Cost depreciation questioned by major lender?

[gregb]

Assigned to appraisal a property within 1.2 miles of the Casmalia Resources Superfund site. Negative environmental influences and stigma impact all 50 properties located in the unincorporated town of Casmalia.

https://cumulis.epa.gov/supercpad/SiteProfiles/index.cfm?fuseaction=second.Cleanup&id=0901257#bkground

 

[ZZGAMAZZ]

No. Here, during the gogo years of Covid, home prices were inflating by as much as 2% per month while site prices were mostly flat (except acreage tracts outside of towns). That is why, without land sales, the cost approach tends to be useless. Thirty years ago, most towns in eastern Montana had housing stock that was mostly 30 to 100 years old and many had not had a new home constructed in decades. I was regularly estimating external obsolescence in the 25% to 40% range...if you built a new home on land you owned, you could expect to lose up to half your investment by the time you moved in. Rates of depreciation are affected by the market and are not simply a product of age and/or pronouncements of entirely subjective "effective age."

Thanks very much. Question: can Ext Obs pertains to underlying, prevalent market conditions rather than specific externalities that affect a property value????

 

[TerryRohrer]

Assigned to appraisal a property within 1.2 miles of the Casmalia Resources Superfund site. Negative environmental influences and stigma impact all 50 properties located in the unincorporated town of Casmalia.

https://cumulis.epa.gov/supercpad/SiteProfiles/index.cfm?fuseaction=second.Cleanup&id=0901257#bkground

Have any of the 50 sold?

 

[gregb]

One SFR marketed as a tear down sold in 2021 for $137,000 after 110 DOM. More recently a SFR sold in 2022 for $380,000 after 12 DOM.

 

[Surf Cat]

Assigned to appraisal a property within 1.2 miles of the Casmalia Resources Superfund site. Negative environmental influences and stigma impact all 50 properties located in the unincorporated town of Casmalia.

https://cumulis.epa.gov/supercpad/SiteProfiles/index.cfm?fuseaction=second.Cleanup&id=0901257#bkground

My lord.....the chances of taking shortcuts for the clean up (human nature) are high.

One SFR marketed as a tear down sold in 2021 for $137,000 after 110 DOM. More recently a SFR sold in 2022 for $380,000 after 12 DOM.

The draw to live by the California coast for that little of money must be strong. Does one roll the dice though?

 

[Sadie]

Well... that makes no sense. Land doesn't depreciate in that way. Sure, the value of a site can increase or decline as the market changes... but with the possible exception of things like erosion, the land doesn't wear out.

Of course it makes no sense, that is what I was pointing out.