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Monday, February 16, 2009
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45 comments:
Here's Alexandria's numbers for zones 7 and 10. These are percentage gains or losses in the assessments for the two areas.
2009 -2.7 -4.3
2008 0.3 -1
2007 0.8 0.2
2006 16.3 21.4
2005 17.1 20.7
2004 16.5 18.4
2003 21.3 30.7
7-Northridge 10-Del Ray
These numbers are from the city's maps.
2009 is the number published in February 2009 for the gains or losses in 2008. These are for SFH. Condo's and commercial real estate is tracked separately.
an opportunity to learn more about redfin at their Falls Church seminar on Wed 2/18, if you're looking for a discount broker.
(i don't know much about them, just passing along this information)
Alexandria Duplex falls below 2003 assessment.
2006 assessment = $283,682.
Current askin' = $89,900.
2003 assessment = $95,400.
Did anyone else watch House of Cards on CNBC last week? It's a 2 hour documentary on the housing bubble and I found it to be pretty interesting. A fair amount of it I already knew but I did learn a few things. It was put together by David Faber, one of the few reporters on CNBC worth watching in my opinion.
It airs again tonight at 8pm and probably again in the future.
http://www.cnbc.com/id/28892719
If I might continue a thread that started on the previous bit bucket, with regard to the crazy valuations in North Arlington.
We live in 22207, walking distance to the metro. We bought at the absolute peak of the market, 2006, just before things started to fall apart. I say this because *nobody* was a bigger housing doomer than I was, having lived through the madness in California (why did I buy at that moment? The spouse freaked about the fact that we still didn't have a house and offered to put down the full down payment, despite my saying it was incredibly stupid and she could lose it all). But we found a house we could live with in a neighborhood we liked and, in a series of unlikely events, had an offer accepted that was $50K above the tax assessment. We put nearly 30 percent down (my worst case scenario being that prices might drop 30 percent over the next five years).
It's three years later, and the house is worth about what we paid for it (real decline of about ten percent because of inflation) propped up in no small measure by the continuing and frantic knockdown of smaller houses and their replacement with McMansions.
I don't disagree that it's crazy, but it really does seem as though this particular area is extremely resistant to the price declines. People are still snapping up the million plus McMansions the moment they're completed.
I don't think you have to be pimping the area to acknowledge that, for some reason, this part of the world is seen as desirable, which is propping up values. I would hypothesize that, as other areas have significantly declined in value, those concerned about losing value might see the lack of decline in this area and be more enthusiastic about buying here. My take at this point is that as long as a critical mass of buyers who can obtain a mortgage exists in this region, they will try to minimize their risk and aim for North Arlington.
In sum, I don't think there's anything particularly special about North Arlington beyond the fact that housing there is perceived as holding its value, and that perception has created a virtuous cycle that has encouraged people who want to buy, and can afford to do so, to pursue housing in Arlington. So long as this perception remains, and so long as financing is available and people have the cash to make a purchase, I expect housing prices here will remain relatively stable. Which frankly is very disappointing as I was hoping to snap up a bunch of those million dollar condos for $100K next year, but I don't think that's gonna happen.
Gruntled, I think you make some good points.
At the same time, the MRIS #s for the most recent month (Jan.) suggest some price declines, at least for that small sample and short time period (sorry the spacing doesn't come out well):
009 2008 % Change
Average Sold Price: $ 725,900 $ 910,800 - 20.30 %
Median Sold Price: $ 625,000 $ 765,000 - 18.30 %
Total Units Sold: 10 10 0.00 %
Average List Price for Solds: $ 786,690 $ 1,031,690 - 23.75 %
There were only 9 SFHs sold that month and 127 SFHs on the market; 56 new listings (all types of homes) and only 16 pending/ contingent contracts (all types of homes).
I think it remains to be seen whether some price declines start later in some areas than in others, particularly now that financing is more strictly limited now than a year ago (no more 100% financing, and interest rates are higher for conforming jumbo and even higher for jumbo (over $625K).
Sorry, should have said those #s are for 22207 (Jan. 09 vs. Jan. 08).
Jeff B,
Yeah, I "taped" it and watched it yesterday.
The one thing that struck me that I hadn't heard before was Alan Greenspan in like '03 or '04, calling upon lenders to enable more buyers through more creative types of loans.
I say this puts the kibosh on his claim that he didn't know (whatever it is he claims he didn't know). If buyers need ever more "creative" financing to get into houses? Eventually they won't be able to afford them at all under any terms and prices will plateau and crash. Duh.
I also liked when he claimed he didn't understand CDOs. Um, if that's true you needed to retire, because I'm sorry it really is just math. Grrrrr. Math with faulty underlying assumptions, yes, but math nonetheless.
I thought the Greenspan segments were some of the best. It really hits home that no one *truly* understands the economy. He really seemed beaten down at the end when he essentially said that capitalism would continue to see these failures in the future because of the failures of human nature.
I had also been placing more blame on Fannie and Freddie than it seems was warranted. I didn't realize that they didn't really get involved in the worst part of the mayhem until later on when wall street was already at full speed.
It was also compelling watching nearly everyone that was interviewed shrug off any blame or remorse for what has happened.
Jeff B.
I know, the "well, I guess it was partly me, butbut what about them?!" Or, "what difference would it have made if I hadn't done it, everyone else would have taken my place?"
And greenspan's right, there will be asset bubbles in the future, but we don't have to enable them to be in the roofs over our heads! If we want to go back to 50% down and 5-10 year financing that would avoid the excessive personal leverage that enabled this we could. Oh sorry, but we want an "ownership society".
The Fannie and Freddie stuff is largely a smokescreen, and has been jumped on for political purposes.
No, they aren't innocent, but their contribution was pretty small. To put it another way, we'd still be in this mess even if Freddie and Fannie had behaved prudently.
And the Freddie/Fannie thing is one of my pet peeves. It really ticked me off that, after so many (Housing Bubble Blog, Calculated risk, etc.) had basically done their own investigation to uncover this mess, and had been ignored and pooh-poohed for the past few years, when everything finally does blow up, the paid-talking heads start pointing fingers at Fred/Fan, Clinton, etc. In other words, they would rather score political points instead of disseminating the truth.
I think "The Economist" is the only mainstream publication that has been paying attention these last 7 years or so.
[/rant off]
Jeff B,
Frannie & Freddie had their own serious problems (and some of their current & former executive should be doing hard time for them), but they're not responsible for the bubble. I believe that they were privatized, because it was politically expedient. Had the democrats been in office that may not have happened. F&F learned long ago that a sound housing market requires factoring ability and willingness to repay into the loan process. If the investment banks hadn't gotten into the market the bubble may not have occurred. Having said all that, I'm glad they've been humbled.
I can remember "experts" making statements about F&F no longer being relevant (replace "expert" with your favorite four letter adjective)--well, they're relevant now and the government needs them to buy & securitize mortgages. Seems every time these "experts" make some sort of asinine proclamation, they eat their words. I'm beginning to think that the Army's definition of expert isn't that far off. For those of you that don't know this, an expert is a old drip under pressure (get it? ex=former or old, spurt=drip under pressure).
Having said that, I'm beginning to think that housing is rigged. Why should affordability be determined by some multiple of your current income? Imagine how affordable housing would be if it was a cash & carry (so to speak).
Gruntled @ 10:36 AM:
"It's three years later, and the house is worth about what we paid for it (real decline of about ten percent because of inflation) propped up in no small measure by the continuing and frantic knockdown of smaller houses and their replacement with McMansions.
I don't disagree that it's crazy, but it really does seem as though this particular area is extremely resistant to the price declines. People are still snapping up the million plus McMansions the moment they're completed."
I think 22207 has many beautiful neighborhoods, but all of its amenities (schools, Metro, proximity to DC) have been known and priced in for years. Its desirability means that it should be more expensive vis-a-vis other areas; it does not mean that current prices are sustainable. It's desirability will also mean that price declines will likely move slowly (as we are seeing) for two reasons: (1) owners have the money to hold out and refuse to sell; and (2) any house priced slightly below comparative listings will be snapped up by marginal buyers who would otherwise buy in another zip code.
Yet, echoing what ACE has already said, I doubt that house prices there have remained flat since 2006. Moreover, the math says that the trend is downward. Inasmuch as I don't like relying upon January statistics, they're the most recent stats we have. And what the MRIS data says is that as of 1/31/2009 there were 96 listings in 22207 for houses greater than $700K, and only 4 sales during the month, whereas on 1/31/2006 there were 69 listings for houses greater than $700K and 15 sales during the month. That's 24 months of $700K+ inventory in 2009, versus 4.6 months of inventory in 2006.
What this is telling you is that current asking prices must fall for inventory to clear. Wide jumbo spreads and anxiety about job losses won't help either. Ask yourself this: If all 15 houses that sold in 22207 for more than $700K during 1/2006 were re-listed today, would they be "snapped up" for the same price? I doubt it.
"Cara said...
...Alan Greenspan in like '03 or '04, calling upon lenders to enable more buyers through more creative types of loans..."
I didn't watch the show but from my perspective I don't fault AG for not seeing the meltdown coming. We bought our first home in 03, but started looking in 02 when the market was already beyond reach for a lot of people. Without 'creative loans' we wouldn't have gotten the loan with merely 5% down. I remember how grateful we were to have gotten the loan approved (IOW they took on a higher risk). Perhaps we really couldn't afford the home but we're proud to be a home owner and paid our bills and made improvements. I think we, along with millions and millions of other first-tine home buyers, benefited from the 'creative loans' that AG was pushing for, so I don't think it's necessarily a bad thing (or the cause of the screwed-up). From what I've gathered so far on this crisis, I think the blame falls squarely on those reckless lenders. And if there's a gov't agency who's supposed to oversee lending practice and could've stopped these lenders (i'm not sure it exists/ed) then they share some of the blame too.
Terminator-x,
Not to pile on, but I count quite a few McMansions in 22207 (e.g., large and built 2000 or later) that have been sitting a long time, although the current DOM seems to be messed up at franklymls. Many of the houses with no sqft. showing are still quite large and I count them.
22207
It appears to me that the ratio may be 20 sitters to 1 that is in contract at this time. This of course does not account for recent sales and homes taken off the market after not selling. But it certainly suggests that people aren't buying the McMansions unless they are well-priced and special.
MM,
In the context of the show, by the time Greenspan called for more "creative" products, simple things like 80/15/5 were already ubiquitous (and FHA/HUD have been around for a very long time, but indeed had reasonably low limits relative to prices around here, it wasn't $417k back in '03). The "creative" products they implied were the pay-option-negative-amortization loans. Presumably you didn't get one of those.
I think a lot of it was that Greenspan was in DC and New York, where, yes, there was a bubble, but where the percentage of subprime, alt-a, interest-only and negative amoritization loans was still "within reason". He just didn't know or didn't care what was happening in SoCal, Florida and Phoenix. He claimed in the interview that when told the percentage of sub-prime loans he simply didn't believe the number. When houses that should be $120k flip up to $600k, that's a lot of losses when they come crashing back down. I don't think he comprehended what that magnitude of a bubble, even in isolated areas could do to the whole economy. Yes it amplified the bubble here, but the magnitude of the losses is not neccessarily enough to take the banks down. You'll notice that most of the FDIC closures to date are still West Coast banks. So what was foolish on his part was that he didn't take into account the effect his national policy of low interest rates would have on the local markets of continuously bubble-primed California.
When I first heard that FHA loans weren't just for low-income folks, I was thrilled by the idea that we could buy sooner rather than later. Luckily for me, my jobs were still in that nomadic stage where buying a house made no sense, such that by the time we could have first seriously considered buying (spring of 08) it was obvious where prices were headed.
Low-down is a great thing for getting people into houses they own sooner. But sooner is only a positive thing if prices are sky-rocketing and you really would be priced out forever. Otherwise it's just convenience.
mm jeff b,
I should also note that this program was guilty of a lot of michael moore style "juxtaposition = causality". At one point they talk about the investigations of Fannie and Freddie causing them to retreat from their usual market share in 03/04, and claim that this is what pulled Wall Street in, but then you hear from the Wall Street banker that they had been heavily invested in MBS's since 00/01. So while it may have expanded Wall Street's role, it was anything but causal. The program was definitely trying to make an understandable story-arc. But that requires brushing over complexities and cherry-picking details. So, as a starting place for understanding the crisis it's okay, but it's anything but definitive. (which is fine, it's a show on TV).
IMPORTANT mortage financing news from the WaPo:
Fannie/Freddie fee increases to start April 1
"Under Fannie's and Freddie's new guidelines, even applicants who assumed that their FICO credit scores would get them favorable rates will be charged more unless they can come up with down payments of 30 percent or more."
30 it's the new 20. And the fees are big, 1.5 points kind of big. Yup, the foolishness of buyers past will be paid for by increased charges to buyers in the future. Yes indeedy.
We personally can't possibly buy before then, anyone else thinking this will impact their time horizon? Tabitha?
Hey Cara,
I had read the same article with dismay. It is remotely possible we will buy before then...if Mr. I-want-$100K-more-than-you're-offering changes his mind. Can you tell me the scope of those fees? I know F&F are behind most mortgages now, but does that include USAA, Navy Fed? Will that put a damper on the tax credit effect?
Also, to CRT:
I know you were hopeful about PWC foreclosures slowing soon, but here is a scary thought:
PWC Foreclosures
January 2006: 0
January 2007: 98
January 2008: 134
January 2009: 866
I realize so many happened this past year, there aren't that many more places to foreclose, but considering last year almost tripled the # from 2007, we're off to a rip-roaring start.
Tabitha that's all I know. But many credit unions don't sell to Fannie and Freddie so the fees wouldn't apply. USAA and Navy Fed are big enough it's hard to know, you'll have check that out. Please do report back if you investigate further.
(as we won't be buying until at least August it's bit premature to do our own research)
If the financing gets tougher, prices will drop some more. Didn't prices go up, up, and away when the terms were were no money down, no income verification and low teaser rates?
'But there's an alternative available for just about anyone who wants to avoid the fees: Federal Housing Administration mortgages, where down payments go as low as 3.5 percent and credit scores are not an issue for most applicants. '
Sounds like they are trying to funnel everyone through FHA loans, if these fees go through
Hi all-
Delurking to ask if anyone has seen areas of Fairfax selling significantly over the tax assessments? My husband and I went to this open house on Sunday and the price seemed really high (to me). We won't be ready to buy for at least a year, but I couldn't believe this place was priced so much more than the tax assessment.
Also, it was on a gravel road that the realtor claimed was a county road, but that the homeowner had to maintain the road--is this weird, or just me?
http://franklymls.com/FX6970422
Meshell,
That's a fall in love with it house, at a head over heels price. You could ask the listing agent what's been done to the place that isn't reflected in the 08 assessment. But this definitely a case of someone feeling like they've made a one of a kind home, and pricing it accordingly.
I'm not familiar enough with that area to determine where the price should be right now. But if you're not buying now, you should thank them for listing at a wtf price, because that means it may still be on the market when you're ready to buy a year or two from now. ;)
Thanks, Cara. We did like the house, but we want to be more in a neighborhood and have zero interest in maintaining our own road (!). We won't be ready to buy for awhile but we like to look so we'll know exactly where and what we want when we're ready to buy. I was just a little shocked to see such a discrepancy between the assessment and the price, you know?
meshell,
You can also use the list/tax assessment choice on Frankly to sort for over-assessment houses, some zip codes have a lot of them.
(as list prices anyway)
Meshell: that house is beautiful. I think the pictures in the full slideshow and comments (pasted below) say it all. The county assessment skips most of those stated improvements entirely. Features like radiant heating are nice, rare for this area and not cheap. The overall design looks very tasteful. Moreover, it looks like there was no change in ownership for 17 years. Given that, it is not surprising that the price is above tax assessment. Also, while you might see the gravel road and lack of a neighborhood as negatives, someone else sees the acre of a land and relative seclusion in a close-in area as a big plus. Different strokes.
That house is out of my price range, but it is the first house I've seen at that price level in NoVA that might actually be worth it.
Thanks, Cara-I just tried that-didn't realize it would sort that way!
blacksilver-it was a really nice place-there was a tree house in the backyard that my daughter would die for. :) Too rich for our blood, though (even the assessed price would be a stretch for us!).
Sorry if this seems a thread jack, but I don't know where else to pose the question. I've been lurking here in the background, reading this blog for over two years (how I miss Lance!). Anyway, I have a dilemma that I hope you guys can weigh in on.
My family and I are currently living in my in-laws home in Fredericksburg. At the beginning of 2008, they purchased another home (against my strong advice not to). They held on to the house that I am currently in confident that prices would come back.
My wife and I moved in here from our original house 300 yards away because it offered more desperately needed space for our 3 children. We wanted to buy a larger home, but I could not stomach what was being asked for during the run up.
So we moved in, deal being that we would rent our house out, and pass the proceeds on to them to compensate them for use of their house. That was almost a year ago now, and we might just now have our first tenant.
In the mean time, with the dive in stock and home prices, my in laws are feeling the pressure and want to sell their house. They seem to be starting pricewise from the January 2008 assessment, which based on my calls to Stafford County was based on sales in 2006-2007.
I would consider purchasing this home, but only if it made sense for my family and me. It is almost 40 years old, and although it has been maintained fairly well, it really needs to be updated. Windows and oil furnace are original, as is the kitchen and masonite siding. Insulation is poor. It would need a lot to get up to snuff.
If I asked for an independent appraisal of the house, I don't know what I will get. What use is a conventional appraisal when the comps are several months old and prices are cratering. We are in zip code 22405, which has dropped over 40% from peak.
So, should I just start looking for another property, or try to work out a deal, and if so, how do I approach trying to set a fair value?
Thanks!
Raftel,
That sounds like an incredibly awkward situation, especially since your in-laws seem to be starting from an unrealistic price point. If you negotiated them down to the actual market price, they would probably resent you forever. And overpaying them at the expense of your own family would make you resent them forever. There isn't a likely resolution to this potential transaction that wouldn't make Thanksgiving dinner taste bad, know what I mean?
raftel,
A number of real estate agents will run a comparative market analysis for you for free with no obligation, including Long and Fosters. You could start there to get at least some sense of what a realistic appraisal might bring.
Meshell hit the nail on the head.
Family transactions generally involve a gift from one generation to another, but usually its in the other direction. All potential actions have implications, including you re-negging on your renters and moving back into your own home to wait out the market. If you think the market in your area is going to continue to slide then it's in your in-laws best interest to sell now, and your best interest to wait. Thus inherently your interests do not coincide and any transaction will hurt one party or the other and probably both.
Not to get all Michelle Singletary on you, but if you still don't have renter's does this mean you've been paying your in-laws nothing for almost a year? If you add that amount onto your price that you'd like to pay for their house will it bring it in line with their price?
Meshell-
Yes, you've neatly summed it up. Although I advised against my in-laws real estate decisions, I don't think I want to be the instrument that brings the reality home for them. But even if I don't buy it at all, I fear I will be the target of resentment, having 'prevented' an earlier sale at a better price. My wife and I realize this, and are simply trying to make the best out of several bad choices. The opportunity for an ideal solution is past :-(.
At this point, I feel I do have to at least ask them what their bottom line price is. House was bought for $225K in 2000, and appraised at $345K in early 2008. Based solely on the drop of mean and median home prices in Stafford (zip 22405) alone, I would estimate around $250K now, but I don't even want to mention it because I think they will find it insulting.
It may be best to find another house that has the updates and doesn't bring all of this baggage. I just hate uprooting the family again, and that has a value in itself.
250k? really, that would only be 1.175% yearly appreciation. That seems a bit absurd, unless you think the price they paid in 2000 was either bubbly or foolish.
3.5% appreciation gets you to $306k now. And while, indeed it might not sell for that today, if the 2000 price was accurate, then it should recover to $300k within a few years of the bottom.
True, your family might do better getting a place that didn't require tons of work, but if this place needs that much updating then its possible you might get quite a bit out of it down the road with some "sweat" (and cash) equity.
Cara-
I am working with a realtor now to rent my house, and have been for months. I'll ask him if he would do a market analysis for me on this property.
My prospective renters have not yet signed a lease, so we are free to return to that house if we wish. In fact, I have a contractor coming out this afternoon to bid on a 4th bedroom addition to the house which would make it fit the family again. I don't expect his bid to be reasonable, but I'm just trying to cover all possible solution paths.
My wife and I did considerable renovation to both houses at our expense - paint, wood floor refinishing, carpeting and some mechanical updates. I did this in lieu of rent, but the basic idea was the rent from our property would be their compensation, as well as the fact that we would handle all maintenance and repairs ordinarily handled by a landlord - we were essentially stewards of the property.
They have not given me a bottom line price, only the impression that they were working from the basis of that county assessment. I figure we may be as much as 100K apart then, which gives little basis for honest negotiation.
Cara-
Excellent point about the appreciation rate. Let me explain how I came to $250K.
According to a previous post on this blog (2/10), median sale prices in Stafford county went from $300K in January 2008 to $232,000 in Janaury 2009, a drop of 22.67%.
Applying that 22.67% drop to the $345K assessment gives me $267K. But the assessment is based on sales in 2006-2007. If I use those figures, I have median prices of up to $380K (January 2007) - this indicates a drop of about 40%, and suggests a value closer to $210K (?!?).
Of course, this assumes that the mix of homes making up the median is constant, which it is not anymore as larger and more expensive homes are not moving very well. But I can see similarly sized homes asking around $250K in this zipcode all day long. I don't know what repairs they need as I have not seen them, but it may be time to start looking.
Sweat equity is a good thing, and I hope to apply it to anything I get, but I have to pay a fair price for the property first. And figuring out exactly what that is right now is proving difficult.
raftel,
those are indeed a lot of options.
You need to get an honest appraisal. Tabitha just got a couple and they've run her about $350 each. From the appraisal you can subtract the costs of carpet/paint/finishing that you've done (excluding labor) and add the price of rent for that time period. See what that gives you.
If you don't buy their house from them, then at the very least you've made it easier for them to sell it by your work this year. If they feel under pressure to liquidate it now, then you should let them do so.
How you manage to do that tactfully depends on your own family dynamics.
raftel,
if you want a more accurate median, don't use January, when there are few sales, use June. And if you want a more specific one, go to MRIS and use a zipcode by zip code data search.
"fair price"
Currently you seem to be using, price at this instant as the meaning of "fair". May I suggest a few alternatives that might more closely relate to the underlying value (and therefore hold up better over the long term, both of your ownership and your marriage). Rent versus own. You found a renter for your place, how much would theirs rent for (and actually find a tenant)?. A gross-rent-multiplier of around 150 is a fairly typical one to determine what price a live-in-owner should pay. Or use the detailed calculators on the NYTimes or (anywhere else). Price to income ratio. Find out the historical price to income ratio for that zip code (at a guess 2.5? 2.7?). See how the price your in-laws paid compares to that and what the current income level is and multiply that back out, rather than the more volatile house prices. These should give you a sounder idea about where the price should be when this mess is all sorted out. If it turns out you're splitting some of that equity with your in-laws, is that such a terrible thing?
Cara-
I've been a housing doomer for a while, and my intent before we moved in to this house was always to find a suitable place at a distress price. And I believe that prices have more to move downward here - there are many, and I mean many 'estate' homes of 4000+ square feet on three acres finding no buyers at $350-$400K.
Anyway, to get to the rental multipliers. I usually see 100x to 120x rent, but let's use 150x as you suggest. A price of $250K would indicate a monthly rental of about $1650, which is towards the upper end of *asking* rental rates for a 4 bedroom detached house here. Sure, there are some that ask more - up to $2000/month. But I don't see them rented, and they usually end up as bank-owned shortly after.
I don't remember median income in Stafford, but I think it is around $90K, which at a 2.7 ratio suggests $243K.
As far as splitting equity with in-laws, I think that applying that money to raising children and investing for their future education takes precedence for me right now. We've gotten ourselves into an awkward spot no doubt, my goal is to move as quickly as possible to allow them to sell the home if they wish. If we can agree on terms, great. If not, I'll start shopping.
raftel
The 100x and 120x are for landlords to make someplace cash-flow positive. That is indeed where a natural bottom should form, barring a complete credit crisis.
If your goal had been to buy a distressed property then you are not the right buyer for your in-laws. Make the place as pretty as you possibly can, continue to check in on it while it's on the market make sure pipes don't freeze etc. and let them get out from under their own albatross.
What you "can't" do, is stay in it while building the addition on your old place, letting them ride down the market with no intention of being their buyer.
If they want to sell, offer to leave now. I wouldn't bother to insult them with an appraisal or even a comp check. That other similar sized houses are at $250k and they're thinking over $300 is enough. Explain simply that it's in their best interest to sell now before prices drop further, and in your best interest to buy later, so you've done your best to make the house more friendly to buyers, and now you're giving it back to let them liquidate what cash they can get.
raftel--
I have nothing nice to say about appraisals right now. IF this house is in a neighborhood where the houses are all very much alike and there have been several sales in the last three months, an appraisal might be worth the $350-$500 to give a stamp of legitimacy to your numbers, which are probably far more detailed and accurate than what an appraiser would come up with. If there is anything tricky or unique, forget it. I firmly believe appraisers can make their numbers look any way they so please.
Also, that's a lot of money for one voice. If you can get CMAs from several realtors, you have your own numbers (don't know if you are an obsessive spreadsheeter the way I am), and you take a peek at mostly-worthless online appraisal sites (Cyberhomes, eppraisal, Zillow), that is a lot of voices for free. Further, do you know when county assessments come out? That info is available online in most counties, and should be out pretty soon, I think.
I would exhaust all these free sources first, especially because you do not know their floor. I have personal experience with people saying "I just need to stop the bleeding, just get an appraisal and I'll honor the value," which becomes, "Holy cow! I would never go within $50K of that! That's absurd!" Not everyone spends hours every day ruminating about the collapse of real estate, I guess. The shock value has worn off for me.
Obviously, you also have your calculations, which sound good to me. Also look at $/sqft for your area, or pull several comps and do the calculations yourself. That way, instead of following zip-code-wide trends, you can compare apples to apples.
The best you can hope for is a chorus of objective, reasonable "voices" all saying about the same thing, so it is not you beating them over the head, but rather an impartial "this is just the way things are" observation that you share, let things fall as they may.
[Baby starting to scream in the background, but quickly,] we are talking to our landlord right now about buying the house we are renting, and our circumstances are remarkably similar, minus the relations part. According to sales, the house is now worth just a tad over what our landlord paid for it in 2000 ($199K). Now, is .5%-1% appreciation "fair"? Depends.
I spent the whole weekend stalking around in a fury about the belief most people seem to have that they are "owed" a certain appreciation. We lost money when we sold our house in Indiana in 2002. My parents got $10,000 in 2002 over what they paid for their house in Delaware in 1991, after finishing the basement and doing all kinds of other upgrades; they can't even talk about when they moved from Indiana in 1991, because they more than lost everything after custom building their house with their bare hands. Since when do you get a certain degree of appreciation for sure?!
My rant being done, you can certainly offer your inlaws a good return on their "investment," out of the goodness of your hearts, but I think even your best efforts might result in mutual dismay. Trust me, I share your loathing of moving, but it may end up being the most attractive alternative.
So sorry for your troubles! Please keep us informed, if you can.
PS "Everything cara said ;)"
Meshell, that Annandale house is wonderful - why or why won't more builders build in a similar style and give us some choice??? I agree with others about how nice it is and how expensive the upgrades are, but like you, don't find the acreage and road maintenance a plus (but someone else will). If only I could find a smaller version on a smaller lot, with a better commute for me...I'd be one very happy camper.
Meshell,
I am familiar with the Annandale area where the home is located. The location is close to the FFX hospital,Exxon Mobil, SRA Internationl, Perot Systems, etc.
So it is good except for the schools, which are not thought to be excellent.
I have seen many homes listed in the area for much less than county assessment. It depends on what kind of improvements were made that are not reflected in the tax assessment.
And, oh, the property has a septic tank and oil heat. That is a turn off for me.
I just got a CMA from a Realtor that included data not only on recent closings, but pending sales scheduled to close at the end of this month.
Based on those numbers, the value for the property was assessed at $260K. Mind you, that value still does not account for condition, only lot size, square footage and number of bedrooms and baths. But it looks like the fundamentals of my analysis were correct - for the time being.
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