Sensitivity Analysis For GLA

[George Hatch]

The other site sale is in a different part of town, which is why I compared it to the units in that immediate neighborhood and not to the house on Verdugo or Willalee. That's because I'm smart enough to recognize location as a significant factor for the value.

 

[Gobears81]

What are you going to do in a cost approach analysis when the site with the 100-yr old 4-plex is significantly overimproved relative to its HBU as if vacant; because the city of Long Beach downzoned those parcels 70 years after they were built out? I've had assignments midtown areas of the city of San Diego where the city went through and downzoned from medium density multi-family to SFRs, so that the 12-unit apt complex was a gross overimprovement for the site as if vacant, but yet still competes with other such projects where the improvements do conform to the current development criteria. If the price/unit value indicator is an aggregate of the contributory value of the site + improvements, and the site value as if vacant is 1/4th that of a multi-family zoned parcel of otherwise similar location and attributes then what are we allocating to the improvements and how are we classifying it.

I don't deal with this situation much because of the area being starved for new development, but I remember in my AI classes, they referred to similar situations (such as legal non-conforming uses) as "bonus value". If they can re-build the legally non-conforming use on the site if it is destroyed, then the bonus value rests in that specific site. If it cannot be re-built after being destroyed, the bonus value rests in the building improvements. That is, if I am understanding your example correctly.

 

[George Hatch]

What you are observing is a major adjustment for that lot being a POS.

Not a POS site for Glendale.

Okay, so how much for the adjustment and on what basis? Do you really think the homes on the even side of the street are actually selling for less than the homes on the west side of the street?

 

[Joe Flacco]

George, my friend. I know that your opinion of site value for the level lot property is not $250k. I don't understand why you insist on arguing that it is.

 

[George Hatch]

I don't deal with this situation much because of the area being starved for new development, but I remember in my AI classes, they referred to similar situations (such as legal non-conforming uses) as "bonus value". If they can re-build the legally non-conforming use on the site if it is destroyed, then the bonus value rests in that specific site. If it cannot be re-built after being destroyed, the bonus value rests in the building improvements. That is, if I am understanding your example correctly.

That's the way I learned it, too, as an example of value-in-use.

 

[George Hatch]

George, my friend. I know that your opinion of site value for the level lot property is not $250k. I don't understand why you insist on arguing that it is.

I already said I thought the sale price was a bit low in relation to the site attributes. But not that low. Now the reason I say that is because I did take the time and effort to look at the sales history for land sales in that town going back to 2005. All of them, including the expireds and withdrawns.

Since you think level lots are the thing, how about the site sale at 2561 N Verdugo? $330k in 2016. Now that's a dated sale, but that site is also 11000sf in size, albeit with some lot utility issues due to the shape and proximity to the flood control channel to the rear. I can assure you the SFR market in that area hasn't doubled in the last 2 years.

You still haven't touched on the real issue, though - which is not whether the site value at 3101 is actually $250k or $400k, but how - when we're using land sale data instead of PFA - the contributory value of the 60-yr old structure of average quality and condition apparently amounts to nearly $300/sf under a $400k site value?

I already showed you that you were wrong about the 1951yb home on Willalee being a tear down and that the acquisition price didn't amount to a land sale, so that's not it.

All RE is local.

 

[NachoPerito]

The land value comes into play big time.

In Seattle the land value is $600k. Let's say a home sells for $700k with 1500 square feet. The living area adjustment should be $35-40/SF

Outside in deep suburbs land value is $100k. Lets say a home sells for $700k with 2500 sq ft. The adjustment should be $135-140/SF

I don't think sensitivity analysis is a good idea, but the living area adjustment is one of the easier adjustments to make if you have a reasonable formula or regression analysis.

 

[Joe Flacco]

2561 N Verdugo



3001 N Verdugo


These are really comparable lots to you?

 

[DWiley]

All RE is local.

So true. You really see that if/when you get the chance to view reports from many areas. What is axiomatic in some areas is totally false in others. There is definitely strange stuff that happens out in LA LA land.

Heck, even when I posted some stuff once that I had witnessed over thirty years in my market - things locals know to be true - some wanted to "explain" to me why I was wrong - people who had never even been to my market If someone else wants to debate George's market with George, fine by me. But I ain't playing that game, especially not with HIM.

 

[Meandering]

Oh come on,

an AVM can do it.