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The Golden State Killer’s house, selling lower, & price changes

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I have three things on my mind today. Let’s look at the accused Golden State Killer’s house, a new visual I’m testing out, and some fresh stats.

Huge thanks: First off, thank you for reading my blog this year. This will be my last post of 2019, so I wanted to say I’m truly honored to have you here and I hope you’ll continue to journey with me into the new year. As always, I’m open to your ideas too, so hit me up if you have topics in mind.

GOLDEN STATE KILLER: There’s no holiday cheer with this topic, but we’ve been wondering what would happen if the accused Golden State Killer’s house came to the market. Well, now we know. Sort of. This property sold as a private sale to an FHA buyer a few weeks ago. The SacBee did a piece on it here.

What do you notice about the final price?

Unfortunately the home wasn’t sold on MLS, so we don’t really know the details of how the price was established, but it clearly sold at the lower end of the market. Was the low price due to stigma? Could it be due to condition or lack of upgrades? Or maybe it was the owner selling at a discount? We may never know the details, but it’s interesting nonetheless to see.

House History: It’s sobering to think Joseph James DeAngelo, the accused killer (aka East Area Rapist), was pursuing the “American dream” of home ownership while destroying people’s lives. Here’s a history of the house:

  • 1980: Bought the house for $77,000
  • 1993: Refinance
  • 2003: Refinance
  • 2012: Refinance
  • 2019: Private transfer to family member
  • 2019: Private sale for $320,000

SELLING LOWER (NEW GRAPH): I’m testing out a new graph and I wanted to see what you think. Here’s a look at Roseville and East Sacramento. Would you like to see other neighborhoods? The goal is to see how close a property sells to the original list price vs how long it’s on the market. Thanks Braden Gustafson, MAI for the graph inspiration on Twitter.

The takeaway? The longer a property sits on the market, the further it sells from its list price. I know this is what we’d expect to see, but it’s still cool to visualize. By the way, I used the original list price instead of the most recent list price because it’s a more complete picture of the market.

PRICE CHANGE IN NEIGHBORHOODS: Last week I pulled some stats to prepare for an interview with Channel 10 about price dynamics in Oak Park. So I crunched numbers in about a dozen neighborhoods to help get a wide view of both higher and lower-priced areas.

The Sacramento Bee actually did a piece on my stats too.

I looked at both the dollar change and percentage change on purpose as this helps give a well-rounded view of the market. I also looked at huge chunks of data too as this compared almost an entire year in 2012 vs the same time in 2019. The problem with neighborhood data is if we look at one month only, the numbers can end up being all over the place. 

NOTE: If you want this data in a PDF, just send me an email.

Again, thank you for being here. From my family to yours, Merry Christmas and Happy Holidays. In coming weeks I hope you get a little time off to connect and reflect. Blessings to you.

Questions: Would you feel comfortable buying this house? Would you expect a discount? Any thoughts on the new graphs or price stats? Anything to add?

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My real estate mind never shuts off

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My real estate mind never shuts off. Even when I’m on vacation I can’t help but notice interesting things and think through value issues. Anyway, last week I took a family road trip through Southern California and here are some things that caught my eye. Enjoy if you wish.

INSIGHTS WHILE ON VACATION

1) Vibrant colors: Imagine this pink color in a newer tract subdivision of stucco boxes with earth tones. In that scenario the market could have a negative reaction to such a loud color, but in certain areas vibrant colors are accepted. This reminds us the market isn’t the same in every location or price range. By the way, check out this pink house near Austin in case you missed it earlier this year.

2) Prices are relative: These new townhouse units in San Diego start at $1.2 million. That’s wild considering the starter model is less than 1,200 sq ft. In Sacramento we don’t tend to see such small units command this price point. For reference only 2.5% of the entire regional market in Sacramento this year has sold above $1M. It’s a good reminder that prices are relative to their location. But still, I think this underscores the struggle of affordability in California too.

3) Views can be temporary: This unit has a view of the ocean for now because there’s a vacant lot in front of it that allows this view to happen. My advice? Whenever purchasing a property near vacant land, be sure to check out the zoning and/or the probability of a zoning change. This will help you know what can be built because a vacant lot doesn’t always stay that way…

4) Unique architecture: This is a new build with a modern Arabic architectural feel. It’s a gorgeous custom home and there aren’t too many like it from what I can tell. What would you do for comps on this one?

5) The rage of contemporary homes: I see contemporary or “modern” architecture popping up all over the place in many major cities throughout the country. But while contemporary is clearly a growing trend, it’s not everywhere either. For instance, we don’t tend to see homes like this built in rural markets or lower-priced areas, but we do see it near major cities. On a personal taste level, this isn’t for everyone. But then again, it doesn’t matter what you or I think. What does the market think?

6) A location with an asterisk: This is a killer view, but there’s one big issue. Is it possible to demolish the unit in front? If so, how high could a new structure be? This is a critical issue to consider when choosing comps as we have to consider the permanence of a view when assigning value to a property. We see stuff like this happen all the time when an owner backs vacant land until a developer builds a store. I recently appraised a house that had a lake view only because of a vacant lot across the street. But said vacant land was purchased and it’s now likely to see a change in the view.

7) Funky driveway: I’ve not seen a driveway like this before. I’m not sure if it’s just ornamental or if there is a practical use for this design. What do you think?

8) A door that pops: I often get asked for ways to help increase curb appeal. I’m not saying painting your door is going to sway value, but when there is a limited budget I tend to tell people to focus on lots of little things instead of just one big project. In other words, try to increase the “bling” of a house in small ways rather than only remodeling the kitchen. This is why I like painting a door because it’s an inexpensive and practical way to give a house vibe or even charm. As always, know your market. If nobody is doing this, maybe don’t do it.

9) A house of a convicted murderer: I made this image just before vacation and I wanted to sneak it in here. I’ve been watching a series on Hulu called The Murder of Laci Peterson. If you recall, Scott Peterson was convicted of murdering his pregnant wife about 15 years ago. Anyway, this home has sold a few times, so I figured it was worthwhile to visualize on a graph. Does it look like the most recent three sales sold with a diminished value? Or does it seem like the sales fit into the market without any big negative reaction? We talk about homes with stigma all the time, and all I’m saying is it’s important to consider whether a notorious owner in the past or something that happened at a house can make a difference in the value. In this case we don’t actually know for sure where the wife and child were killed. Here are some more thoughts on fame and real estate if you’re interested.  

10) Unique homes & unique comps: If you’re trying to pull comps on a unique home, you’re not likely to find something exactly the same. My advice? Look through years of sales for clues on how the market responds to unique properties. Try to find something that is similar in appeal or uniqueness rather than hastily picking the three most recent similar-sized ranch home sales over the past few months. Those SALES might not be COMPS.

Anyway, that was my vacation. And now my trip is a tax write-off since I blogged about it. Right?  🙂 

I hope you enjoyed my trip as much as I did.

Questions: Are you similar to me in not being able to shut off your mind? What pictures stand out most to you? I’d love to hear your take.

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Low appraisals, weed, & rent control

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I’ve been getting lots of phone calls and emails about low appraisals over the past couple months. Is something in the water? What’s going on? Let’s talk about this briefly. Then I have some quick thoughts on weed and rent control.

5 things to remember about “low” appraisals:

1) This is common when the market slows.
2) This is even more common in a declining market.
3) It should happen if the contract is too high.
4) It can spur negotiation instead of kill a deal.
5) The value of course is too low sometimes.

The problem: During the housing “bubble” we expected appraisers to always “meet value” so to speak. Yeah, that wasn’t good. But it seems like the residue of that expectation still exists today. So when an appraisal comes in lower than the contract price, it’s often treated like a grave market sin when in fact this should be something that happens from time to time. I know this sounds a bit Pollyanna to say, but I’d like to see the real estate community view appraisals this way instead of thinking appraisers should “hit the number” all the time. Appraisers have an important role to play in the market and if they’re doing their job correctly it won’t always lead to smooth escrows.

Botched appraisals and what to do: Of course we don’t live in a perfect world and appraisers legitimately miss value at times. I’m not glossing over that frustration and I realize there are horror stories out there. When this happens it’s reasonable to go through the lender’s process of asking the appraiser to reconsider the value. I don’t think any appraiser looks forward to this, but it’s part of the business, which is why I advocate for data-informed conversations and ethical protocol. In fact, here’s some tips and a form I suggest using if the lender will allow it (otherwise you’ll need to use the lender’s form).

Note to appraisers: I know this post will not sit well with some colleagues, but this is a part of the business and my goal here is to elevate the conversation (and hopefully only see rebuttals when they need to happen).

Rent control: I have an upcoming interview about rent control with an appraiser colleague in the Bay Area (and I’ll likely do others too). We’ll talk through rent control dynamics and some things to consider for value. In the meantime, here are two quick thoughts. One, rent control is a huge deal, but we’re going to need some time to really understand the fine print as well as its effect on the housing market. The temptation is to look for an immediate impact, but we might need years to fully understand the effects. Secondly, rent control will change the way properties are advertised. Gone are the days of saying things like, “Rents are below market and you can raise them to X amount after buying.” The problem is market rent isn’t so straightforward any longer because not all units can be legally rented at the same level. Remember, rent control does not apply to single family homes. My advice? Be careful with assertions about market rent. 

Landlords getting huge weed fines: There was an illuminating piece by Capital Public Radio on Sacramento fining landlords when tenants turn rentals into “grow” houses. We’re talking big money too as the story highlights an example of a $137,000 fine. The author of the piece states the City of Sacramento has issued almost $100M in penalties over the past two years. I’ll let lawyers figure out if this is legal or not, but from a market perspective this is something to watch. What are the positives and negatives of this type of enforcement for the housing market? How will this affect investors?

I hope this was interesting or helpful.

BIG MARKET UPDATE: I’ll be giving a deep market update at SAR on September 24th from 10:30-12:00pm. My goal is for everyone to walk away with an understanding of how the market is moving, ways to describe it, and some ideas for business in 2020. Sign up here.

Questions: What is the sixth thing to remember about low appraisals? Any stories to share? Any thoughts on rent control or the weed dynamic right now?

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Cost vs value, Johnny Cash, & an explosion of murals

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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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