Lot-mkt $ Change,as Front To Depth Ratio Changes

[Art Gaudette]

Has anyone out there had experience with this problem and if so can you help me.

I would like to know from actual market data how the value of a vacant lot changes, when the ratio of front footage to depth footage changes. Say, the front footage is 100 ft. If the depth is say 200 to 400 ft. along the side, than the lot would generally have good to average utility. However, if the lot had say 800 to 1200 ft depth along the side, then the lot would have poor to fair utility.

So, I would like market data from someone who has actually found out from the marketplace, how as a depth ratio increases and utility decreases; affects the market value of this type lot, compared to a vacant lot with normal front to depth ratio, say 100ft to 200 to 400ft drpth. In this problem, i am assuming that the lots on eather sides can not be combined with the lot in question. So ,say a 100 x 1400 ft deep lot could not be assembeled with adjoining lots to increase the utility use.
I would be willing to pay for the use of this data.

Art Gaudette, Gaudette@futureone.com

 

[Ghost Rider]

Well, since it's something that will be different from market to market, thats a very difficult question to answer........If I were you, I'd get in touch with a local appraiser.

 

[Fred]

MHM is right. There is no stock answer. The overall use patterns, percent of area built-up, current demand/supply, etc. affect this.

It may help to separate the wheat from the chaff. Your larger site does not necessarily have fair-poor utility. The fist 400 feet has just as much utility as 400-foot sites you say have good to average utility.

 

[EDWARD BERRY]

One time I plotted the sizes of tracts along a major street---they varried greatly.

Then I graphed the $/sf-- highest to lowest(which was deepest in this case)

I found then by placing the subject depth along the graph line it was fairly accurate.(we knew the selling price)

Also, we have found the 4-3-2-1 "rule" to sometimes be accurate.

That is that 40% of the value of a tract is in the first 25% of depth, 30% is in the next 25%, 20% in the next 25% and 10% in the remainder(25%)

Hope others will reply with results as much of this stuff is not easy.

ed in the woods.

 

[Austin]

Art:
Your question is the perfect example of why appraisers need to know how to use regression analysis. Congratulations, at least you are aware of the nature of the problem. There is a very simple solution. What you just described is a multiple regression problem with two independent variables. The dependent variable is the value of the lot in dollars and the independent variables are frontage and depth. If you can get enough sales, about 8 or more for example, do a regression analysis and the coeficients will give you the perfect combination of frontage-depth.
Having said that, I have found that the correct independent variables are not frontage/depth, but frontage and site area in square feet or acres. The reason for that is that most zoning laws are based on building to land area ratio and the area of the site in square feet is the critical factor. Frontage yields access and contributes to site functional utility but site area determines intensity of use and is the critical factor.

Ed: I think the 4-3-2-1 rule went out 50 years ago. That rule is totally devoid of any market forces. I remember about 30 years ago when the local Realtor/Commercial guru told me that rule and I though then: "How can you have a rule like that?" Didn't make any sense to me then and makes even less now.

 

[EDWARD BERRY]

Austin,

Thanks for your insights, now share some results of what you found.

The 4-3-2-1 probably should not be called a "rule" but a "tool".

If you have some sizes and have put you AREG(Austin Regression) analysis on them, it would be "interesting" to see if the 4-3-2-1 method has any use.

I have found it to be useful, say a large tract along a major street where the frontage is high (say $1,000/FF, average 300' deep) and the subject is say 1,250' deep.(selling at $4,000/acre)

The back part of the tract usually sells as "acreage" and the front part by SF or FF. (that is what we think, but perhaps it sell as 4-3-2-1, OR like you have found MR.

Feel free to share, it is an intersting problem.

Again, thanks. ED

 

[Carnivore]

Austin, good post as usual. I would like to add something. Its important to compare apples here and make sure no oranges sneak into your sample of sales.

For example, a neighborhood that I have experience in has several independent variables. Corner lots bring more as compared to non-corner lots. These lots are more desirable after razing the existing structure because the owners want a side load garage when they build there 2 million dollar home. Lots in this same neighborhood are worth more with frontage on Queens Road(This is a very busy diveded four lane) with Huge Oak Trees. This is attributable to inflated ego and bragging rights. The next street back is worth a little less and third street back less even more.

My point is that regression is great once you identify the proper sales. See thats what AVM operators do. They hand pick all the sales before they crank up their appraisal generating machines! Its absolutely a very good tool in the hands of appraisers.

 

[Fred]

Does anyone know where the 4-3-2-1 "rule" came from and why it is called a "rule"? It's just sort of a peeve of mine that we are not required to study appraisal history. It's like, 'here are the Fannie guidelines,' go forth and appraise.

Austin,
We recently had another thread about length of frontage and value that you might have read. I touched on the same idea you mentioed about size being one of the two variables along with the length of one side (frontage). This is because we are trying to measure size and shape at the same time.

So to your point,

I have found that the correct independent variables are not frontage/depth

I'll bet you did, It seems obvious from basic geometry that it is incongruous to try to use those two variables at the same time. I don't think I would try.

Art mentioend data sets. In a way, it is sort of a shame that when appraisers do "studies" for an appraisal that these are not databased in a retrievable way. It sure we be nice to have handy access to even moderately relaible data on value effects due to all sorts of things - loss due to proximity to hazards, landlocking and such.

 

[Farm Gal]

all of the above seems to point the same direction: All the number crunching had best come after a through knowlege of market value factors on each individual lot! Not just facts pulled from the county database: limited to sale and lot size.

Some markets also have lot frontage minimums which can make potential lot splitting/vs. depth factors into an excess land value issue, or may (in a case where the ratios are out of order with local ordinance) result in lots with minimum frontage/depth ratios which preclude splitting.

gotta know the market and the rules.

Agreeed that 'saving such studies for future referral and sharing/sale to others is appropriate, but a user of such information had really better understand the dataset that went into the development of the study!

 

[Jungle Boy]

The view would have to be considered. Is the property waterfront?

There are no answers here, just good ideas.

Study the local market.