EEveryone knows that location is the most important consideration affecting value in real estate. But there is even more to it than that. The most basic principle for understanding and evaluating all real estate is this: All Real Estate is Local. It is very, very local, right down to the individual property.
What About Automated Online Valuations???
Many websites offer an automated valuation of your property. Although this is an option in the Ethernet world, it is just a hook to get you drawn in; there is no such thing as an accurate automated valuation in the real world!
Online valuations access county sales and tax assessment data, and sometimes multiple listing data. There is no consideration of the actual market conditions at the time of sale (which can vary significantly), the specific neighborhood or area, the type of property, or the condition of the house and property. Is it a fixer, a bulldozer, dated, recently remodeled, high-end construction, or a do-it-yourselfer? What about the schools, view, proximity to traffic, trains, industry, noise, or anticipated detrimental changes to come (and the list can be long)? Tax assessments rarely match actual market value.
The only way to properly value a property:
- Walk the property and see the home in person. It takes ‘boots on the ground’ reconnaissance to make smart decisions. One cannot even begin the research until this has been accomplished.
- Know the comparable areas. Two towns located in the same county will have considerable differences in value because of numerous tangible and intangible differences. This goes for neighborhoods as well.
- Compare the property with genuine comparable properties. Two statistically identical homes will be dramatically different in price because of location alone, and there are always other considerations as well.
- Compare sales which occurred in the same market conditions. Appraisers prefer ‘comps’ to be no older than 3 months, almost never more than 6 months. It does little good to see properties which sold last year unless you have a depth of knowledge to properly extrapolate value.
- Compare with actual sales in the free market. Distressed sales which are the result of foreclosure, or closed sales within a family, do not reflect the actual market price. They distort the value and need to be eliminated from consideration.
Many of the problems we now suffer from (the sub-prime mortgage mess, rabid speculation and non-existent standards) are tied to the fact that in-person appraisals were not performed. Instead, lenders relied on automated valuations to support their loan programs.
Locally, we can begin with McMinnville, Oregon which is the County Seat of Yamhill County. With 30,000 residents, McMinnville is only 13 miles south of Newberg and its 20,000 residents. Each is a college town and yet the markets are very different. Each of our smaller towns has its own character and set of unique values. The prices of homes in Amity are far different from Yamhill. Carlton is not far from Dayton, but there is a significant price difference. Sheridan and Willamina are at the southern end of the county and Gaston is at our northern most point; they all represent different markets. Dundee is the epicenter of Oregon’s world renowned wine industry because of the soils, elevations, and southern aspect. The hills of Dundee have an amazing concentration of gorgeous vineyards and wineries and so it is a valuable place to live. The area also has legendary traffic problems, so some of the high price luster is dulled. Lafayette, after 150 years, is finally growing and doing so rapidly; its values are changing dramatically.
In rural areas, the location has a more profound effect. Bald Peak in rural Hillsboro and Newberg is a valuable place to live. The views over the Yamhill Valley or the views toward Portland are breathtaking. The farmlands of the valley hold a different value, as do the densely forested retreats of the coast range complete with streams and abundant wildlife such as deer and elk. It is almost impossible to have a monolithic valuation for rural areas. The diversity is amazing. Can a website evaluate that?
We are not California, Arizona, or Florida!
These are the places which have dominated the nation’s news outlets for more than three years. Our local area is very different and has resisted much of the damage done by over-speculating, the sub-prime housing fiasco, the spike in oil prices, the financial sector meltdown, and the deepening recession. We never saw out-of-control appreciation, and so there is not as much to correct, as all markets are prone to do. The metro-Portland market as a whole still boasts the lowest prices of any major area on the west coast.
But there is another reason our values have held stable. We are attractive to people changing careers and to baby boomers who are planning for retirement. When people are looking for a new life and a better location, Yamhill County is often in the running. The greatest allure might be the wine industry and the stunning beauty of the vineyards gracing our hills. As one of the most well-known wine producing areas of the country, many are attracted by this culture and its relative affordability.
If not for the stunning beauty of our rural areas, and our quaint towns, we may not enjoy as much interest or value. But if you have lived in the Sunbelt, with its own particular desert beauty, then the magnetism of our green, clean, and lush landscapes may move you. We treasure our vast and spacious beauty and spectacular scenery featured around every town and city. Vineyard-covered hills and fertile farmland valleys adorned with rivers and streams and creeks affect the demand and the price. The Eola Hills, Chehalem Hills, and the Coast Range add more variety. Equestrian properties dot the landscape. Yamhill County is a complex wonderland.