Appraising Our Future

Earlier this year I received a phone call from a friend requesting me to appraise a home in Wauwatosa.? He recently inherited the property and needed the effective date to reflect the value prior to his father’s passing.? We went over the definition of a Retrospective Appraisal (see definition at end) as well as other items necessary to create an appropriate Scope of Work in order to ensure the report met his objective.

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While completing the physical observation/data gathering portion of the assignment, my friend asked about the rental market for single family homes in Wauwatosa.? This was simply a discussion of generalized insights.? Had it been an assignment condition, I would have requested this information during the development of the Scope of Work.

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Reviewing the income analysis portion of various appraisal reports over the past few years, I am constantly surprised at how the rents have skyrocketed in Southeastern Wisconsin.? I think back to my first apartment; that rent seems like a drop in the market by comparison.? The average rent on Zillow and Craigslist for a single-family home in the community of Wauwatosa ranges from $2200-2400; I even saw a five-bedroom advertised at $4,450 the other day!? Zillow is at present classifying the Wauwatosa market as Warm; however, it is a few days before Christmas and the winter season is historically slower for the housing market.

According to a recent analysis by HUD the rental market in Waukesha & Milwaukee Counties remains tight, through easing when compared to a year ago.? ?“The rental market vacancy rate is currently estimated at 7.0 percent compared with 7.8 percent in 2010. Apartment market conditions are slightly tight but easing from a year ago. Among apartments, which account for 42 percent of rental units in the Milwaukee HMA, the vacancy rate was at an historic low during the fourth quarter of 2021 but then increased 0.8 percentage point to 4.1 percent as of the fourth quarter of 2022 (CoStar Group). The current rate is below the historical averages of 5.5 percent from 2017 to 2019 and 4.9 percent from 2010 to 2016. During the 3-year forecast period, demand is expected for an additional 9,075 rental units, with slightly more than one-half of the demand in Milwaukee County. The 6,350 units currently under construction are expected to meet demand during the first two years of the forecast period.”

Source - HUD Portal, Comprehensive Housing Market Analysis.

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There are a number of websites available to individuals who currently own or are looking to get into the rental market.? Here are a few that I recommend to my investor clients. ???

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Omni Calculator – This site is a go to for easy-to-understand calculations.? The provided link connects to their cap rate calculator.? There are at present 2000 calculators to choose from and growing!

Apartment Property Valuation – Just looking for someone to bottom line it for you?? This site provides quick and easy access to current cap rates across the country.

Mashadvisor – You do have to pay if you wish to unlock all the features.? But I like this site for a quick reference when valuing Airbnb.

Zillow – Quick source for calculating ROI.

Apartments.com – Rental listings by type.

Asap Appraisals, LLC – Looking to buy, sell or get an update on your present value?? Give us a call at 262-442-2323 or email [email protected].

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Speaking of Wauwatosa

For today, Wednesday, December 20, 2023, the current average interest rate for the benchmark 30-year fixed mortgage is 7.08%. ?Looking to refinance?? Today’s current average interest rate is 7.17% for a 30 year fixed and 6.34% for a 15 year fixed.? Declining interest rates are translating into an increase in new mortgage applications.? Hopefully we get supply this spring or it may be yet another feeding frenzy!?

Average sold price for the month of November in the City of Wauwatosa was $398,000 compared with $358,923 for November of 2022; translating into an increase of 10.89%.? This is reflective of the City in its entirety and does not take into consideration other factors such as differences in location or overall marketability of a specific property.? Average marketing time for both Novembers is/was 15 days.

There are at present (December 2023) 39 single family listings with cumulative marketing time of 40 days; 50% of which have offers and medium list price of $347,950.? There were 118 sales in the last 90 days; 83% of which sold under 30 days on market with medium marketing time of 6 days and medium list to sales price ration of 100.73%.? Marketing time is steady with list to sales price ratios in community having decrease from the 105.67% of summer 2023.

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?Coffee Corner

I have visited Miss Molly’s Cafe on a number of occasions.? Most recently this month where my daughter and I enjoyed a little sustenance just to warm up a bit before three hours of shopping at Mayfair Mall just so she could find the perfect gift for her boyfriend!? I absolutely love the warm and cozy feeling of this place.? From the holiday decorations to the fireplace to the friendly smiles behind the counter.? And the food!? They offer a wide variety of made from scratch and gluten free items.? I absolutely love the baci di dama (little Italian sandwich cookies with chocolate hazelnut filling) and their rosemary biscuits with homemade jam and butter melt in your mouth.? In fact there is nothing on this menu that I haven’t found scrumptious.? Miss Molly’s Café, 9201 Center St, Wauwatosa, WI 53222.

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Definitions From Earlier

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Retrospective Appraisal

A value opinion effective as of a specified historical date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific prior date. Value as of a historical date is frequently sought in connection with property tax appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation. Inclusion of the type of value with this term is appropriate, e.g., “retrospective market value opinion.” Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010).

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Scope of Work

The Appraisal Institute’s (AI) book,?The Appraisal of Real Estate – Fourteenth Edition, states that Scope of Work is “the type and extent of research and analyses in an assignment.”

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Contact Asap Appraisals for all your valuation needs.

262-442-2323 ?[email protected] * wiasapappraials.com