Appraisal Articles 2019 Free Appraisal Articles for Appraisers and the Public
As a vacant land appraiser I keep reading the news articles and thinking "where is all this cheap land the Press is talking about at $ 190,000 or less per acre in Las Vegas?" If you are reading Mr. Wargo at the Las Vegas Sun, he just spews out what this analyst or that broker says about a specific sale or the average price per acre of vacant land for whatever quarter he is reporting on.
We all realize that there is "downward pressure" in the land market. It doesn't take a reporter to tell us that. When you get unemployment over 13 percent, massive job losses due to a "suspension" in the construction business and gaming takes a big hit you expect that many investors and some speculators will step back and wait for a turnaround.
As an appraiser I ask myself, "does the average price per acre as reported in the news articles have meaning?" The answer is no, not much. If you consider the fact that only a few to a few hundred acres (much less than 1% of the total market) are being sold in any give quarter and that 60% to 75% of the acreage sales are bank foreclosures, wouldn't that skew the prices being reported?
What about location? Is all of the vacant land in the Las Vegas market uniform in value? If some of the few sales recorded in one quarter are all from outlying areas and the sales from the next quarter are parcels from intensely developed areas, would that make a difference in the average price paid per quarter?
What about the fact that the figures that are being reported include an aggregate of all types of real property from vacant residential land to vacant, prime commercial property, would knowing that fact influence your decision about the veracity of these "news" articles and the statistics that they are based upon?
What about size? Would it make any difference to someone relying on the statistics to know that the few sales being made every quarter in Las Vegas often vary from a few acres each to parcels as large as 60 acres. If you get a few small sales one quarter and then a large sale the next, do you think that there may be a comparison problem? Appraisers understand that there is a relationship between price and size, but I don't know if that is common public knowledge.
The simple fact of the matter is that the land market in Las Vegas is like the land market in most other places. While there may be more people wanting to sell than to buy, market supply and demand is central to values, however market participants also focus on specific, individual physical and economic property characteristics. You just can't look at the sale of a few distressed or foreclosure sales that occur in a quarter and tell readers that you are "tracking the price, supply, demand of vacant land." What you are making news about is the statistics from a few sales and it should be disclosed that "it is likely that the sales discussed and the statistics derived from them do not represent market reality."
Before you jump to the conclusion that I have lost touch with the reality of the market, I would like to mention the fact that appraisers who value property using the standard definition of "market value" would have to consider distressed sales but not use them as "comparable sales" because the transactions are not made by "willing sellers to willing buyers." About 75% of the sales / statistics that are being reported by the Press don't meet with that definition.
The land market in Las Vegas in 2010 has gone from being described as in a "suspended animation" to one best described as "seizure." Much of the available vacant land is being closely held by owners, and only a few transactions between private owners occurs each quarter but these transactions are generally at a higher price per acre than those foreclosure sales being blasted by business "news" reporters that are based on faulty statistics. The reality of the market is that many owners have accepted that they willing incur the opportunity cost related to holding their land, and they expect that an certain future Las Vegas turnaround with increased demand and that they will be compensate them for their carrying cost.
Only time will tell if the decision to carry land in Las Vegas was a good decision or a bad one.
For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.
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