C.D. McCullough Real Estate Appraisal

01/25/2023

Lawmakers are proposing national rent control. This is not the answer. Ultimately, rent controls lead to under maintained properties. The federal government wants to ”control” everything.

10/21/2022

Accessory Dwelling Units (ADUs) have now been mandated to be allowed on all residential properties, regardless of lot size. This is providing that they meet the set back requirements of 25 feet front and 4 feet side and back. Additionally, all residential properties are now allowed to have up to two ADUs or Junior ADUs (JADUs) or Guest House. Two-Four unit residential properties can have up to to ADUs if the original units are legal. ADUs can be a portion of the original structure. According to Housable.com "The maximum size of a detached or attached ADU subject to this subsection is 850 square feet for a studio or one-bedroom unit and 1,000 square feet for a unit with two or more bedrooms. An attached ADU that is created on a lot with an existing primary dwelling is further limited to 50 percent of the floor area of the existing primary dwelling. FAR and Lot coverage cannot prevent an ADU of at least 800 sq. ft. " The ADUs were originally constructed as additional family member dwellings or "granny flats" and one of the dwellings had to be owner occupied. This is no longer the case. Both may be tenant occupied. This essentially makes the property multi-family. This has been in effect since 2020.

This state mandate has superseded local zoning. So if you move into a home in an owner occupied residential neighborhood of primarily single family homes, you could soon find yourself surrounded by tenant occupied duplexes or tri-plexes.

History shows that, were this has happen in single family districts, it has not had favorable results. the Mulberry district in Riverside is one area that comes to mind. In the 1980s (approx) it was decided to take the old single family residences, mostly Victorian style and rezone the area to multifamily. This allowed the homes to be broken up into units. This blighted the area. The city later decided to offer incentives to owners to return the properties to single family. and the city made improvements to the streets in this area. This has made it better but still has not returned the area to what it once was. With this example, at least it was zoned for units when the conversion was made to multi-family.

With ADUs there is a problem with appraisal. All properties are appraised to highest and best use. With a fully tenant occupied property of two or three ADUs, highest and best use could easily be as income property. Additionally, few ADUs exist in most single family zoned areas and few have sold. Market value of the ADU cannot be determined if there are no ADU sales in the market. ADU income is usually different that multi-family income. To take rents from multi-family or even sales of duplexes and tri-plexes, zoned as such, are not typically the same market.

We are to arrive at a Market Value for the subject being appraised. It is possible that only a cost approach value can be determined. If no value for the ADU can be determined, is the value of only the original single family residence all that can be given a market value? What about non-permitted ADUs? What are the hazards to health and safety in this situation? Comments? More to follow.

10/01/2022

“Home prices cooled in July at the fastest rate in the history of S&P Case-Shiller Index”

Rising inflation and energy costs have fueled uncertainty. Federal increases in interest rates, a necessity to slow inflation, have not been made with the certainty that they will be enough. In my opinion they were not raised fast enough, with all the cash being pumped into the economy due to the pandemic.

This has made the typical buyer back off until they become comfortable with the higher interest rates. Rates are much higher, and higher that some have ever seen. However, I have seen higher interest rates ( if you remember the 80’s). Buyers will become comfortable with the higher rates and will buy again. Housing prices will come down, as before, and it will be a buyer’s market.

How long will this take? I don’t know. The Federal Reserve has been napping, as far as I’m concerned, and not responded as they should have months ago.

Residential appraisals, for most AMC have slowed, or all but stopped, here in California. Oddly enough it appears that even most non-lender appraisals have stopped, also.

So, here we go again. Riding the real estate value roller coaster we have reached the peak and now down we go, to pick up momentum for the rest of the next cycle. What will be different from previous times? The suspense will be incredible.

06/14/2022

Foreclosures are on the rise. Inflation is out of control and no plans for control. Home prices are at a level that limits the buyer pool. Creative financing is on the horizon, if not in the works, now. Brace yourself everyone, here we go again. The economic base will not support these home prices.

05/28/2021

Well, here we go again. The market has gone crazy and people are buying homes above market, in a seriously inflated market. This has shades of the 2000's. When are we going to learn from history? Will what has happened in the past will never happen again? It has been occurring approximately every 20 years. Are these buyers betting on the government to bail them out of their over-valued homes? Agents seem to be pushing buyers into it. This was seen on a listing in MLS: " Buyer will have to be willing and able to pay above appraised value, buy in "as-is" current condition and give seller 10 days after COE at no cost to seller."

An agent called me, as she mistakenly thought I was looking for a home to purchase. She said she got my contact through Zillow. I said I am not interested in buying, as now is not the time. I told her I was an Appraiser and she said, "Oh so you know the market and know what is going to happen... you're right".

I have been appraising Real Estate for 32 years. I have seen this before. It is different than the last time but, our economy and where the U.S. Dollar is headed, spells future trouble in the Real Estate market and we already have foreclosures on the rise.

I am not telling you not to buy. I am saying to check carefully and ask for more than one opinion Think before you buy in this market. That is my advice.

08/13/2020

The FOMC met last week and there were no surprises. The Fed kept the Monetary Policy unchanged. They continue to say they will "do whatever it takes" to continue economic recovery, including keeping interest rates near zero through 2022 and maintaining all there various lending facilities and programs. Their next meeting will be September 15th and 16th.

Due to the Fed actions, so far, the real estate market remains strong in the Inland Empire of Southern California. The home values have remained stable. The sales market is still very active in spite of the pandemic.

08/28/2018

"All information provided are hereby considered factual but may not be accurate." -MLS

04/12/2018

A Burned-Out Husk of a House Is Selling for $800,000 in Silicon Valley - Gizmodo https://apple.news/AIPcJag4jQleTAd6WqWlY4g

06/21/2017

https://www.facebook.com/clare.mccullough/posts/10211965925936666

The reconfiguration of the 215 freeway, which runs through the counties of San Bernardino and Riverside, has eased rush hour traffic. This has led to an

02/17/2017

Well, it looks like another day of rainy wet inspections. At least I don't have to go to the snow today. We do need the rain. May the people near the Oroville dam stay safe. I pray that the temporary repairs hold.

02/01/2017

Things I have to wait for, to do my job: 1) Plowing out the driveway to the property I need to appraise.