It’s been some time since my last blog post, I apologize for that, but I’ve been a little busy. I wanted to share some exciting news; I am now an SRA Designated member of the Appraisal Institute. Throughout my years of appraising, I’ve been involved with other appraiser associations, such as the Real Estate Appraisers Association, and the National Association of Appraisers, but wanted to further expand my education and enhance my experience and expertise appraising residential properties.
What I’ve Learned
In my opinion, learning never ends. I graduated with an economics degree in 2002. I took most of my appraisal training classes from 2003 through 2006. I had a wonderful education, but the older I get, the longer its been since I’ve been I’ve had advanced education. While all appraisers are required to take continuing education courses to keep their licenses active, not all education classes are created equal. Throughout the designation process I took upper education level courses on appraisal ethics, legal standards, appraisal report writing, market analysis, highest and best use, real estate finance, statistics, and valuation modeling. Each course required a proctored final exam testing my knowledge. The SRA process also required experience logs where another designated appraiser reviewed and critiqued appraisals I previously completed. I passed a demonstration report that was the most detailed appraisal I’ve ever written. Lastly, I passed a proctored cumulative exam testing my overall knowledge of all appraisal procedures and practices. Throughout the process I learned new communication skills, techniques, and technologies to better my communication with clients.
What This Means to You
Not all appraisals are the same, and not all appraisers have the same education and experience. The Sierra Nevada Foothills are a very complex market and hiring an expert in the market is a key component in the valuation process. Many real estate professionals can give credible results, and that is very important, but communication of findings cannot be overlooked. For example, litigation cases have been decided because communication and accuracy of procedures were correct in one report while the other report had numerous errors. Hiring a professional with experience and abilities to communicate can make the difference in many scenarios. The IRS can choose to audit an entire estate file because an appraiser didn’t make specific disclosures in a report. A judge or mediator can issue a decision because the correct definition of market value was not accurately communicated. Hiring a professional with an advanced skillset can eliminate unforeseen and unwanted outcomes. There are currently 80 appraisers with active licenses in Nevada County, according to the State of California Bureau of Real Estate Appraisers. I am now one of two appraisers in Nevada County with the SRA designation. In the entire state of California, only 1.6% of appraisers have an SRA designation.
The Appraisal Institute offers several different types of designations. These designations are typically specific to an appraiser’s expertise. The SRA designation is for professionals who provide a wide range of services for residential properties. Although a designated appraiser may not be necessary for every type of appraisal needed, when one is hired, the appraisal and appraiser is known as a top professional in the field.
What’s Going on in the Market?
Mortgage interest rates are in excess of 7% and are driving current market conditions. It may not make any financial sense for owners to sell their property if they currently have a 3% mortgage. This is driving the supply of properties available. The number of sales has been down during the summer of 2023, by approximately 25%. The current inventory of available properties for sale (based on the number of closed sales) has fluctuated between 2.1 and 3.5 months. In August 2023 there were 2.7 months of listings available for purchase.
The price trend for single family residential homes depends on the specific market. Overall, median prices were slightly down in August 2023 from July 2023 and were down 4% from August 2023. But a closer look at specific price trends can tell a slightly different story.
This week I appraised a townhouse in Grass Valley. Analyzing the data for condominiums and townhouses in Grass Valley and Nevada City showed an overall stable price trend. The data indicated a slight appreciation in values of 5.6% over the past two years
I also appraised a property in South County on approximately five acres. This is a much different market segment that appeals to different buyers. For this segment I searched properties located in the South County and McCourtney MLS areas, with homes between 1,600 and 3,500 square feet, located on 2 to 10 acre parcels. This analysis showed a decline in price trends of approximately 14% over the past two years.
Conclusions
Overall, the market in Nevada County is fairly stable. Although there are few homes on the market, the supply of available homes is keeping up with demand. Median prices for the county have declined slightly from 2022, but remain mostly stable. But this story doesn’t always tell the entire picture. Every home and every market segment is unique. Each market segment must be analyzed to determine an accurate trend. As always, I recommend hiring a real estate professional for your specific needs to determine trends for your home.
