ScoopGear.com is not only a marketplace but a community blog where appraisers and vendors can share tips and tricks. Today, Jim Westman of Centennial Appraisal Group, Inc., shares his Real World example of market trend analysis.
Like many of you, I recently received my Nuts and Bolts of Spreadsheets and Graphs DVD set from Anthony Young and I was anxious to put it to work!
There are a couple of subdivisions in Breckenridge, CO with deed-restricted units (limited appreciation) and residents must work in Breckenridge at least 30 hours a week. Both Vista Point and Wellington subdivisions began at the same time and are adjoining.
My subject is a deed-restricted unit and I included three deed-restricted units in the appraisal report. Comps four and five were fee simple market units. By paring comparables four and five with one, two, and three I thought the adjustment looked like it was about a 20% difference. But I wanted some concrete support.
To graph the differences between deed-restricted units and free market units, I calcluated the price per square foot for all of the sales over a seven year period in Excel. Click image or here to enlarge.
The average price/sq. ft. of restricted vs. market units was $210/sf vs $253/sf. But, more intersting is that my market trend analysis supports the fact that this variance holds true over time!
Conclusion? Sure enough the market units were about 20% higher than the restricted units.
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