Last week was a heavy post, so this week I have something quick and light. I wanted to share a perfect cost vs value example and then look at a few murals – particularly the Johnny Cash mural in Downtown Sacramento.
Record price: This contemporary home in Sierra Oaks Vista just sold for $5M, which is the highest residential sale ever in Sacramento County. I know it surprises some that we haven’t seen loftier sales, but let’s remember Sacramento isn’t the Bay Area despite being close.
Cost vs value: This house cost ten million dollars to build, but the market only paid half that. This is a striking example that just because an owner spent money doesn’t mean buyers will. Keep in mind there were two previous listings below six million for nearly two years of market exposure, so this home wasn’t given away.
Big takeaway: Just because you spend a dollar doesn’t mean you’ll get a dollar back in value. Cost doesn’t always translate to value, and this is the perfect example. More on the myth of dollar for dollar here.
EXPLOSION OF MURALS
Many cities across the country are seeing an explosion of murals lately. In Sacramento there’s been a concerted effort to paint the town with an emphasis called Wide Open Walls. This isn’t just Midtown or Downtown either as art is starting to spread to other portions of the region. If you want to see local murals, here’s the most exhaustive mural map out there.
Johnny Cash: Artist Shepard Fairey unveiled a 15-story Johnny Cash mural last year. This mural commemorates the 50th anniversary of the At Folsom Prison album (which I have on vinyl), but it also highlights the need for prison reform. Thank you to local photographers Dan & Vicky for letting me use these images.
Johnny Cash mentions in MLS: If you didn’t know, Folsom is a city in Sacramento County, which means Johnny Cash recorded his album locally. As a side note, “Johnny Cash” is mentioned seventeen times in MLS listings. It would be cool if the mentions were due to Mr. Cash making the real estate market move, but that’s just not the case. In every instance the mentions have been associated with the Johnny Cash Walking Trail. Yes, there’s a walking trail on the outskirts of the prison property.
A few other cool murals: Thanks to John Adair and Vicky for letting me use some of your mural pictures.
One more. This isn’t in Sacramento, but it’s one of my favorite murals. I snapped this photo in Downtown Los Angeles a couple years ago. It’s called Our Lady of DTLA. I like how it canvases the housing units instead of being located on some random alley like many murals.
I hope you enjoyed this. Have a wonderful 4th of July!
Questions: What do you think about all the murals? Do they add value or make any difference for a neighborhood?
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Love all the murals. Cool little things make a city.
Thanks so much Gary. I totally agree. It’s the small things. I love this trend because it helps with vibe and culture.
Cost versus value lesson : That’s a hard one to put over to a client, at times !! They always know the cost of everything, and the value of nothing (like accountants ) !!
Thanks Truett. True. I feel like this example is a real gift because it’s a conversation piece because of the lofty sales price. So in that regard it’s sort of like real estate eye candy. But on top of that it’s a real shocker to think the cost was twice of what it sold for. I am definitely going to refer to this example quite a bit (sorry everyone who sees me do a presentation soon). 🙂
I really enjoyed this post! I love the murals. They are popping up in parts of Cleveland and Lakewood in my area. I think art and personal expression is an important part of society. Great thoughts on cost vs value.
Thanks Jamie. That’s good to hear. It seems like art is exploding in many markets. A few decades ago it almost seemed like murals were used to more or less cover graffiti. But now it’s far more than just blight abatement so to speak.
It’s fun to watch!
I love the Johnny Cash mural!
Me too Deniece. Thanks. It’s something else. I can’t get over the size of it too. It’s an instant landmark in my book. Lots of selfies in coming years will be taken with Johnny in the background. 🙂
Great post, Ryan. I love the murals. I think the paintings are a good sign of revitalization in an area. Over the last several years downtown Birmingham has had a makeover and I hope that as it continues that we have more paintings like this. Happy 4th to you and your family.
Thanks Tom. Happy 4th to you guys too. I hope you have something fun planned (with no work if possible). 🙂
I’ve heard this myth from the other perspective: When a tenant sees their rent increase and then says, “But my landlord hasn’t made any improvements.” I suppose it’s obvious that the myth of the dollar for dollar goes the other way too.
Thanks Jose Luis. That’s a fantastic point. I haven’t actually heard the point phrased this way. Nice job.
The thing many people don’t realize is the market is the factor that gives or takes away the most value. What I mean is you could actually gain or lose tremendous value while doing absolutely nothing to your home – if the market is moving up or down quickly. There’s a point in here for rent going up too.
Anyway, thanks again.