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Land Park

Appraisal waivers & the foreclosure wave

February 27, 2019 By Ryan Lundquist 12 Comments

I have two things on my mind today. Yesterday I had a conversation about appraisal waivers and “hybrid” appraisals, so I wanted to share my take. Then I have some new graphs to help tell the story of the foreclosure crisis.

APPRAISAL WAIVERS & “HYBRID” APPRAISALS:

Here’s a Q&A with with Scott Short on appraisal waivers and “hybrid” appraisals. I get things changing for appraisers in light of big data, but diminishing the role appraisers play seems like a bad idea for the housing market. Watch here. If you want to just hear the “hybrid” part, it’s at 7:12.

By the way, a local appraiser named Barry Cleverdon had an accident a few weeks ago and is currently in a coma. Here is Barry’s GoFundMe.

THE FORECLOSURE CRISIS:

1) Healing: The foreclosure rate in the United States is way down. I would guess most markets have essentially healed. In Sacramento County ten years ago 84% of sales were distressed and now that number is less than 2% when considering both short sales and bank-owned sales (REOs).

2) Not the same in every neighborhood: When it comes to distressed sales, some areas and price ranges did better than others as you can see below. This reminds us the market doesn’t experience the same exact trend everywhere.

3) The power of equity: Areas with more equity and higher prices tended to fare better with the number of distressed sales. I know that’s what we’d expect to see, but it’s interesting to actually see it. It’s amazing how equity (and probably better jobs) can create opportunity and even help people weather a storm.

4) The promise of a new wave: Many have promised a new wave of foreclosures, but we just haven’t seen it. I hear things like, “Dude, there are so many Notice of Defaults right now.” That may be true, but not all of these NODs end up hitting the market. Or if they do go into foreclosure they may likely be sold on the court steps before MLS.

Two weeks ago I asked friends on LinkedIn which areas they wanted to see, and that’s how this post was born. I didn’t get to everywhere, but I got to most areas.

MAKE GRAPHS LIKE THIS: If you want to know how to make a graph like this, here’s a tutorial for how to put a few different layers of data on one graph.

BLOG BASH: Just a reminder my wife and I are hosting a party at Yolo Brewing on Saturday March 2nd. It’s an excuse to get together and you’re invited. It’s okay if we’ve never met too. I’ll be buying the first 100 beers. Details here.

Questions: What do you think of appraisal waivers and “hybrid” appraisals? What stands out to you most in the images above?

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Filed Under: Market Trends Tagged With: 2-4 unit sales in sacramento, 95815 sales, Arden Manor, Arden Park, bank-owned sales, College Glen, distressed sales, East Sacramento, El Dorado Hills, Elk Grove, Folsom, foreclosure epidemic, foreclosures, Land Park, Lincoln, Meadowview, REOs, Rio Linda, Rocklin, Roseville, Short Sales, Tahoe Park

Seeing the market over two decades

July 24, 2018 By Ryan Lundquist 17 Comments

Buckle up and let’s take a drive through the past 20 years. Where has the market been over these two decades? Since MLS recently made it much easier to extract older data, I had to do this post. I hope you find it useful or interesting – even if you aren’t in the Sacramento market.

SOME THINGS TO KEEP IN MIND:

1) Data: We are only as good as our data and our ability to understand. Some graphs below are very clear in their trends, but others probably aren’t meaningful because of massive data or an enormous price range.

2) Not back: Many lower-priced areas are not back to their price peak in 2005.

3) Back: Some well-established areas have exceeded previous peaks.

4) Different trends: Not all price ranges, locations, and property types have moved the same way, so let’s be cautious about sweeping generalizations about the entire market. After all, the condo market might be far different from the 2-4 unit market or vacant land.

5) Inflation: Prices might be similar today to where they were in 2005, but that doesn’t mean values are the same. I know, that’s so technical, but when we factor in inflation over 13 years, it’s really not the same thing when comparing today’s prices with prices from 13 years ago. Keep in mind the market today has far different dynamics from 2005 also.

6) Bubble: Graphs like this can often lead to conversations about a housing “bubble.” If it’s relevant, please read peak prices and an open letter to buyers worried about another housing bubble.

SIDE NOTE: I’ve been having major website issues over the past 2 months. I’ve switched hosts, and that should solve the problem of down time.

DOWNLOAD ALL GRAPHS: You can download all images as a zip file. I included both a web-friendly size and larger ones. Please use as you see fit (unaltered). If you post somewhere online I always appreciate a link back.

Rosemont:

River Park:

Meadowview:

Vacant Residential Land:

Million Dollar Sales:

Pocket / Greenhaven:

Rancho Cordova:

Sierra Oaks:

Loomis:

East Sacramento:

Duplex Sales:

Gold River:

Land Park:

Elk Grove:

Garden of the Gods:

Sales under $50K in Sacramento County:

Del Paso Manor:

Tahoe Park:

Fair Oaks:

Treelake / Ashley Woods (Granite Bay):

Condo Sales in Sacramento County (and Downtown):

Colonial Heights:

College Glen:

Davis:

West Sacramento:

Bella Vista High School Boundaries:

Arden Park:

Folsom:

Arden Manor:

95815 Zip Code:

4-Unit Sales in Sacramento County:

Roseville:

I hope this was interesting or even fascinating. I’m intrigued and excited about having more data at my disposal (thank you Metrolist). Thanks everyone for your graph suggestions too. I reached out on Facebook, Twitter, and LinkedIn and got to most of what people asked for, though I couldn’t do them all.

Questions: What are your thoughts about the market after seeing the graphs above? I’d love to hear your take.

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Filed Under: Market Trends Tagged With: 4-unit sales, American River Canyon North, Arden Manor, Arden Park, Bella Vista High School, Broderick, Bryte, Colonial Heights, condo sales, Del Paso Manor, Duplex sales, East Sac, East Sacramento, Elk Grove, Fab 40s, Fabulous 40s, Garden of the Gods, Gold River, Greater Sacramento Regional Appraisal Blog, Lakeside, Land Park, Langua West, Loomis, Market Trends, Meadowview, Phoenix Field, Pocket, Rancho Cordova, Roseville, Sacramento Neighborhoods, Sierra Oaks, State Streets, Stonelake, Tahoe Park, The Bluffs in Fair Oaks, Treelake, trend graphs, West Sacramento

Cherry-picking comps & being connected to the neighborhood

May 3, 2017 By Ryan Lundquist 14 Comments

On paper it looked like value was going to be so much higher. Why? Because comps to the north were easily 10-20% higher, and even Zillow came in $100,000 above the appraisal (ahem). The big cause of such a legitimately lower appraisal boiled down to one thing. Location. Today I want to show a situation where a small section of the neighborhood was blocked off from the rest, and it was a big deal for value. Have a look below and let me know what you think. Anything to add?

land park neighborhood sacramento

The value issue: As you can see, this pocket of housing in the Land Park neighborhood isn’t accessible from the rest of the neighborhood besides a frontage road next to I-5. In other words, this section is disconnected. What sort of impact is there (if any) for being cut off from the rest of the neighborhood?

land park neighborhood sacramento 3

Methodology when only 5 sales in 5 years: When appraising something in this section, there were zero sales over the past 2 years and otherwise only 5 sales in the previous 5 years. This means I had to really study older sales to understand how value works. Here are the five sales:

land park neighborhood sacramento 4

What I ended up doing was comparing sales in this small pocket with similar sales at the same time in other areas of Land Park. Also, my goal was to find other patches of housing in the expanded neighborhood that seemed to sell at the same level. If I could find other areas selling at similar price points through the years, then current sales in those areas are probably my best comps for today.

land park neighborhood sacramento 5

land park neighborhood sacramento 6

Conclusions: After looking through all five sales I observed the following:

1) Some of the lowest prices: This small housing patch has some of the lowest prices in the neighborhood as shown with the yellow dots in the graph below.

Land Park trends by Sac Appraisal Blog

2) 10-20%+ easily: If I were to cherry pick “comps” directly to the north, there is easily a 10-20%+ price difference for otherwise similar houses. The truth? Location matters. So does being connected to the rest of the neighborhood. In some cases a few streets that are disconnected might not sell differently than the rest of the market, but it could also be a big deal like the example above. The truth is if we cherry-picked nearby higher sales, the value would’ve been inflated by $60-80K+. 

3) Limited by 90 days: It’s tempting to only look at the past 90 days of sales, but that can be far too limiting – especially in a situation like this. Also, a 5-minute comp check isn’t realistic. At times we might spend hours researching before beginning to understand how the immediate neighborhood compares to the rest of the market. We might even call colleagues and seek out other opinions too.

4) True comps: Other patches of housing in Land Park that tended to command similar prices were very busy streets or homes having a huge influence from nearby commercial properties (or heavy fixers that would have otherwise sold at much higher levels in average condition). I don’t say this to be negative about any of Land Park, but only to be objective as an appraiser trying to explain how value works in some areas compared to others.

I hope that was helpful.

Two classes I’m teaching in May: By the way, I’m teaching a class at SAR in a few weeks called How to Think Like an Appraiser. I’m also doing a blogging class. Click here for details.

Presentations - sm

Questions: What point above stands out to you most? Anything else to add? I’d love to hear your take.

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Filed Under: Appraisal Stuff Tagged With: adverse location, appraiser methodology, choosing comps, comp selection, how to choose comps, Land Park, next to freeway, no recent comps, no reent sales, real estate appraisal sacramento, Sacramento Land Park neighborhood, sacramento real estate values, thinking like an appraiser, tips for comp selection

Convincing sellers to NOT overprice their homes by making graphs

October 2, 2014 By Ryan Lundquist 12 Comments

The market is overpriced. So if you are a real estate agent trying to communicate with sellers, how do you get someone who wants to test the market at $500K to realize a more reasonable price is $375K? There are surely many strategies, but today I want to mention the power of graphing neighborhood sales. I don’t mean to beat the dead horse by bringing this up again, but knowing how to graph will help you communicate effectively, stand out from other industry professionals, and seize your role as a market trend expert instead of letting Zillow have all the glory. Sure, you can show your client a graph of city or zip code trends by using Trendvision, but it’s hard to argue with neighborhood-specific data.

making graphs - image purchased by sacramento appraisal blog

A letterhead to give your sellers: Before we dig in, here is a letter I wrote for sellers about things to consider when pricing in this market. This letterhead is based on a post I wrote recently, but I tweaked a few things. See the image below and DOWNLOAD here (PDF). Feel free to email or use as you see fit. Obviously the letter does not address a specific property. If you need a letterhead for your specific property, let’s talk about some consulting.

letterhead

Excel Tutorial: I know, you don’t use Excel because it’s only for nerds. But let me break it down for you below so you can join the club. Previously I shared a tutorial on how to graph with Gnumeric, but I had a few requests for using Excel instead since that’s what most people already have on their computers.

land park two-bedroom graph example by sacramento appraisal blog

This graph shows the range of similar-sized neighborhood sales is between $300-375K for the most part (instead of $500K). This can be a very powerful visual, especially when you begin to show the sales at $375K have been remodeled.

A tutorial on how to show the market: I recommend watching the tutorial below and then pulling up some MLS data for a neighborhood you are working in so you can create a graph by following the steps I took. This is perfect for Sacramento MLS, but as long as you can export data from your MLS system, you should be okay too. You may need to pause my video several times or rewind at moments. Whenever we do something new, it takes a while to catch on. If you don’t have Microsoft Paint to paste the graph like I did, you can use a different photo editing program, or maybe use a snipping tool on your computer. Additionally, you can open up Paint and simply start a new file, and then paste your graph (as opposed to opening an existing photo like I did). Watch below (or here if it’s too small below).

Please let me know if you have any questions. I hope this was helpful. Perhaps this will spur on a new skill set for you that can make a difference in your business.

Questions: Was the tutorial helpful? Anything you need clarity on?

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Filed Under: Resources Tagged With: appraisers, convince sellers of price, Excel, Gnumeric, how to, how to make a scatter graph, how to make real estate graphs, Land Park, overpriced market, Real Estate Appraiser, sacramento market, tutorial

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First off, thank you for being here. Now let's get into the fine print. The material and information contained on this website is the copyrighted property of Ryan Lundquist and Lundquist Appraisal Company. Content on this website may not be reproduced or republished without prior written permission from Ryan Lundquist.

Please see my Sharing Policy on the navigation bar if you are interested in sharing portions of any content on this blog.

The information on this website is meant entirely for educational purposes and is not intended in any way to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or any other potential real estate or non-real estate purpose. The material found on this website is meant for casual reading only and is not intended for use in a court of law or any other legal use. Ryan will not appear in court in any capacity based on any information posted here. For more detailed market analysis to be used for an appraisal report or any appraisal-related purpose or valuation consulting, please contact Ryan at 916-595-3735 for more information.

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