Opinion from the masses

[MBuehler]

I haven't had a chance to ask my mentor this, but was wondering about it this morning.

When something horrific happens like the bridge collapse, how does that effect the value of homes that are up for sale in the immediate area ?

The news reports say there is no easy way around the bridge accident, and people will have to travel many more miles to get somewhere, when it used to only take them a few miles to get there, when the bridge was standing.

How do you place any type of value on the inconvenience of everyone who survived and used that bridge for their livelihood ?

Its a tragedy to say the least. I am sure that many things will be affected for years to come because of the accident. But I still am interested on how it will affect our industry.

Thank you.

(If anyone feels that this post is in poor taste, I apologize, but I really would like to know what your take is on when a major tragedy happens in this country, as it pertains to appraisals.)

 

[Tawfik Ahdab]

It's not in poor taste to ask if the bridge collapse constitutes a detrimental condition for real estate affected by the loss of this important linkage. However, just because occupants of nearby real estate are affected does not mean that the inconvenience will necessarily affect values. If there is an effect, it must be measured rather than surmised.

Evidence of the bridge collapse having an adverse impact on the real estate market and/or values could include:

A rash of cancellations of pending sales

A surge in listings in the area immediately surrounding the bridge or near arterials feeding traffic toward and from the bridge.

Lower market resale prices of the same homes after the bridge collapse than before (this would take some time, and in additon to measuring loss of value if any, would provide evidence as to whether the impact of the bridge collapse was very brief or more lasting in impact.

I'm sure others will have good suggestions of their own.

It's a good question to ask, but be careful about making any assumptions, and not projecting conclusions without seeking ways to test a hypothesis empirically.

And permit me to add that, far from the masses, you are soliciting the opinion of the real estate elite.

 

[BenLuby]

If your MLS allows you to do an archival search, I'd search all pendings prior to the collapse, then check back about once a week, on the same ones, and see how many are back active.
That should be a good indicator of how the market is viewing it, but I also fully agree with Tawfik. If you cannot measure it from actual data, then don't adjust for it. However, you should also note that there is no available data to use to adjust for possible future negative reaction to the loss of the bridge. Other, older, wiser heads will definitely chime in.

 

[xmrdfghap]

One of the strange facets of this profession is that we base present value on future demand established by historic events.

Not having an historic database with this event as history it is difficult to establish future demand making it improbable that an effect on present value can be established.

However, as home ownership is a long term condition, and the loss of the bridge is relatively short lived condition (that bridge will be rebuilt within a year), I don't think there will be significant long term effect. I think short term impact will occur in the investment/income market, but for owner occupied SFR's I doubt you will see any significant market reaction.

 

[Otis Key]

When 9-11 happened, there was a rather massive and quick rush by many appraisers across the US to put in all sorts of disclaimers about the effect on current or future values. That proved to be a lot of waste of time and paper, as far as I know.

Remember, your appraisale is based upon a specific point in time. People are going to need a place to live. Many will put up with the discomfort of a commute, even if suddenly increased due to an "inconvenience" such as the bridge collapsing or major road rebuilding or road repairs - they just tend to grumble, get up earlier and get home later - but most don't just suddenly jump up and sell. If they attempted, it would mean a rather dramatic decline in values because there would be a large over supply. Maybe someone from NY will bring in some history from that time period.

One thing for sure - I wouldn't ignore it - I'd mention it in the report and in some expanded comment pages.

 

[Lobo Fan]

I lived in Northern California at the time of the '88 World Series earthquake. I was south of the epicenter. A couple of freeway bridges going through Watsonville on Highway One collapsed. It was a circitous detour to get through that area. I was selling real estate at the time and I didn't notice a big flurry of listings. Although it was really not a commute route, it was the main road to Santa Cruz and Monterey. More tourists were inconvenienced than locals.

The people more heavily impacted were those in Oakland near the Cypress structure and those that used the Bay Bridge. From what I saw, people just adapted, using other bridges or the BART to get to the city. People started paying more attention to the soils under houses after that. Structures built on landfill and mudflats don't do real well in 7.2 earthquakes.

 

[Rice Brewer]

......we base present value on future demand established by historic events

Classic! Best I have ever seen that describes what we do.

 

[Terrel L. Shields]

Stigma is probably the appropriate term. Some stigma could be attached to the property, such as the site of a murder, but stigma can be a neighborhood condition.

I really liked the old term "environmental" obsolescence referencing a non-specific obsolescence relating to the environs surrounding a property at a given time. This stigma will cure itself...much like Love Canal eventually did. Or, it might linger if safety questions begin to surround the area.

In this case, 'this too shall pass'.

 

[Rice Brewer]

...such as the site of a murder, but stigma can be a neighborhood condition

I like to call this type of thing "reputational obsolescence"

 

[Oregon Doug]

You'll need th have emperical data in hand before you can start making adjustments. I think of this unfortunate event more as a stigma that will gradually waine over time as the bridge gets repaired, traffic patterns return to normal and folks forget (let's not tell FEMA, eh?).

I've worked in several areas/times where such tragic events took place (Oakland/Piedmont after the fires, San Francisco/Oakland after the 'quake [I was in the Sunset District at the time]. All of these areas eventially returned to "normal" fairly quikely, so I expect the twin cities will also.

Oregon Doug