How To Measure Real Estate Appreciation
Last week, I wrote a blog about real estate appreciation that generated a lot of emails to our office. People wanted to know if we could provide a little more analysis of what the Tallahassee real estate market has done, in terms of appreciation and depreciation. So, I thought about it this weekend and came up with the following analysis. I would greatly appreciate any comments following this blog for feedback (scroll all the way down to the bottom of the page).
If you recall, regarding the best way to measure real estate appreciation, the Tallahassee Real Estate Blog wrote:
Using a sampling of homes in an area and comparing to previous sales of same units - this would be the preferred method, but the sample would have to be statistically relevant and the market area would have to be accurately defined. The problem with this method is the time and resources required to do it are much better suited to a University than to a business, because the degree of accuracy, though enlightening, would not likely bring an economic benefit to a business that invested the resources to know this for a certain area.
So this is what we have done
How To Measure Real Estate Appreciation
The following real estate graph is chock full of useful information, but first we need to identify how we were able to produce the graph. The graph is a measurement with the following constraints:
- All recorded 2009 existing home sales in Tallahassee (no new home sales)
- Only "Warranty Deed" recordings in order to remove as much "non arms length sales" as possible
- Only properties with square footage recorded at the county
- All Previous sales were used to calculate annualized return for each property
Measuring Real Estate Appreciation
The real estate graph above can be a bit confusing, but it reveals some interesting information about real estate appreciation in Tallahassee:
- The higher the annual appreciation rate for a year in the graph, the better it was to have purchased a home a that year's prices (compared to the sales price in 2009).
- People who bought in 2005 or 2006, and sold in 2009, sold for less than they paid.
- People who purchased in 1997 and sold in 2009 were the greatest winners, with an annualized appreciation rate of over 7%!
- Currently, homes sold in 2009 that were purchased in 2008 are showing a staggering appreciation rate of 17.2%!
- It's too early to have a fixed opinion on 2008, but right now it appears that a majority of sales (from homes purchased in 2008) were from people who bought and flipped to take advantage of a great real estate opportunity.
2009 Existing Home Sales Used To Calculate Real Estate Appreciation
|Address||2009 Sales Price||Earliest Sale||Annual Appreciation|
|1923 ATAPHA NENE||$190,000||2008||90.0%|
|S ADAMS ST||$162,500||2008||14.0%|
|5528 GREEN MEADOWS CT||$138,900||2008||15.8%|
|1305 WOODGATE WAY||$250,000||2007||-2.9%|
|4890 CHAIRES CROSS RD||$160,000||2007||6.9%|
|1912 RHONDA DR||$157,400||2007||-8.0%|
|3502 LAKEWOOD DR||$64,500||2007||111.6%|
|2047 HILLSBOROUGH ST||$23,000||2007||-28.7%|
|2325 W PENSACOLA ST||$31,000||2006||-26.7%|
|1951 N MERIDIAN RD||$146,000||2006||4.6%|
|3347 GOLDEN RAIN DR||$129,900||2006||-8.1%|
|400 MERIDIAN RIDE||$500,000||2006||-2.5%|
|1314 DILLARD ST||$325,000||2006||-2.4%|
|4244 GROVE PARK DR||$314,050||2006||-3.5%|
|1117 BROWNING DR||$303,600||2006||2.9%|
|1537 WOODGATE WAY||$243,000||2006||-3.2%|
|1809 CELTIC RD||$237,500||2006||-4.7%|
|3791 OVERLOOK DR||$235,000||2006||-7.6%|
|710 N GADSDEN ST||$83,000||2006||-11.6%|
|1575 PAUL RUSSELL RD||$150,000||2005||-6.5%|
|3358 LAKE RUN DR||$329,900||2005||-3.8%|
|9171 OLD CHEMONIE RD||$310,000||2005||-1.0%|
|765 EAGLE VIEW DR||$305,000||2005||0.1%|
|6845 CANOPY GROVE LN||$291,000||2005||0.5%|
|1509 BOWMAN DR||$265,000||2005||4.2%|
|244 NABB LOOP||$250,000||2005||0.1%|
|2843 KILKIERANE DR||$204,400||2005||-2.4%|
|3241 GALLANT FOX TRL||$177,000||2005||3.7%|
|1797 FOLKSTONE RD||$170,000||2005||-3.9%|
|8402 CHICKASAW TRL||$148,500||2005||-3.3%|
|5532 CATTAIL CT||$133,500||2005||0.9%|
|2361 WINDERMERE RD||$72,000||2005||-9.8%|
|2969 PARRAMORE SHORES RD||$320,000||2004||2.0%|
|2765 FOX HOLLOW CT||$300,000||2004||-3.4%|
|6133 EASTFIELD TRL||$235,000||2004||0.4%|
|3403 CAMERON CHASE DR||$220,000||2004||1.5%|
|153 NORTHCUTT TER||$180,000||2004||-0.6%|
|5920 STONELER RD||$130,000||2004||2.8%|
|3707 WOOD HILL DR||$126,000||2004||1.8%|
|1887 FOLKSTONE RD||$154,600||2003||1.2%|
|185 PITKIN TER||$274,500||2003||4.5%|
|3488 VALLEY CREEK DR||$265,000||2003||3.2%|
|1635 CHURCH ST||$62,000||2003||2.5%|
|9194 SHOAL CREEK DR||$475,000||2003||29.0%|
|3966 ROYAL OAKS DR||$330,000||2003||5.2%|
|1861 EASTON FOREST DR||$301,000||2003||3.7%|
|1116 STONEY CREEK WAY||$260,000||2003||3.5%|
|1506 GOLF TERRACE DR||$205,000||2003||5.3%|
|4726 PLANTERS RIDGE DR||$200,000||2003||2.8%|
|7837 MACLEAN RD||$200,000||2003||0.6%|
|1018 HIGH MEADOW DR||$194,000||2003||3.3%|
|2473 LAURELWOOD CT||$168,000||2003||1.7%|
|5072 MINT HILL CT||$162,900||2003||0.8%|
|963 BALKIN RD||$115,000||2003||3.6%|
|2140 DELTA BLVD||$63,000||2003||-10.9%|
|5576 LILY POND CT||$135,000||2002||2.4%|
|1360 OLD VILLAGE RD||$223,000||2002||4.4%|
|1140 WINFIELD FOREST DR||$226,000||2002||4.5%|
|1982 BUSHY HALL RD||$223,500||2002||4.4%|
|8332 INNSBROOK DR||$215,000||2002||2.6%|
|1215 CLARK AVE||$178,000||2002||4.5%|
|3105 BRIARWOOD DR||$233,500||2001||6.4%|
|3210 EARL DR||$146,000||2001||5.5%|
|2054 HANOVER CT||$90,500||2001||5.5%|
|3489 CEDAR LANE DR||$550,000||2001||-0.3%|
|2419 BUTTONBUSH CT||$215,000||2001||4.7%|
|4245 SHERBORNE RD||$205,000||2001||3.3%|
|875 VIOLET ST||$200,500||2001||5.6%|
|1117 ALBRITTON DR||$160,000||2001||2.8%|
|1550 PATRICK AVE||$71,100||2001||3.3%|
|1540 PATRICK AVE||$66,300||2001||2.7%|
|1546 PATRICK AVE||$56,300||2001||0.3%|
|1907 SHARON RD||$170,000||2000||8.0%|
|2944 CAPITAL PARK DR||$110,000||2000||5.8%|
|604 KYLE ST||$31,500||2000||-4.8%|
|2709 WHARTON CIR||$330,000||2000||1.9%|
|7307 HOLLIS ST||$158,000||2000||3.9%|
|2863 KILKIERANE DR||$235,000||2000||5.5%|
|3252 STORRINGTON DR||$202,500||2000||6.8%|
|1413 COLONIAL DR||$153,000||2000||5.1%|
|902 BALD EAGLE RUN||$106,500||1999||4.6%|
|2608 BLOCK DR||$117,000||1999||35.8%|
|7305 HOLLIS ST||$159,500||1999||4.1%|
|2028 TRESCOTT DR||$37,500||1999||-9.6%|
|1292 FERN HILL CT||$210,000||1999||4.4%|
|7845 PRESERVATION RD||$240,000||1999||3.8%|
|3058 LAYLA ST||$141,900||1999||3.6%|
|5657 MAPLE FOREST DR||$105,000||1999||6.9%|
|2233 GREENWICH WAY||$55,000||1999||-4.8%|
|1227 BRAFFORTON CT||$110,000||1998||5.4%|
|1121 SAVANNAH TRCE||$380,000||1998||4.5%|
|1445 SILVER PINE LN||$599,000||1998||10.5%|
|2712 KEATOR ST||$95,000||1998||6.0%|
|7454 HEARTLAND CIR||$1,160,000||1998||7.2%|
|3317 BARROW HILL TRL||$210,000||1998||5.7%|
|518 RIVERPOND CT||$550,000||1998||4.6%|
|5508 SPLIT OAK CT||$99,500||1998||4.7%|
|1374 SILVER MOON DR||$229,500||1998||5.5%|
|3346 THOMAS BUTLER RD||$100,000||1998||2.2%|
|709 FOREST LAIR||$440,000||1998||4.0%|
|405 INGLEWOOD DR||$183,000||1998||7.5%|
|6661 MAN O WAR TRL||$162,000||1998||5.7%|
|2417 NUGGET LN||$107,500||1998||4.5%|
|1155 SEMINOLE DR||$275,000||1997||9.9%|
|211 ROSEHILL LN||$690,000||1997||15.7%|
|1230 CAMELLIA DR||$177,900||1997||5.4%|
|1518 VALLEY RD||$129,900||1997||6.6%|
|3284 RUE DE LAFITTE DR||$164,800||1996||4.2%|
|3535 DAYLILY LN||$145,500||1996||5.0%|
|2660 HARTSFIELD RD||$115,000||1996||3.3%|
|2141 LONGVIEW DR||$93,000||1996||3.4%|
|1322 CIRCLE DR||$161,900||1996||6.3%|
|3025 STILLWOOD CT||$200,000||1996||4.3%|
|927 ALACHUA AVE||$180,000||1996||5.9%|
|3941 CALLE DE SANTOS||$182,500||1996||5.0%|
|5302 WATER VALLEY DR||$145,000||1995||3.5%|
|10563 WINTERS RUN||$357,000||1995||5.5%|
|2212 PAUL RUSSELL CIR||$127,000||1995||6.0%|
|2364 IAN DR||$122,900||1995||3.9%|
|5751 DOONESBURY WAY||$120,000||1995||2.4%|
|2262 MONAGHAN DR||$210,000||1995||3.8%|
|1415 DEVILS DIP||$233,000||1995||6.3%|
|6484 BOLD VENTURE TRL||$145,000||1995||4.8%|
|6417 CAVALCADE TRL||$172,900||1995||5.0%|
|3428 DAYLILY LN||$155,000||1995||3.9%|
|3954 BOTHWELL TER||$122,800||1995||5.7%|
|5400 BUCK LAKE RD||$170,000||1995||2.6%|
|4015 HARPERS FERRY DR||$195,000||1994||3.6%|
|657 LITCHFIELD CT||$185,000||1994||3.1%|
|3496 DAYLILY LN||$143,000||1994||4.3%|
|1920 TALPECO RD||$158,000||1994||11.7%|
|1815 MONTICELLO DR||$148,000||1994||3.5%|
|2037 LONGVIEW DR||$143,300||1994||5.9%|
|800 TIMBERS CT||$107,000||1994||5.2%|
|2813 COLONNADE CT||$275,000||1994||2.7%|
|1718 COPPERFIELD CIR||$262,000||1993||5.0%|
|1649 TWIN LAKES CIR||$165,000||1993||6.1%|
|6846 HILL GAIL TRL||$179,000||1993||5.5%|
|5881 CYPRESS CIR||$130,000||1993||5.6%|
|3691 WOOD HILL DR||$133,900||1993||5.3%|
|3633 KILLARNEY PLAZA CT||$167,000||1993||3.9%|
|1883 FOLKSTONE RD||$145,000||1993||3.1%|
|5019 EASY ST||$110,000||1993||5.1%|
|1548 CHULI NENE||$141,500||1993||6.2%|
|1608 REDWOOD DR||$168,000||1993||5.9%|
|1529 CINNAMON BEAR CIR||$87,000||1993||1.3%|
|8256 HUNTERS RIDGE TRL||$182,900||1992||4.9%|
|3998 CAMINO REAL||$140,000||1992||3.1%|
|4857 BALLYGAR DR||$207,000||1992||4.0%|
|2636 BRENTSHIRE DR||$190,000||1992||5.5%|
|2814 SAIL CT||$52,100||1992||0.0%|
|4589 BERKLIE DR||$60,000||1991||-4.8%|
|1319 BETTON RD||$399,000||1991||5.7%|
|1801 WOODGATE WAY||$250,000||1991||3.2%|
|5040 TILLIE LN||$79,500||1991||8.0%|
|713 GWEN ST||$28,350||1991||0.1%|
Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.
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Could the big appreciation in some samples be due to "flips" with costly additions and/or improvements? Is there a way to discover or know about substantial upgrades? Wouldn't average appreciation be tainted if costly additions and upgrades are not included?
Great question Trent. On a case-by-case basis, this is definitely a consideration. But you ask "Wouldn't average appreciation be tainted if costly additions and upgrades are not included?" The fact is, when we consider the entire population of data, additions, upgrades, and improvements are historically part of the appreciation mix. We assume that these are occurring and when we see an average annual rate of appreciation of 4 to 5 %, we know some of this is due to work done by the homeowner to improve the property.
A couple of things for you. I really appreciate the objective analysis of the Tallahassee real estate market you provide. I like your strait forward honest approach without the typical hype. It is refreshing that you seem to be different and I appreciate your integrity. I know of no other Real Estate professional in this market that says it like it is. On another note I would like to see some studies and analysis by you on the condo market in Tallahassee and more specifically the downtown market. Here are my observations and would love to hear yours. I guess the three main properties downtown are the completed Tennyson and Tallahassee Center and the soon to be completed Plaza Tower. I've seen ads for units in the Tennyson and they seem to take forever to sell. A look at the property records show the vast majority of sales back in 2006 when it opened, a few in 2007, 2 in 2008 and none so far in 2009. That’s with the developer still having 3 units in their possession. My questions on this building are, is this a dead building now?.....were the sales in 2006 primarily for college students to live in, while in school and 2010 will see those units dumped back on the market? Regarding the Tallahassee Center, the developer has been advertising on their marketing site, the close out of the last 14 remaining units.... For a building that opened in 2006 with 111 units and still having 14 units 3 years later, does not reflect well on the downtown market. Not to mention that some of the price discounts from the developer approach almost 50%. Does this building have a large percentage of college student housing that started in 2006 as well, and will be dumped in 2010? A quick look at the property records show 5 sales for 2008 (does not include sales to the same party and includes one unit that sold twice in one year). That unit might need to go into the Tallahassee condo hall of fame in this market. I see no 2009 sales. One interesting sale was unit 808, sold for $330,000 on 04/2008, a couple of months later the developer slashed prices and for 61 more square feet on the same floor you could get a unit from the developer for $265,000. Not a bad investment, you lost $67,000 in a matter of months, provided the developer doesn't take less than the new prices that have languished for almost a year. Of course most Realtors would only comment on what a wonderful view, and be oblivious to the market and its trends. (my opinion as a generalization) One more point.....HOA fees, not sure what the Tennyson and Plaza are or going to be, but the Tallahassee Center list on their sales brochure a rate of $ .52 a foot (per month) I could have sworn I saw it listed earlier at .62 , but lets take .52. That’s outrageous, I have lived in the Buckhead section of Atlanta and typical HOA fees are the .30 range. I hope people realize that in a building like the Tallahassee center with a 1200 sq. ft unit you will pay $624 per month......I wonder how many people realize this? These buildings have to get these fees in line, because I think they are a detriment to sales. With all this said , I wonder what the sales status will be of the Plaza Tower coming to the market now? This building has 202 units, I’m sure a lot of pre-sales when there was easy mortgage money and lending restrictions required that you be breathing. I'm not 100% sure, but I believe that Fannie Mae has new condo restrictions that require the building to be 70% sold, before they will buy the mortgages. Fannie Mae has also recently become the only game in town regarding purchasing these mortgages. Can anyone say BLOOD BATH for downtown condos? The slow economy (understatement), rising unemployment, stricter lending requirements, higher down payments, tougher to sell an existing house in order to buy, higher cost to maintain (HOA fees), and decreasing prices can not be good for the downtown condo market. My last and final point. In order for there to be a successful live / work community in the downtown, you need the close proximity of a super market, different restaurants and shops that stay open after working hours. These services are all common in successful live work communities. I just don't get it....can the downtown condo market really be successful?......is it a good investment?......do you see developer bankruptcies? How do you think the cost of ownership compares to a single family home? Would love your input and observations on this market.
Hey Doug, wow, great (long) question. I will do some homework and make this a blog post next week. Thanks for the great question.
Appraisers generally use the comparative-sales approach which justifies current pricing based on the irrational behavior of buyers.There are new generation tools in Real Estate which do complete evaluation & give the true value of any property along with the ability to predict how much appreciation it will achieve in the coming years.
Jacob, thanks for commenting.
I have to question your belief in an approach on valuation that does not consider the behavior of buyers.
Real estate is a commodity, and it IS the behavior of buyers that determines what real estate will sell for. The best computer systems that estimate value are solely based upon past buyer behavior (and that is why they are no good, because they do not know how to measure current buyer behavior).
Hi, How do you check the valuation on the property indicies in comparison with the actual financial market. How do you determine the bubble and where do you forecast it will go? So in conclusion, how did you come with these inferences.
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