Have you ever seen a high-voltage tower INSIDE a backyard? I’ve seen towers behind backyard fences, but never something inside until my appraiser colleague Dawn Foucault shared a couple images of a brand new neighborhood in Sacramento. What the? Can you believe it? Let’s kick around some thoughts.
The PG&E tower is operational AND is located inside the parcel lines of the subject property. By the way, Dawn gave me permission to share these images.
Here’s some initial thoughts on my mind. Anything to add?
1) Surprise: Anyone who works in real estate sees some odd stuff, so I’m not all that surprised at most things. But with so much conversation around the safety of electromagnetic fields in recent years, I’m a bit taken aback to see something like this. I’m sure there is a technical reason why the building department allowed this to happen, but that doesn’t replace my shock. Can you relate?
2) Resale value: Properties like this tend to struggle in the resale market. They might be able to command a decent price when selling directly from the builder, but in the future after the allure of a brand new home has worn off, many buyers will simply pass on properties with adverse or odd issues. This is especially true in markets with higher housing inventory.
3) True Comps: We can’t assume the house next door is a perfect comp because there is likely a value difference between a property with a high-voltage tower INSIDE the backyard vs being located NEXT DOOR to a tower. In an ideal world we’d find other sales with high-voltage towers inside the backyard (or maybe something equally adverse) to help tell the story of value for the property. In this case there was actually one other sale in the neighborhood a year ago with a backyard tower, so my appraiser friend lucked out to say the least.
I hope this was interesting or helpful.
Questions: What do you think after seeing these photos? Would you ever buy a house like this? Why or why not? I’d love to hear your take.
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3) Housing inventory remains low: There isn’t any quick fix for anemic housing inventory, so we can expect to see another year of low inventory unless something drastic happens causing sellers to list their homes. That brings me to share something I talked about last month. In a 
6) Disappearance of the $100,000 market: There is definitely upward value pressure on the lowest end of the price spectrum. Other price ranges last year were much more flat, but not so much with the lowest prices in town. This year in Sacramento we are going to very likely see the disappearance of the market under $100,000. Each month lately we’ve had maybe 6-12 sales under $100,000 for single family detached homes, and after the next few quarters I expect that number might be down to zero. We shall see though.
10) Multiple offers: We are likely to continue to see a climate of multiple offers in the Sacramento area. In a market like this I would advise sellers to be realistic about pricing their homes properly. What have similar homes actually sold for? What is similar and getting into contract right now? It’s easy to cherry-pick the highest non-similar sales in the neighborhood because “the market is hot”, but we have to remember similar homes are the “comps” appraisers are going to use (key point). At the end of the day appraisers have to support the value, so it may be best to be reasonable on the front end rather than run into all sorts of “appraisal issues” because the property got into contract too high. Remember, just because housing inventory is low does not mean you can command whatever price you want. That may have been more true in early 2013, but it’s not true right now.