How to Calculate the Fair Market Value of a Home?

Photo by Amir Zee / iPhone 6s / May 2nd, 2018

Utilizing the services of a professional home appraiser is the most accurate way of calculating the fair market value of a home. However, it is possible to crunch the numbers without hiring an appraisal service by analyzing the sale prices of similar homes that have sold in the prior 6 months in the same neighborhood.

The fair market value of the residential property can be calculated by comparing the recent sale prices of similar homes in the neighborhood.

Valuing a home is not an exact science, but professional home appraisers take some critical features into consideration when determining a home's fair market value. These include the property's age, lot size, internal square footage, the number of bedrooms and bathrooms, type of heating system, amenities and overall condition. Location is critical. Homes in a neighborhood with low crime rates and better transportation links tend to have a higher value than homes in which lack these features. The first step is to look at the property with an appraiser's eye and write down its principal features. I provide free Comparable Market Analysis " CMA" of your property. Or you can use What's My Home Worth? To receive your report in few minutes. As always please call me with any real estate questions.

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Why buying a house today is so much harder than in 1950

According to Curbed, In 2016, millennials made up 32 percent of the homebuying market, the lowest percentage of young adults to achieve that milestone since 1987. Nearly two-thirds of renters say they can’t afford a home.Even worse, the market is only getting more challenging: The S&P CoreLogic Case-Shiller National Home Price Index rose 6.3 percent last year, according to an article in the Wall Street Journal. This is almost twice the rate of income growth and three times the rate of inflation. Realtor.com found that the supply of starter homes shrinks 17 percent every year.

It’s not news that the homebuying market, and the economy, were very different 60 years ago. But it’s important to emphasize how the factors that created the homeownership boom in the ’50s—widespread government intervention that tipped the scales for single-family homes, more open land for development and starter-home construction, and racist housing laws and discriminatory practices that damaged neighborhoods and perpetuated poverty—have led to many of our current housing issues. Great article, please read the full story here.

The Changing Math Behind Homeownership in the U.S.

Year	Median Home Value	Median Rent	Household Median Income
1950	$7,400	$42	$2,990
1960	$11,900	$71	$4,970
1970	$17,000	$108	$8,734
1980	$47,200	$243	$17,710
1990	$79,100	$447	$29,943
2000	$119,600	$602	$55,030
2010	$221,800	$901	$49,445

While homes values and rent costs have increased, incomes have not kept pace. All values are national media values. Information via U.S. Census Bureau

According to a new survey by Realtor.com, rising rents, millennials are purchasing homes to address the needs of their families. 

Because of increases in the rent, now, they are rushing to purchase their first home. Realtor.com polled more than 1,000 active home buyers online to come up with its results. It found that, among millennial buyers, 23% cited rising rent as a reason to buy a home. That is more than any other reason mentioned in the survey. 

It also comes as rents around the country are increasing, particularly in urban areas where the cost of living tends to be higher. Relator.com pointed to Department of Housing and Urban Development (HUD) data revealing that rents increased in 85 of the top 100 metro areas, with nine metro areas seeing rents jump double digits from last year.

Your comments and suggestions are welcome. Please if you are first time buyer and need help to start your home purchase process, I will be glad to help you. 

Days on Market (DOM)

Days on Market (DOM) refers to the period of time a property is active on the Multiple Listings Service before a sold transaction occurs and the home sale becomes legally binding, with any stipulated conditions having been met by both the seller and buyer. Simply put: it’s a measure of how many days a home takes to sell.

Arguably the second most referred to real estate statistic, behind price, of course, days on the market is firmly eyed by run-of-the-mill buyers, veteran investors and industry insiders alike.

The faster properties sell (and the lower the DOM), is an indication housing is strong, supply is tight, and conditions are those of a seller’s market. Higher DOM tends to suggest a buyer’s market. As you see above chart, in Long Beach Ave. DOM is about 19 days. Please note this chart is for condominiums only. I love your comments, and please be sure to subscribe, as I add different real estate issue frequently.   

Long Beach, California Real Estate Market update for February 2018

As PWR " Pacific West Association of Realtors reports, The three most prominent national market trends for residential real estate are the ongoing lack of sufficient inventory, the steadily upward movement of home prices and year-over-year declines in home sales. Sales declines are a natural result of there being fewer homes for sale, but higher prices often indicate higher demand leading to competitive bidding. Markets are poised for increased supply, so there is hope that more sellers will take advantage of what appears to be a ready and willing buyer base.

New Listings were up 4.2 percent for Single Family homes and 4.5 percent for Townhouse-Condo properties. Pending Sales decreased 47.2 percent for Single Family homes and 51.3 percent for Townhouse-Condo properties.  You can see all Long Beach, California real estate numbers vs. last year numbers. 

The Median Sales Price was up 9.4 percent to $689,450 for Single Family homes and 8.2 percent to $446,000 for Townhouse-Condo properties. Months Supply of Inventory remained flat for Single Family units but was up 11.8 percent for Townhouse-Condo units. 

In February, prevailing mortgage rates continued to rise. This has a notable impact on housing affordability and can leave consumers choosing between higher payments or lower-priced homes. According to the Mortgage Bankers Association, the average rate for 30-year fixed-rate mortgages with a 20 percent down payment that qualify for backing by Fannie Mae and Freddie Mac rose to its highest level since January 2014. A 4.5 or 4.6 percent rate might not seem high to those with extensive real estate experience, but it is the new high for many potential first-time home buyers. Upward rate pressure is likely to continue as long as the economy fares well.

Downtown Long Beach Real Estate sale

The chart above shows the number of properties sold in downtown Long Beach area "90802 zip code" via the MLS. Increasing sales activity signifies an accelerating market while decreasing activity signifies a declining market. Note that sales activity may also change seasonally. Due to the amount of new construction and City of Long Beach emphasize to improve this district, it is highly recommended for investment. As the city of long beach truly believes, Well-detailed and crafted buildings are highly valued in Long Beach, and new buildings must contribute to this legacy.  To better understand the importance of Downtown LongBeach please read this report.
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City of Long Beach vs Los Angeles County Average Taxable property Values

As Assessor LA county reports, the total assessed value of taxable real estate located within the City of Long Beach is currently $54,043,738,933 (or, $54 billion). This comprises 106,569 properties, of which 79,689 are single-family residences (including condos), 17,312 are residential rental properties, and 9,568 are commercial or industrial properties. Year-over-year growth in Long Beach from 2016 to 2017 was 5.0%.

For the County of Los Angeles as a whole, the gross value of all taxable property is a record $1,473,759,940,499 (or, $1.47 trillion). The net value, which does not include exemptions but is also a record high for the County, is $1,416,125,372,989 (or, $1.42 trillion). This is a 6.04% increase in valuation over 2016 and represents the seventh consecutive year of growth.

The graph below compares average growth in the LA County with that of Long Beach for the period 2003-2017:

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