger when a market is soft since buyers have their pick of properties, but when inventory is tight, adjustments might be smaller.
  4. If there are no recent sales on a busy street for comparison, go back in time to find older sales. What were those sales selling for at the time compared to other properties on streets with less traffic flow? Get a good sample too because having only one pair of sales isn’t enough to establish a solid adjustment.

Questions: How have you seen location impact value? Any further insight, questions, or stories to share?

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Seeing real estate trends in Sacramento (you pick the neighborhood)

Let’s look at some specific neighborhoods today in Sacramento. How is the real estate market evolving in each of these areas? In this post I plan to include 10 graphs, but the fun part is YOU CHOOSE which ones I make.

HOW IT WORKS: Email me a request to graph a specific neighborhood or area. I’ll then make a graph like the ones below and post it here over the next few days. Keep checking back. You can use the graph as personal research, for a listing presentation or post online as you see fit. I’ll need three things:

  1. Name: Location or name of neighborhood (in Sacramento, Placer or Yolo).
  2. Time: How many years of sales do you want on the graph (1 to 5 years)?
  3. Other: Do you want to see all sales? Or would you like to refine data to see a certain square footage range, bedroom count, etc…?

Send me a quick email? Seriously.

NOTE: I have all graphs in larger sizes if you need them. Just email me.

1) Antelope: Here all all sales over the past 5 years in Antelope per request of Scott. Isn’t it interesting to see how the market has moved? Bottomed out in early 2012, massive appreciation and then leveling off.

All Antelope Sales - 530

2) Days on Market for Antelope Sales: How long have sales in Antelope spent on the market? Here are all sales. A chart of average number of days on market each month or quarter would be great, but maybe in a different post.

days on market for all sales in Antelope in MLS - 530

3) Midtown/Downtown: Per request in a comment below, here are all sales in Midtown/Downtown from 0-2 bedrooms and under 1000 sq ft. This graph only includes single family sales – NOT condos. What do you see?

Midtown Downtown Sales in Sacramento - SFR Detached Only - NOT Condos

4) Elk Grove: Per request of Bruce, here are all sales between Bruceville, Franklin, Bilby and Elk Grove Blvd. This is the 95757 zip code. Any thoughts?

Elk Grove Market Trends - by Sacramento Appraisal Blog - 530

5) Arden Manor: Per request of Cass, here are all 3-Bed / 1-Bath sales in Arden Manor (located off Watt Avenue in Sacramento in case you are not familiar).

Arden Manor Sales - by Sacramento Appraisal Blog - 530

6) Carmichael: Per request of Susan, here are all 3-4 bedroom sales in Carmichael over the past five years. I took the liberty to include only sales under $1,000,000 because there were only a handful above that level (and including them made the graph less legible). It would be interesting to see a precise square footage range in Carmichael as a follow-up to this graph.

carmichael sales 3-4 bedrooms - 530

7) Natomas: Here are all sales in the 95835 zip code for houses at 3200 sq ft or larger (hope you like this one John).

Natomas 95835 Sales - 3200 sq ft and larger - 530

8) Elk Grove: This is a graph of all sales in Elk Grove under $400,000 with 3-4 bedrooms, 1500-3000 sq ft of living area and properties built between 1997 to 2007. Hope you like it Gary.

Elk Grove Market Data - 530

9) Condos in City of Sacramento: This pie graph helps shows all condo sales in the City of Sacramento from 2010 to 2014 – and it really says something about the market, doesn’t it? Being that many condo complexes have too many rentals, pending litigation or some other issue that is a turn-off for financing, there has been a very high percentage of cash purchases. Note this is the City of Sacramento and NOT the entire county. Hope you enjoy this one Barbara.

condo sales in city of sacramento

10) Laguna West in Elk Grove: Here are all sales with a gross living area between 2400-3000 and with no pool in the Laguna West neighborhood over the past three years. Hope you like this one Doug.

Laguna West Sales - 2400-3000 GLA - no pool - 530

Examples for Blog Post:

1479 model in Mather

Mather: This graphs shows all 1479 model sales in Mather over the past five years. I appraised a model recently that was priced beyond the highest recent sale. It was out of sync with the market.

Gold River Station Sales

Gold River Station: It’s easy to confuse Gold River Station with Gold River, but they are two different areas. Gold River Station is located just north of Highway 50 and immediately south of the Gold River HOA. Gold River Station is not a part of Gold River, which is important to consider when choosing comparable sales.

Any thoughts, insight or questions?

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