Why are real estate values important???

Why are real estate values important? This strikes at the very reason for my being an appraiser. Certainly real estate values must be important, otherwise those that value real estate would be equally unimportant- and how would I explain this unimportance to my kids? They love me…

2011 in Review…

The economics of real estate are ALWAYS intriguing for me, as I characteristically think in terms of why, how, when and what?… Why are things this way? How did they get this way? When will they change? What will things be like in six months?

And, looking back at 2011, I was pretty good as answering those questions.

Supply, Demand and the Foreclosure Crisis… in Michigan

Just last year the foreclosure crisis combined with job losses had real estate markets in shambles. Homes were selling at “Millennial” low levels and land values were in significant decline due to declining population and a lack of new construction activity in Michigan… especially southeastern Michigan. That was then, this is now. And, the real estate markets today are better, which is the most import sign of recovery. It is all about supply and demand. Take a look at real estate activity… I have.

West Michigan Real Estate Recovery Underway

Remember Last December...

Grand Rapids, the Holland Lakeshore area, Kalamazoo, Battle Creek, pretty much all of western lower Michigan, are six months into a real estate recovery… take a look for yourself!!!  Six months in a row of strong sales activity and declining inventories, combined with ongoing new construction activity, are signaling a recovery in the real estate markets.  The best news is where the volumes are the highest, Grand Rapids and neighboring Lakeshore areas.  The Holland area has its lowest inventories since last December– yes, traditionally the time in west Michigan where only the desperate or vacant are listed for sale- and a 62% increase in pending sales over 15 months ago when government incentives ended (Who needs government incentives?!!!).  This time I will let the numbers do the talking, just click on the names of the different areas above for charts.  Oh, and pay special attention to year-over-year and monthly numbers… Can the rest of Michigan be far behind?  You tell me.

Market Value… and holidays with the in-laws.

Most disputes involving value tend to resolve before reaching trial, so it is a rare event to be sworn in and provide the Truth, the whole Truth, and nothing but the Truth… and, in each case, I do. The Truth, as far as an appraisal is concerned, is an estimate of market value and here is where the fighting breaks-out.

The Inside Line on New Construction…

How is the small builder today succeeding when demand and new construction starts for single family homes are down, and larger scale builders have lower unit costs? Consider this approach.

The Appraisal Process, Undue Influence, and Market Outcomes

Here’s the point. We all need outcomes. Results are validating, and they pay the bills. However, it is the process and integrity of the materials being processed which generate quality results. If you are not getting quality results, you must change either the process or the stuff going in… Markets today need to change the stuff going in.

So, a man walks into a house…

Stop me if you’ve heard this one…

Having rented a very nice, two bedroom/two bath, Loft apartment in Holland for the past year and enjoyed the maintenance free, in-town living, lifestyle… I’m ready to buy a house. We chose to rent as our future on the lakeshore area of SW Michigan was uncertain. Now, however, with my wife getting great results in her career and our daughters prospering in school (and socially), it is time for us to buy. Home prices have come down over the past two years and interest rates are still low, which helps a great deal in affordability. Still, I have two concerns…

First, everything is getting a lot more expensive while our incomes struggle to stay the same, or modestly improve. Food, gas, electricity, and clothing are all much more expensive than a year ago-  and these are things we all want each other to have. I don’t care how much gold you have, or the value of your portfolio… please invest in food, heat and clothing! Bottom line is that if inflation builds into the economy as the jobs market improves then interest rates should rise adversely impacting the affordability of homes, and values will drop more unless demand greatly improves.

Secondly, the trend is my friend-  and my friend tells me that home values have gone down over the past few years and will continue to decline. Buying a home now could mean losing money over the next few years if we needed to sell. While that trend seems to be holding for now, market conditions also appear to be improving in terms of a dwindling supply and steady demand. Of course, my friend also told me that the White Sox would win the American League Central this year, health care would become affordable for more people, and global warming would make Michigan more temperate than Kentucky… Maybe I need a wiser friend!

Yet, I am buying a house as I need a house. I could enjoy this in-town, Loft, lifestyle for another year or two, however my family needs a home for their emotional well-being. They need to have friends visit, colors they like on the walls, and more privacy. They need to play with the dog in the yard and listen to the crickets while they fall asleep, not cars and trucks. They need to build memories of a place we call home that reminds them of home, and apartment living does not fill that need-  no matter how nice it may be.

13 Ways of Looking at Value (Part 1)

If there is one lesson I’ve learned appraising and buying homes in Michigan this past year, it is that homes can be priced, and valued, in many different ways. Ultimately, it is not the size of the home or site that contributes marketability and value, but demand for the lifestyle it represents…

…and then the rain stopped and the Sun came out.

“I was talking with X, who is a veteran Realtor in Holland/Birmingham/Bloomfield/Grand Rapids, and she says that sales are getting better. How are things for you?” This is perhaps my least favorite conversation starter, and it seems to happen nearly every weekend. So, not wanting to sound like a loser or a Debbie downer, I find some green shoot or silver lining in the market to talk about. This happened to me last night at the annual school fund raiser. Here is what I said.