Health Risks in Older Homes

When purchasing an older home, whether you intend to renovate with the plan to live in it or “flip it”, there are some risks you should familiarize yourself with before you begin.

Lead- Lead is often found in the paint, plumbing and the settled dust of an older home. Specifically, homes built prior to 1978 all carry the risk of lead based paint. If you want more information I wrote a blog article on the risks associated with this: https://www.tncresappraisals.com/blog/2022/10/14/lead-based-paint-cant-be-that-bad-or-can-it The best way to deal with lead issues is to consult with a certified lead professional before renovating.

Asbestos- Prior to 1980, asbestos was used in insulation, flooring, roof sheathing and even on textured ceilings. The EPA issued a ban on most products containing asbestos in 1989. When the asbestos fibers are damaged or disturbed, the become airborne which is when it poses the greatest hazard as you breathe these fibers into your lungs. This exposure can show up years later in the form of lung cancer and mesothelioma. When you suspect a material contains asbestos, never sand, scrape or drill holes through it. It is best to use an asbestos abatement professional to determine if something contains asbestos and for any type of repair or removal.

Mold- This can be one of the most insidious of the problems as it is a living organism that, when not treated thoroughly, can reoccur continuously. It also can hide and not appear as an issue until it is an overwhelming problem. It is most likely to occur in areas where there is plumbing or water infiltration like a roof leak or poorly sealed window frame. Those with pre-existing health issues such as allergies or lung problems can be overly sensitive to mold spores. In areas where there is more than 100 square feet of affected area, it is strongly recommended that you use a professional to remediate this issue.

While all three of these health hazards can be scary to think about, each of them are treatable with the right kind of professional. Know the risk and evaluate their impact within your decision process.

Greensburg 2022 Market in Review

The year 2022 was a year of historically low inventory and high demand, unlike anything Greensburg has seen in recent history. Interest rates have been a major player in the market this year and definitely caused some of the historic gains to cool off towards the last quarter of the year. As rates rose, activity slowed- at least to a certain extent. As you look through this report, you will notice that the rise in mortgage rates corresponds to other market data events.

 The annual median home sales price for all residential properties in Greensburg rose from $149,950 in 2021 to $173,450 in 2022 which is a 15.7% increase. Compare that to the year 2020 when the median sale price was $135,000 and the increase was at 11.1%.  In looking to this coming year, it is safe to say that these increases will cool down. To what degree will depend on mortgage interest rates, inflation, demand and market saturation.

The general trend in the median sale price over the past year has been increasing with the peaks in those increases showing up during the summer months.

The supply has been historically very low in 2022. The supply appears to have had a sharp increase towards the end of the year which is counter intuitive to cyclical seasonal historical data.

The marketing times (expressed in DOM- days on market) has also been extremely low. However, in the past few months, this has been rising due to a cooling in the market most likely attributed to seasonal cyclical events during winter months and compounded by the rising mortgage rates.

As is expected, the quantity of sales decreased in the last quarter of the year.

One point of data I was surprised to see pertains to the actual number of transactions year over year for the last 3 years. The years 2020 and 2021 had a high number of transactions with 2022 showing a slight drop off. This is conversely affected by the fact that with fewer transactions, there was a higher median sale price.  

The current number of active listings is also decreasing. We will have to wait a few months to see if this starts to increase when the market typically experiences seasonal cyclical events around March or April when sellers like to place their properties on the market.

Not only as demonstrated in the previous chart which showed the number of actives decreasing, the median list price is also decreasing. This could be significant to keep in mind. As the marketing times increase and the list prices decrease, this could have a direct impact on the median sale price going forward. Only time will tell how all of this will affect 2023 sales.

Rear View Mirror or Crystal Ball?

Appraisals are a report that indicates an opinion of market value for a property. It is a reflection of what has been happening up until a certain point (our effective date) and not what is going to happen or might be continuing to happen.

What has happened could be different from what is going to happen. There is a place in real estate valuation for forecasting, but when completing appraisals for mortgage lending, divorce, estates, bankruptcy and listing work, we look at the sales and trends leading up to our effective date. Most often, our effective date is the day we look at the house, but there are times when our effective date is a retrospective look at a prior date such as a date of separation for marital dissolution purposes or date of death for estate purposes.

In any of these cases, the effective date that reflects the estimated market value is a culmination of the data analysis in the market leading up to that date. In other words, we are always looking in the rear view mirror to determine our opinion of value.

Over the past year, appraisers ran into situations where our rear view mirror was not equaling the rapidly changing markets. Houses were being listed and within less than 24 hours, sellers had multiple offers to choose from. Some of those offers included a percentage above the list price that seemed ludicrous, but buyers were desperate to get into a house and were getting discouraged by running into rejection after rejection so they were making very attractive offers. Inventory was low and this created the perfect storm. If you had cash and didn’t care about value, no problem. But if you needed a mortgage, the appraisal needed to reflect that it was worth what the buyer was willing to pay for it. In many instances, the history of sales did not make this possible. It either forced the buyer to bring the cash to the table to make up the difference or go back at the drawing board and start searching again.

Market value looks at how these actions between buyers and sellers have affected the climate in the market and use the sales that have closed as indicators of value for the property being appraised. It isn’t until you have an accumulation of data points that indicate buyers and sellers are reacting in concert that you have the ability to point to a changing market. In rapidly changing markets, it is challenging to correctly interpret the data and accurately reflect those changes. Those changes being reflected are not to be understood as an indicator that they will continue to happen, only that they have happened.