
How prices compound - $359,000
A reader asked me to review this house.
At least for this house, we can thank the realtor for providing 27 photos of the property. It is MLS #459549.
The builder bought the land (0.15 acres) for $59.9K in 2005. It was a multi-transaction deal for 2 properties so I split the cost in two. From the photos I estimate the construction cost with builder profit to be about $70/sq ft. 2,116 sq ft would be $148,120. Total cost all in with profit to the builder would be $208.2K.
Here is how the prices compound:
- When the builder bought the land it was over-valued. $59.9K for 0.15 acres is close to $400K/acre! Especially when right nearby you have Highway 64 and a train line in the background. I would have only valued the land for $15K.
- The first buyer bought the house for $304K in 2006. That put an extra $100K into the builders pocket.
- The second buyer bought the house for $335K in 2008. At that price the seller was just trying to cover their costs of the home and the realtors cost.
- They now have it on the market for $359K. At that price the seller is just trying to cover their loan and the realtors cost.
It is assessed for $315K.
If you took out the realtor costs for both of the transactions and the extra $100K that the builder put in his pocket, and the over purchase of the land you would be back down to about $163K.
I think it is worth somewhere between $163K to $220K.
Before everyone gets in an uproar about how much lower that is than what the assessed values are, I want you to look at how each time a pricing error is made, it gets passed down to the next buyer, and the next buyer, and the next.
Eventually you get to a tipping point that the mistakes cost too much, and the price has to be significantly driven down again. Is it fair for current buyers to pay for the mistakes of previous buyers?
What do you think?
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Total Acres | | 0.1500 | Primary Prop. Address | | 1353 COURTYARD DR | Other Address | | N/A | Property Card(s) | | 1 | Lot | | 77 PHASE 4B | Property Name | | N/A | Subdivision | | Redfields | | Notes | | 06/16/2005 $119,810 FOR 2 LOTS TM 76R1-04-69 & 77 Subdivide Information Deed Book, Page (1981 , 244 ) Conveyance ( ) Date of Sale (01/03/2001) Transaction, Date (200500366 08/21/2003) | | |
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Owner | | KALUPNIEKS, ANDRIS | Address | | 1353 COURTYARD DR CHARLOTTESVILLE VA, 22903 | | Owner as of Jan 1st | | KALUPNIEKS, ANDRIS | | |
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Year | | 2009 | Assessment Date | | 01/01/2009 | Assessment Reason | | Reassessment | Land Value | | $95,000 | Land Use Value | | $0 | Improvements Value | | $220,800 | Total Value | | $315,800 | | |
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Previous Owner | | SLAWSKI, DESIREE | Owner | | KALUPNIEKS, ANDRIS | Sale Date | | 01/28/2008 | Sale Price | | $335,000 | Deed Book/Page | | 3543/684 | Validity of Sale | | Valid Sale | | |
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State Code | | Single Family Resid (Urban) | | Tax Type | | Reg. Taxable | | Parcel Level Use Code | | Single Family | | Primary Zoning Designation | | Planned Residential Develop | | Appraiser | | CRB |
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Card Type | | Residential | | |
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| | | Public Water /Sewer
| | | | Whirlpool w/ Separate Shower
| | | | Water & Sewer - Jurisdictional Area Designation | | |
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| | Garage, Attached Frame.....260 sq ft | | | | Patio, Aggregate.....336 sq ft | | | | Porch, Aggregate Floor.....30 sq ft | | |
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Comm. Section | | N/A | Card Level Use Code | | Single Family | Year Built | | 2006 | Year Remodeled | | N/A | Condition | | Good | Grade | | B--- | Number of Stories | | 2 | Story Height (ft) | | N/A | House Type | | 2 Sty Transitional | Finished Sq. Ft. | | 2,116 | Basement Type | | None | Basement Garage Doors | | 0 | Bsmt Fin. Sq. Ft. | | 0 | Bsmt Tot. Sq. Ft. | | 0 | Attic Type | | N/A | Attic Tot. Sq. Ft. | | 0 | Roof Material | | Dimensional | Heating | | Heat Pump | Cooling | | Central Air | Fireplace(s) | | 1 | Fireplace Type | | Gas Fireplace | Wall Framing | | N/A | Exterior Covering | | Vinyl Siding | Bedrooms | | 3 | Dining Rooms | | 1 | Family Rooms | | 1 | Full Baths | | 2 | Half Baths | | 2 | Total Room Count | | 7 (Every unit assumed to have kitchen and living room. Bathrooms are not included in total room count.) |
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Land Use | | Homesite 1 | Acres | | 0.1500 | Sq. Ft. | | 6534.0000 | Rate | | $95,000.00 | Adj Rate | | $95,000.00 | Base Value | | $95,000.00 | Adj Amount | | $0.00 | Value | | $95,000.00 |
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Year | | 2009 | Assessment Date | | 01/01/2009 | Assessment Reason | | Reassessment | Land Value | | $95,000 | Land Use Value | | $0 | Improvements Value | | $220,800 | Total Value | | $315,800 | | Year | | 2008 | Assessment Date | | 01/01/2008 | Assessment Reason | | Reassessment | Land Value | | $95,000 | Land Use Value | | $0 | Improvements Value | | $253,100 | Total Value | | $348,100 | | Year | | 2007 | Assessment Date | | 01/01/2007 | Assessment Reason | | Reassessment | Land Value | | $95,000 | Land Use Value | | $0 | Improvements Value | | $244,700 | Total Value | | $339,700 | | Year | | 2006 | Assessment Date | | 06/14/2006 | Assessment Reason | | New Construction-2nd Cycle | Land Value | | $60,000 | Land Use Value | | $0 | Improvements Value | | $204,200 | Total Value | | $264,200 | | Year | | 2006 | Assessment Date | | 01/01/2006 | Assessment Reason | | End-of-year Rollover | Land Value | | $60,000 | Land Use Value | | $0 | Improvements Value | | $0 | Total Value | | $60,000 | | Year | | 2005 | Assessment Date | | 01/01/2005 | Assessment Reason | | Reassessment | Land Value | | $60,000 | Land Use Value | | $0 | Improvements Value | | $0 | Total Value | | $60,000 | | Year | | 2004 | Assessment Date | | 03/22/2004 | Assessment Reason | | Division of Property | Land Value | | $45,000 | Land Use Value | | $0 | Improvements Value | | $0 | Total Value | | $45,000 | | Year | | 2004 | Assessment Date | | N/A | Assessment Reason | | End-of-year Rollover | Land Value | | $0 | Land Use Value | | $0 | Improvements Value | | $0 | Total Value | | $0 |
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Previous Owner | | SLAWSKI, DESIREE | Owner | | KALUPNIEKS, ANDRIS | Sale Date | | 01/28/2008 | Sale Price | | $335,000 | Deed Book/Page | | 3543/684 | Validity of Sale | | Valid Sale | | Previous Owner | | CRAIG ENTERPRISES INC | Owner | | SLAWSKI, DESIREE | Sale Date | | 05/18/2006 | Sale Price | | $304,236 | Deed Book/Page | | 3212/662 | Validity of Sale | | Valid Sale | | Previous Owner | | REDFIELDS DEVELOPMENT CORPORATION | Owner | | CRAIG ENTERPRISES INC | Sale Date | | 06/16/2005 | Sale Price | | $119,810 | Deed Book/Page | | 3002/254 | Validity of Sale | | Multi-Trans |
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Elementary School District | | Cale | Middle School District | | Walton | High School District | | Monticello | | |
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Magisterial District | | Samuel Miller | Voting Precint | | Country Green | | |
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Census Block Group | | 1 | Census Tract | | 112 | | |
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Primary | | Planned Residential Development | Secondary | | Unassigned | Minor | | Unassigned | Other | | Unassigned | Proffered? | | Yes | | Natural Resource Extraction Overlay? | | No | Flood Hazard Overlay? | | No | Airport Impact Area? | | Yes | Scenic Stream Overlay? | | No | Entrance Corridor? | | Yes | | |
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Comp Plan Area | | Urban Area 5 | Comp Plan Land Use - Primary | | Neighborhood Density | Comp Plan Land Use - Secondary | | Unassigned | Comp Plan Land Use - Minor | | Unassigned | Comp Plan Land Use - Other | | Unassigned | | |
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Land Use - Primary | | Residential -- Single-family (incl. modular homes) | Number of Structures - Primary | | 1 | Number of Dwelling Units - Primary | | 1 | | Land Use - Secondary | | Unassigned | Number of Structures - Secondary | | 0 | Number of Dwelling Units - Secondary | | 0 | | Land Use - Minor | | Unassigned | Number of Structures - Minor | | 0 | Number of Dwelling Units - Minor | | 0 | | |
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Subdivision | | Redfields | MPO/CHART Area? | | Yes | Traffic Analysis Zone (TAZ) | | 171 | Jurisdictional Area Designation | | Water & Sewer | Watershed | | Moores Creek | Water Supply Protection Area? | | No | Development Area? | | Yes | Other Rural Land? | | No | Ag/Forest District | | N/A | Conservation Easement? | | No |
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"Eventually you get to a tipping point that the mistakes cost too much, and the price has to be significantly driven down again. Is it fair for current buyers to pay for the mistakes of previous buyers?"
ReplyDeleteOf course it's not fair, nor is it good business (to respond as if your question was anything other than rhetorical). And it's "Fake," an "asset bubble."
And these "mistakes" happen with existing homes as well. It's how the Cville market got to where it is...stalled. For every property that gets sold, there is at least 1 more that come on the market the same day, usually more like 5-10, to replace it, now that we're in the "Season."
And the Gen Y's, and some X's, are priced out just when the market needs 'em the most:
http://realcville.blogspot.com/2009/04/charlottesville-albemarle-real-estate.html
there is also sheer madness in the market - look what just got listed....
ReplyDelete421 Alwood Ln - $950,000 MLS# 463956
Real C'Ville - great post, and thanks for the link to your excellent post on your site regarding how the market is pricing people out.
ReplyDeleteKaren - 421 Alwood Ln is a great example of what happens when a seller is either overloaded in debt or clueless about the market. That property sold back on 10/26/2007 for $400K when it was then assessed for $277K.. now it is only assessed at $430K....woops!
What really had me rolling on the floor was this in the description of the property:
"Owner has agreed to perform $50,000 in upgrades, to be chosen by purchaser with a full price offer."
Priceless!
Another ridiculous example of "affordable" housing in C'ville listed by the owner/agent. Unfortunately if you extrapolate the lunacy of this price upward for a 'real' house, the sky is the limit. LOL!!
ReplyDeletehttp://www.mycaar.com/(kkkgqn55jsvlwdydnzj0mv55)/propertyDetails.aspx?mls=454183
626 Booker Street
That "thing" was featured on the bubble blog...It's "always" "for sale." A couple houses across the street have been rehabbed and gone for the low 200's.
ReplyDeleteThe seller is hoping somebody will bite and take the land and build...which is more realistic than ever these days, right?
But it's also being marketed as a perfectly acceptable place to live. It's a tool shed or a gardening shack, not a house.
I LOVE CHARLOTTESVILLE.
The house on Courtyard was just reduced by symbolic $10,000. Long way to go...
ReplyDelete