March Newsletter

Image by The_Smell_of_Roses from Pixabay

March, when days are getting long,
Let thy growing hours be strong
To set right some wintry wrong.
~Caroline May, 1887

The signs of seasonal change are here. Many of the trees have buds or flowers appearing. Our local Tulip Farm is open as some of the tulips have emerged. If you are in North Texas we highly recommend taking a trip to see the tulips. If you enjoy nature you will be thrilled as the bluebonnets are to be spectacular this year because of our rainy winter. Here is a list of great placed to see bluebonnets: 5 Great Places to See Beautiful Bonnets in Texas.

What about our real estate markets? Well as we have been reporting the DFW markets are slowing down. The median sales prices have moved up slightly or are flat. Prices have been appreciating at such a fast rate that the market is starting to become more balanced. There are more listings and they are staying on the market longer. This is good news for buyers.

Affordability has been declining since 2012, thus a slow down will help some who have been getting priced out of the market. We do not think that we are headed for a crash just a slow down as the rapid price appreciation we’ve seen in the last five years was unstainable. What goes up must eventually come down. Mortgage interest rates, which had climbed in November, then dropped are starting to trend back up.

Market Updates- Denton, Collin, Dallas & Tarrant Counties

** Make sure you hover over the charts to see all of the data**

FEBRUARY 2019 (YoY Trends)
 

Denton County
$304,990 | +1.7%

Collin County
$325,000 | +1.6%
Dallas County
$235,000 | -3.1%
Tarrant County
$230,886 | +4.9%

The median sales price for single-family residences are almost flat in Denton and Collin Counties, they have decreased in Dallas County and had on a modest increase from the same time last year in Tarrant County.

FEBRUARY 2019 (YoY Trends)
 

Denton County
$137 | +1.5%

Collin County
$135 | +0.7%
Dallas County
$130 | 0.0%
Tarrant County
$121 | +6.1%

The price per square foot metrics are also trending the same. They are flat in Dallas County, slight in Denton and Collin County and up 6.1% in Tarrant County. All of these trends are compared to the same time last year. There are slight increases from last month which is typical as prices begin to pick up as we head into the spring selling season.

FEBRUARY 2019 (YoY Trends)
 

Denton County
2.8 | +40.0%

Collin County
3.1 | +34.8%
Dallas County
2.8 | +33.3%
Tarrant County
2.0 | +25.0%

A definite indicator of a market slow down is an increase in supply. The increase has been double-digit percentages in all four counties. The supply is still three months or less- which is an undersupply. A four to six month supply is a more balanced market. The market is trending to a more balanced market as the supply increases. New construction has helped with the increase in supply.

FEBRUARY 2019 (YoY Trends)
 

Denton County
894 | -7.9%

Collin County
993 | -12.8%
Dallas County
1,573 | -4.0%
Tarrant County
1,789 | -2.6%

Volume in down in all four counties. It is typical for sale volume to be down in the winter months, however, these are down compared to last year.


Rolling Stone article about the real estate appraiser of the world's most gruesome murder sites

Did you know that real estate appraisers are Rock Stars? Well at least this one is. Check out this fascinating read about appraising stigmatized properties in Rolling Stone Magazine.


2019 Happiest Cities in America per Wallet Hub

Congratulations to the city of Plano, TX in Collin County. They were selected as the #1 Happiest City in America per Wallet Hub. Have you been to Plano lately? We certainly are happy when we visit Plano.


Commercial Corner

Since we also provide commercial appraisals as well as residential, we thought we would add a section to cover a little bit of commercial real estate news.

  • CRE Nationally – Growth in U.S. commercial property prices slowed to the weakest annual pace in eight years in January, reported Real Capital Analytics, New York. Industrial properties were strong keeping it from slowing more. Just as we are seeing slowing in residential markets, the same holds true for CRE. Read more here.
  • CRE Texas -The overall strong performance in the Texas economy translates into a positive outlook for the commercial real estate sector. The outlook for 2019 appears to be positive for commercial real estate due to the strength of the U.S. and Texas economies. According to Texas Real Estate Center Overall, the dollar volume of mortgage originations in the office sector has stabilized since 2015. While industrial borrowing showed little movement from the first half of 2017, dollar volume of mortgage originations increased sharply from 2016 to 2017. Over the long term, retail borrowing has declined in dollar value of mortgage originations; new loans on retail properties measured 70 percent lower than 2007. You can read the full report here.
  • Industrial Strength– E-Commerce has supercharged the industrial sector. This was just one of the four takeaways From Marcus & Millichap’s 2019 Office and Industrial Forecast

We hope that you enjoyed this new format for the newsletter. Please let us know what you think! Also while you are here check out our latest posts:

  • The Problems with the Price Per Square Foot Method– Do you use this method when determining the price or value of a home? Read this to find out how this method can lead you astray.
  • A Market Advantage- Tips for Selling a Home in Winter– This is a guest post from contributor Patrick Young who is an advocate for people with disabilities. If you would like to submit a guest post just contact us at www.dwslaterco.com and let us know what you would like to write about and if it is relevant to our readers we will consider it.

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A Market Advantage: Tips for Selling a House in Winter

This article is written by Patrick Young who has been a regular contributor to our blog.  Patrick is an advocate for those with disabilities and writes important information pertaining to those with disabilities. This article focuses on selling your home in the winter.

 

 

A Market Advantage: Tips for Selling a House in Winter

Real estate tradition holds that spring and summer are the traditional home-buying seasons. After all, the weather’s more accommodating, and it’s easier to make a house look appealing if the trees aren’t bare and snow isn’t blowing. But for prospective buyers who don’t find the right house at the right price during the warmer-weather months, winter may the time they need to get a deal done.

If you’re a seller, buyers who weren’t able to find a deal in the warmer seasons are well-motivated, which can be a real windfall for a seller who needs to get top price for their property. Bear in mind that you needn’t price your house lower than you otherwise would simply because you’re selling in winter.

Curb appeal

Come wintertime, antsy buyers start feeling the heat, with end-of-year tax benefits at issue and the need to move out of a home they’ve put up for sale or a lease that’s terminating. You can capitalize on a situation that’s to your advantage by maximizing your property’s curb appeal. When the flowers are blooming and the sun’s shining, prettying up a home’s exterior and front landscape is a comparatively easy undertaking. But with bare trees and snow cover, getting that “wow factor” isn’t so easy, and some home owners come up short as a result.

Make sure to rake up all those leaves or hire a lawn service to do the job for you. Keep the lawn well-cropped and edged, and keep all walkways and sidewalks swept and cleared of leaves, snow, twigs, and acorns. The gutters often go overlooked by people selling in colder months, so make sure to do a thorough cleaning of yours to give the impression that yours is a well-kept and cared-for property, worth every cent of what you’re asking for it. There are many gutter-cleaning services that can do the job for you reasonably if physical restrictions or age prevent you from getting up on the roof.

Promote your property

Photos are an important way to promote your property on your realtor’s website and via social media, but unfortunately, winter exterior shots don’t make the kind of impression that photos taken in the summer do. Accentuate any photos taken earlier in the year or, if necessary, arrange for a professionally staged exterior shot once your lawn and the front of your house have been cleaned, raked, and well-groomed for the occasion.

Stage, stage, stage

If you’re selling in winter, your best bet may be to accentuate what your house has to offer on the inside, so stage each room carefully. Sometimes, knowing who you’re dealing with may suggest a staging strategy that makes the difference. Prospective buyers whose kids have moved out, for example, may be looking for an in-home work space, so carefully staging a third bedroom or finished basement may give them an idea that seals the deal. Similarly, a young couple may be looking for a room that would make a good nursery, so remove any extraneous furniture and clutter from an extra bedroom to help them envision themselves caring for a newborn in that space. In general, decluttering as much as possible is best. You can do it yourself or even hire professionals to complete the job. Check reviews and price quotes online before hiring a packing service.

If you’re pressed for time, there are simple and quick ways to help get your home ready for potential buyers. Load the dishwasher, brighten the house by turning on all the lights and opening the curtains, and get rid of bad odors by taking out the trash and spraying Febreze in the affected rooms.

Repairs, renovations

Make a careful survey of your house, and take care of any fixes or upgrades that might help prevent damage resulting from harsh winter weather. Pay special attention to the roof and exterior walls, and have your HVAC unit serviced if necessary.

Selling a house in the winter can give you a valuable market advantage, particularly with fewer houses on the market and plenty of buyers needing to find the right house and finalize a deal. Pay careful attention to your property’s external appearance, and stage each room with great care, making sure to show off the space and flow inherent in your space.

 

photo courtesy of Pixabay

This is a guest post from Patrick Young. Patrick created AbleUSA to offer resources to people with disabilities and officer advice about navigating various aspects of life. For more information and resources, you can contact Patrick at AbleUSA.

 

We do not sell real estate but appraise it.  If you would like to provide a guest post please contact us at www.dwslaterco.com.  It is our desire to provide you with relevant information in regards to real estate appraising and those who use appraisal services.   

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The Problems with the Price Per Square Foot Method

Do you know the price per square foot method for determining the value of a property? Do you use it? This is a topic that has been written and discussed much and for good reason. Real estate agents, buyers, seller’s, lenders, or investors all like an easy way to determine the value of a home. Many will use the price per square foot method.

Example: You know that a property which is 2,500 sq ft in size sold for $350,000. You take the price of the home, divide it by 2,500 and ………..(drum roll)………- the price per square foot is $140! Now, your house is 3,500 sq ft, so using the price per square foot method, you multiply 3,500 x 140 and………..(another drum roll)…… your house is $490,000! Wow! Wasn’t that easy? Well, it might be easy but there are many problems that can occur using this method for determining value. It is my desire to share some of the reasons why this might not be the best method for many, many properties.

Many Factors Contribute to Value

One of the problems with using the price per square foot method is that it does not consider any of the other factors that contribute to the value of a home. When you use the price per square foot method, you are only considering the size of the home and nothing else. You could over price or under price a home looking at only the square footage. Here are some of the other factors that contribute to the value of a property and should be considered when determining value:

  • Location – the location of a property can have either a positive or negative impact on the value of a home. A property located with a beautiful view of a lake will have more value than a property located with a view of the local trash dump. A property located in a gated private community with access to a community pool, clubhouse, tennis courts, and a private lake will have more value than one that is not located in such a development. Would you love drinking your coffee and listening to the birds with the view below or next to the noisy highway that drowns out the sounds of the birds each morning?
This back porch view would contribute to overall the value of the property.
  • Amenities- There are so many additional features or amenities that also contribute to the overall value of a property. Some common amenities in our markets are swimming pools, pool houses, workshops, guest houses, barns, or party rooms. For lake homes, boat docks, lifts, and boathouses give added value. When you look at only the price per square foot, you are not considering any of these amenities.
  • Condition-One very important factor that impacts value is the condition of a home. If your neighbor’s house sold for $225,000 and it is the same size, same age and located next door then your house should be worth $225,000 right? Well, it would except that before their house sold, it had a new roof, all of the flooring replaced, the kitchens and bathrooms updated with new fixtures, and the interior and exterior was repainted. Your house still has the 1970’s avocado green appliances, shag carpet, popcorn ceilings, and original roof. The conditions of the two homes are not equal. Using the price per square foot method does not consider the condition of a home.
  • Quality of Construction– Similar to the condition of a home, the quality of the construction is also a factor when determining the value of a home. Understandably, a home with a much superior quality of construction will sell for more than one that is less. Real estate appraisers look for the quality of the construction in such things as the flooring, custom cabinets, high grade or commercial grade appliances, built-ins, custom trim, and finishes. Price per square foot does not consider the quality of construction.
  • Age-Related to the condition of a home is the age. It is best to compare homes that are of similar age. One of the things that appraisers determine in the appraisal process is the economic life of a property. At some point, a property will reach the end of its economic life, most of the contributory value of a property will be in the land alone. At this time, the highest and best use will be for it to be demolished. That is not to say that all older homes have reached the end of their economic life. We see many that are remodeled, preserved and well maintained. The point is that when finding homes that are comparable, having homes of similar age is important. Price per square foot does not consider the age of a home.

Law of Diminishing Returns

Another reason that price per square foot will give you inaccurate and false results has to do with the “Law of Diminishing Returns”. The law of diminishing returns is defined as” the premise that additional expenditures beyond a certain point ( the point of decreasing returns) will not yield a return commensurate with the additional investment.”- The Dictionary of Real Estate Appraisal 4th Edition.

Let’s go with the example I began with and that the house that sold for $350,000 is located right next door to my house. Both are in the same location, have the same view, are the same age, are in the same condition, have the same quality of construction and amenities. All is the same except for the size, so the price per square foot method should be great, right? Well, unfortunately since my house is 3,500 sq ft and the house next door is 2,500 square feet. That is a very large difference in size. The law of diminishing returns would factor in here and my larger house is going to sell for a smaller price per square foot than my neighbor’s house.

Do you ever shop at Sam’s Club, Costco? The price per unit goes down the more that you buy in bulk. Back when we had all of our 7 kids at home, it was so beneficial for us to buy in bulk as the price per ounce or price per pound was less. I mean we went through a gallon of milk and a loaf of bread each day! One of the best analogies that many of you can relate to is from appraiser Ryan Lundquist as he used the analogy for Starbucks and the price per square foot–the price per ounce differences in the Tall, Venti and Grande at Starbucks diminish as the size increases. Same principle.

Price Per Square Foot and Trends

One of the reasons, I decided to write this post is because I had a reader ask me about the price per square foot trends that we publish in our monthly newsletter. Our company publishes a monthly newsletter with market updates and trends. One of the metrics that we look at is the price per square foot trend. (if you are interested in our monthly newsletter you can sign up at our website or on the sidebar of this blog) Someone wrote to me to ask about if his property had a horse barn and was on five acres would the price per square foot trends we reported apply? The answer, of course, was no.

The trends are a broad look at larger market areas and not his specific smaller market area. Plus of course, it didn’t consider his larger lot size and amenities. The trends are really just a metric to look at to see what the overall market is doing. It is one of the many things that we look at. The next time you read a headline about prices up 25% or homes selling at $125, please do not use those numbers for your own home. Each property is unique and will require an expert in valuation to help you in knowing what your home is worth.

Here is a trends chart from our newsletter-(Hover over it and you can see the numbers for each month)

So, I hope you find this helpful. Know that using the price per square foot method can get you inaccurate results. I have only shared some of the problems that would change the result of the price per square foot method. Unless a home is similar in every way, chances are there are factors that will skew the result of price per square foot. What did I leave out? Do you use this method? If you have any questions about this, appraising or real estate appraisals please contact us at www.dwslaterco.com

Helpful Resources:

Starbucks and the price per square foot – Ryan Lundquist, Appraiser from the Sacramento Appraisal Blog

Why price per square foot can be an agent’s worst enemy when pricing a home- Tom Horn, Appraiser from the Birmingham Appraisal Blog

Price Per Square Foot is a Poor Value Indicator– Bill Gassett , Realtor from the Maximum Real Estate Exposure Blog

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