Market areas and Market Trends

[Fernando]

Regression and avms can't take everything into account because there are differences that are not tracked or organized in a database.

I just did one where the most recent comp sold for like 10% less compared to other comps. The reason is it's on a hill and you have to park on the street and walk up 25 steps to get to the door.

That reminds me of an appraisal I did in SF.
It was a very very steep hill and I was lucky to find parking on this dead end street.
And then I had to walk up so many steps to the main door.
Had good views though.

 

[RCA]

More significant would be mortgage rates. Do you have rates as your variable? If so, does it have much affect on sales price?
Instead of many detail variable, there are limited number of variables in each market which have most affect on price.

Sure, I have done that. It is easy to find the historical rates and add them as a regression variable. But there is a wide difference in mortgage rates at any one time - and at least in the SF Bay Area, many potential buyers have plenty of cash for large down-payments.

 

[Fernando]

Sure, I have done that. It is easy to find the historical rates and add them as a regression variable. But there is a wide difference in mortgage rates at any one time - and at least in the SF Bay Area, many potential buyers have plenty of cash for large down-payments.

Do you have variable whether how large down payment or all cash? I would think from personal experience, all cash have "lower" prices.

 

[RCA]

Do you have variable whether how large down payment or all cash? I would think from personal experience, all cash have "lower" prices.

You have worked in the Bay Area long enough. It depends on timing of course. But back around 2019-2020, cash buyers often just pushed the non-cash buyers out of the competition. That is to say, you just didn't stand much of a chance of buying a desirable house, if you couldn't make something like a 60% down payment. This was particularly true if the seller was in a hurry to sell.