Home Values Rising? (Ramsey: condos, credit, big home)

[Roger Watland]

Year over year statics on the Zillow site for Single Family homes in Minneapolis indicate a 10% drop for home values.

It is clear to me that some areas it is more, some less. It also varies with the price range within many areas.

A zestimate is going to be close to the mark some of the time. Competing listings do tend to put a cap on market value. Whomever suggested comparison shopping to firm up one's conclusions was right on with that suggestion

[MNNative]

Originally Posted by Camden Northsider

I was going to chime in a pretty similar statement (although I'm not nearly as qualified as yourself to do so Sarah!). Really I check it out to see if it might be capturing any trends in the local markets, but for the most part its figures and trends, at least in the past year or two, haven't compared at all to what I've seen in the local market in Mpls. It seems (from a very laymen's perspective) to have a higher accuracy rate when it comes to the more expensive/ exclusive areas of the Metro (which is why Clifford I think your zestimates have been pretty close to actual in SW Mpls and Mahtomedi), although I think it's questionable even then as it seems to rely heavily on tax-assessed and last sale value which similarly isn't reliable.

For instance, check out 3842 upton ave n on zillow, one of my favorite houses in the victory neighborhood (has us tempted to see if we could sell our own right now to 'move up' in this one). In 2004-2005 it could have easily sold for mid 300s if not more (the last sale in '04 was a very underpriced sale to a family member), and it's currently on the market now for $219K. Looking at the zillow chart for the past 5 years, in 2004 it shows its value at just above $200K and a rise to just above $250 in '05 before coming back down (which is way off/ undervalued), yet somehow in just the past month or two it's miraculously increased in value by about $60K or so to bring it up to $290K while it's actually on the market for $219K (meanwhile, in the past year our house, very close by, has decreased by about $20K?). Doesn't make any sense.

Agreed.

[Clifford63]

Originally Posted by Camden Northsider

I was going to chime in a pretty similar statement (although I'm not nearly as qualified as yourself to do so Sarah!). Really I check it out to see if it might be capturing any trends in the local markets, but for the most part its figures and trends, at least in the past year or two, haven't compared at all to what I've seen in the local market in Mpls. It seems (from a very laymen's perspective) to have a higher accuracy rate when it comes to the more expensive/ exclusive areas of the Metro (which is why Clifford I think your zestimates have been pretty close to actual in SW Mpls and Mahtomedi), although I think it's questionable even then as it seems to rely heavily on tax-assessed and last sale value which similarly isn't reliable.

For instance, check out 3842 upton ave n on zillow, one of my favorite houses in the victory neighborhood (has us tempted to see if we could sell our own right now to 'move up' in this one). In 2004-2005 it could have easily sold for mid 300s if not more (the last sale in '04 was a very underpriced sale to a family member), and it's currently on the market now for $219K. Looking at the zillow chart for the past 5 years, in 2004 it shows its value at just above $200K and a rise to just above $250 in '05 before coming back down (which is way off/ undervalued), yet somehow in just the past month or two it's miraculously increased in value by about $60K or so to bring it up to $290K while it's actually on the market for $219K (meanwhile, in the past year our house, very close by, has decreased by about $20K?). Doesn't make any sense.

Well I got my appraisel back today. We closed on new house 8/30/08 and the appraisel came at about 1% gain. Sales data matters for sure. They had the wrong sale price information on the first report that I got back last week. After pointing that out, they changed the number. Sure seems like they are using some formula where sale price and market trend are big factors.

I was in my old house 12 years before selling, but there was a lot more comparables to look at too. Tax rates probably matter as you suggest. I can tell you my taxes there were $748 when I bought and over $4500 when I sold. Big part of that gain is elimination of "limited market", but not a question in my mind that tax rates were being raised as aggresively as possible every year. Had I not invested in significant upkeep, the estimated value would have been high. Not a doubt about this.

I looked at the Propery tax info on the house you mentioned. No sales data on record which means current owners have been there awhile. I also see that limited market and Estimate market have not yet converged for this home. Estimate Market Value for 2009 and 2008 is 245,500 (no change), but limited market rose from 205,200 to 235,900. Taxes are just under 3K which is about a $500 screw job, but consistant with city of Minneapolis being too high on property tax. If the house shows very well and still does not move, it sure seems like both the city and zillow are high on estimate value. I believe there is an implied assumption that homes are in good upkeep without need for updates. The older a home, the less likely that is going to be true. I don't think it is uncommon to see a home go for 30-50K less than it would if everything was perfect.

I agree that certian areas seem more stable than others. May be price range more than area, but to some degree those map together. Unfortunalty the foreclosures are affecting some segements of the market much harder than others. That can trickle out too. If you can buy a house for 350K and it seems like an ok deal, but you see another house for 250K in a slightly less demand area but it seems like a great buy, are you going to think that over pretty hard? Perhaps.

I enjoy thinking this stuff through, but certianly don't claim to be an expert.

[Camden Northsider]

Originally Posted by Clifford63

I looked at the Propery tax info on the house you mentioned. No sales data on record which means current owners have been there awhile. I also see that limited market and Estimate market have not yet converged for this home. Estimate Market Value for 2009 and 2008 is 245,500 (no change), but limited market rose from 205,200 to 235,900. Taxes are just under 3K which is about a $500 screw job, but consistant with city of Minneapolis being too high on property tax. If the house shows very well and still does not move, it sure seems like both the city and zillow are high on estimate value. I believe there is an implied assumption that homes are in good upkeep without need for updates. The older a home, the less likely that is going to be true. I don't think it is uncommon to see a home go for 30-50K less than it would if everything was perfect.

I agree that certian areas seem more stable than others. May be price range more than area, but to some degree those map together. Unfortunalty the foreclosures are affecting some segements of the market much harder than others. That can trickle out too. If you can buy a house for 350K and it seems like an ok deal, but you see another house for 250K in a slightly less demand area but it seems like a great buy, are you going to think that over pretty hard? Perhaps.

I enjoy thinking this stuff through, but certianly don't claim to be an expert.

Regarding the house - you are correct in that it has been in the same family for about 50 years - zillow is showing a fairly recent sale in '04 although i'm not sure this is correct (although it could have been a transfer of title to family member with a low sales price listed, not sure how that works). It's a beautiful older home, we went to the last open house - extremely well maintained by the owners over the years (you can see this in its pristine woodwork, windows, walls, floors, mechanicals, etc.) - only needs would be updates to bathrooms and what looks to be an 80s kitchen renovation. It actually started on the market at around $290K, which again is pretty low comparative to more recent years in the n'hood for a home of that size/ quality (it's an amazing example of prairie/ craftsman foursquare architecture). It sounds like there was a sale recently that fell through - the buyers needed 0 down financing and the sale was right around the time that banks started implementing new standards/ not allowing 0 down financing. Also, if there is one downside to location, it's that it shares an alley w/ thomas ave, but this in my mind is not really a concern at all. To be honest, I can't believe it's not selling, it could be such a great/ beautiful family home (2000 finished sq ft, 4 bedrooms upstairs, lower level is unfinished but has extremely high ceiling height and could easily add another 600 or more sq ft), and we all know it's in a great neighborhood ...as to your comments about foreclosure trickle-down, Victory I think overall has retained values better than most n'hoods up here, but it too has been affected in values by the foreclosures that hit hard in surrounding n'hoods.

[Clifford63]

Originally Posted by Camden Northsider

Regarding the house - you are correct in that it has been in the same family for about 50 years - zillow is showing a fairly recent sale in '04 although i'm not sure this is correct (although it could have been a transfer of title to family member with a low sales price listed, not sure how that works). It's a beautiful older home, we went to the last open house - extremely well maintained by the owners over the years (you can see this in its pristine woodwork, windows, walls, floors, mechanicals, etc.) - only needs would be updates to bathrooms and what looks to be an 80s kitchen renovation. It actually started on the market at around $290K, which again is pretty low comparative to more recent years in the n'hood for a home of that size/ quality (it's an amazing example of prairie/ craftsman foursquare architecture). It sounds like there was a sale recently that fell through - the buyers needed 0 down financing and the sale was right around the time that banks started implementing new standards/ not allowing 0 down financing. Also, if there is one downside to location, it's that it shares an alley w/ thomas ave, but this in my mind is not really a concern at all. To be honest, I can't believe it's not selling, it could be such a great/ beautiful family home (2000 finished sq ft, 4 bedrooms upstairs, lower level is unfinished but has extremely high ceiling height and could easily add another 600 or more sq ft), and we all know it's in a great neighborhood ...as to your comments about foreclosure trickle-down, Victory I think overall has retained values better than most n'hoods up here, but it too has been affected in values by the foreclosures that hit hard in surrounding n'hoods.

Remodel a kitchen and 2 baths is going to cost 40-50K. That really does go along with what I was saying. The number you see on zillow assumes you are near perfect with no major needs. Say you call it 50K, that 290K drops to 240K which is pretty close to where city has it assessed at. If it is still not selling for 219K, that is saying market is of 10% of where it was a year ago. That is a familiar number you see regarding how the market is today.

The bank lending standards are a big part of why sales are down. For too long people were able to buy with nothing down. Now that you need 10% minimum it changes things a bunch. Many buyers are asking sellers to provide that at close. That works as long as the sale price allows the seller to get out in the black and appraisel holds up. Unfortunantly many people pulled most of the equity out and can't provide cash at close to buyers or choose not too. This will take some time to settle out.

[MNNative]

We just received our tax assessment notice from Mpls. According to them, our 2009 assessment Market Value = $147,500 (2008 = $170,500). Meanwhile, Zillow (today) shows it at $216,000.

That's quite a difference. (though I won't complain seeing as our property taxes will go down!!) I would assume that Zillow will soon reflect the change since past data shows them following the tax assessor's numbers for the most part.

Clifford, you're right to mention that Zillow assumes the house is in perfect condition. I think it's important to remember that. And good point regarding the lending standards & such. I'd give you rep points for some of these posts but I apparently have to spread it around...

**Has anyone shed some light on the accuracy of the theory that city homes are more popular than suburban homes as of late?**

[Slig]

I don't think Zillow assumes the house is in perfect condition because as the owner of the house you can go in and make adjustments to the house information by changing the number of bedrooms, bathrooms, sq ft, if you've done any rennovations, etc, and it will add to the zillow value. I went in and changed the number of bedrooms in my house from 2 to 3 since the office downstairs is a legal bedroom and it increased my zillow value by a couple thousand. I think whatever equation Zillow uses to find house values isn't placing a strong enough weight on the current state of the housing market and it's throwing the numbers off.

By the way the assessor has my home listed at 134,000 and Zillow has it at 156,500. Considering what houses are going for in the area right now I would say the city assessed amount is more accurate.

[BORGUSX]

So,is the square feet only apply to the house? The lot size compose the square feet of the house plus the square feet of the land? Am I right?

[Ben Around]

Originally Posted by MNNative

We just received our tax assessment notice from Mpls. According to them, our 2009 assessment Market Value = $147,500 (2008 = $170,500). Meanwhile, Zillow (today) shows it at $216,000.

That's quite a difference. (though I won't complain seeing as our property taxes will go down!!) I would assume that Zillow will soon reflect the change since past data shows them following the tax assessor's numbers for the most part.

Clifford, you're right to mention that Zillow assumes the house is in perfect condition. I think it's important to remember that. And good point regarding the lending standards & such. I'd give you rep points for some of these posts but I apparently have to spread it around...

**Has anyone shed some light on the accuracy of the theory that city homes are more popular than suburban homes as of late?**

Don't know about other counties, but Ramsey County has long undervalued residential property values. Many years ago when I bought my first house, I paid $85k for it and after I bought it I found out the assessment was for $77k. I was livid when I found out, I thought I had been screwed. After a talk with a couple different realtors and the tax assessor, I calmed down. Apparently, underassessment by the assessor is common in Ramsey. I have checked sale prices vs. assessed values on mny proprties in my neighborhood over the years, and the variance is always striking.

BTW, my conversation with the tax assessor ended like this: Her: "Would you like us to re-assess it at a higher value?" Me: "Um...no thanks! Gotta go!"

[Clifford63]

Originally Posted by MNNative

We just received our tax assessment notice from Mpls. According to them, our 2009 assessment Market Value = $147,500 (2008 = $170,500). Meanwhile, Zillow (today) shows it at $216,000.

That's quite a difference. (though I won't complain seeing as our property taxes will go down!!) I would assume that Zillow will soon reflect the change since past data shows them following the tax assessor's numbers for the most part.

Clifford, you're right to mention that Zillow assumes the house is in perfect condition. I think it's important to remember that. And good point regarding the lending standards & such. I'd give you rep points for some of these posts but I apparently have to spread it around...


**Has anyone shed some light on the accuracy of the theory that city homes are more popular than suburban homes as of late?**

Catch me later on the rep. Couple peoiple in the murder thread could use some

City vs Burbs trend is also interesting topic. My best guess is we won't see a major change overnight. If Minneapolis and St. Paul keep strong focus on improvement they will become more attractive.

Likely to work against such a trend:

1. People are creatures of habbit and major changes need significant catayst. Price of gas is one that may factor in as a difference maker.
2. People seem to want a bigger house and price is always a huge factor. The burbs tend to offer larger homes at lower prices with all else remaining equal. This could be a roadblock for a fast trend of urbanization.
3. People want to feel safe. There is a difference between being safe and feeling safe and perception is not always reality. Ties in with number 1 to a certian degree. Large numbers of burbanites have no real knowledge of residential areas of the city.
4. People value education a great deal and put the well being of children at the highest level. That works against the city in a substantial way. This is not condemming schools of Minneapolis or St. Paul, but a comment regarding the general consenses that exisits.
5. Higher taxes for property and sales tax to a smaller degree.
6. Many people are sitting with little or no equity in their current home and financially strapped right now. This makes moving a difficult situation.

Likely to work for such a trend
1. Less time in the car commuting
2. Savings on fuel cost. Particularly true when you look at outermost range of commutes like Elk River, Hudson, Northfield etc.
3. More dense areas can allow greener lifestyle. Some value this a great deal and the trend is picking up steam.
4. Recent price drops in some areas might be enough to make city living a possibility that was not possible 5 years ago.
5. Minneapolis School bond passed and may help some of the issues
6. Diversity is increasing everywhere. This reduces the contrast between city and suburb to some degree.