Valuing Fractional Interests Article – Part 3

Goldilocks and the Critical Importance of Time

The most important thing about valuing a fractional interest in real estate is time, specifically, how long will the interest-holder be stuck in its position? Interest holders care less about the current net asset value, and more about its future value. The valuer can use this to solve many issues and conclude the likely period, which is a critical element in such valuations. 

The restriction period typically ends when the assets are sold and profits are distributed. This period has profound effects and it is important for the valuer to consider the circumstances that could affect the period. 

Two possible dilemmas may occur when matching the model period and the period which discount rates are taken from. One dilemma is when a period seems to be “forever”: partners who intend to hold their assets forever. “Forever” would rely on future generations, which is very difficult to predict. Webb suggests that exceeding 10-15 years creates an invalid model because it is practically impossible to find discount rates that can support longer periods. 

The other dilemma is the short term: when a partnership ends and partners do not want to extend. With good facts, a 2-3 year restriction period can be concluded, but short holds are not baked into yield rates.

Ryan Whitelaw, MAI will be attending the 2022 Appraisal Institute Annual Conference in Las Vegas.

This conference is the premier annual event for real estate valuation professionals to gather for education seminars, dynamic speakers, knowledge sharing, networking, and product and service shopping. In addition to Keynote Speaker, Ryan Leak, a speaker, coach and consultant with expertise in empowering leaders to reclaim a new self-awareness, classes and speakers at this event will explore Fannie Mae policies and initiative updates, how to keep pace with demand, interpret real market data, litigation and arbitration and many more tools that are effective in educating and advancing professionals in the appraisal field. 

To learn more click the link below:

https://www.appraisalinstitute.org/annual-conference/

Pacific Appraisers Ryan Whitelaw MAI moderates breakout session at the 2022 MBAS

Ryan Whitelaw MAI recently attended the 2022 Monterey Bay Appraisal Seminar (MBAS). Ryan moderated the breakout session on “Best Practices using Marshal and Swift”. The 2022 Monterey Bay Appraisal Seminar was sponsored by the Society of Real Estate Appraisers (SREA), The American Society of Appraisers (ASA) and The American Right of way Association (ARWA).  The seminar covered topics regarding policy clarifications, appraisal compliance reviews, SB 9, and cost approach, with an opening keynote from Dr. Gerd Welke, and many presentations from experts at different appraisal companies around the country.

To learn more click the link: https://norcal-ai.org/event/2022-monterey-bay-appraisal-seminar-2/

Right of Way Certification

We are very happy to announce that Ben Rumsey, MAI has received his Right of Way certification from IRWA. This will help Pacific Appraisers to continue its expansion into non lender appraisal markets.

Pacific Appraisers is hiring

Pacific Appraisers is looking to hire two staff residential appraisers. The positions would be located in the Central Valley (Fresno, Visalia, Bakersfield) and the Monterey Bay Area. Interested candidates please email tim@pacificappraisers.com . To learn more about Pacific Appraisers visit our website at –  www.pacificappraisers.com

2018 Annual Fall Conference: Real Estate and Appraisal Symposium

The Pacific Appraisers Team will be attending the 2018 Northern California Appraisal Institute Annual Fall Conference.

Location: South San Francisco Conference Center, South San Francisco

2018 marks the 68th consecutive year that the Northern California Chapter has presented its award-winning Annual Fall Conference.

Fall Conference is the real estate appraisal profession’s longest-running and highest-rated one-day continuing education & networking event on the West Coast. Our conference consistently draws over 250 participants and features the real estate profession’s “most in-the-know” presenters.  Our topics will keep you informed of the latest developments that affect your profession, your profitability, your business – your future.

Approved for 6-hours of BREA, Appraisal Institute and SBE training credit; applications for credit from the States of Washington and Oregon have been submitted.  Typically ASA, ASFMRA and IRWA offer reciprocal credit for AI approved offerings.

Our 2018 venue offers onsite FREE parking and complimentary shuttle service from BART and Caltrain.  Watch for more details when the registration materials become available.

To learn more click here

Key California housing bills enter the home stretch

State lawmakers are now making moves to alleviate California’s soaring rents and home prices. The bills being deliberated cover permanent housing for the homeless, new zoning rules to allow apartments on BART parking lots, and workarounds for the $10,000 federal cap on state and local tax deductions.

Assembly Bill 2162 would fast-track housing developments for the homeless and disabled that can be delayed or derailed by local politics. The bill would also allow for affordable leases on apartments.

Assembly Bill 2923 aims to allow housing development on BART’s parking lots. David Chiu, who leads the Assembly’s housing committee, states that “Given the twin housing and congestion crises, building housing next to major transit is simply common sense.” However, this bill faces stiff opposition from many of the affected cities.

Senate Bill 227 seeks to create a workaround the on $10,000 cap on state and local tax deductions that came about as a result of the federal overhaul of the tax code earlier this year. The bill would allow for Californians to make contributions to school districts, charter schools, and community colleges in exchange for state tax credits, which could be fully deducted from their federal taxes.

Click here to read article.

Thousands of long-awaited homes are coming to Folsom.

The most anticipated new housing community in the Sacramento region goes “vertical” next week south of Highway 50 in Folsom with the construction of model homes, followed by homes for sale.

The project site is massive at 3,300 acres, just south of the freeway and north of White Rock Road, between Prairie City Road and the El Dorado County line. It will contain nearly 11,000 homes and apartments, three public schools, two fire stations, a police station and 82 acres of office and commercial buildings.

The community ultimately will house 25,000 residents, enlarging the city of Folsom by one-third. It will bring new home-buying opportunities, but also growth pains.

 

 

 

Click here to read article.

 

Merced is California’s fastest growing county

More people are moving into Merced County and the housing market is having trouble keeping up with the growth.

The California Department of Finance reported that the county is the fastest growing in the state. The report showed that more than 4,000 people moved into Merced County last year. The state department shows the county saw a 1.8% population increase since the start of 2017.

Merced County’s population is projected to grow by nearly 68 percent between 2015 and 2060, reaching 452,519 residents. If the state’s estimates prove accurate in other parts of the state, Kern will overtake Fresno in the 10th most populated county by 2052.

Krotik says a big part of it has to do with the growth of UC Merced. About 1000 apartment units are being built in the city of Merced. County officials are working to accommodate the influx of both people and businesses.Another factor is affordability. Los Banos saw the most people moving in with more than 900 new residents. Real estate agents claim most of them are from the Bay Area.

High housing prices along the coast and in the north part of the state – and a reluctance to build more there to meet the demand – will continue to push more people inland, including those who live in the Valley but commute for better-paying jobs

A strong market it’s a good problem to have, but low vacancy will remain a problem until more homes are built to meet the needs of a growing county.

Click here for more information.