Matrix Blog

I read Mike Mulligan and his Steam Shovel nearly every night to my 4 sons when they were younger (probably an unnecessary qualifier). It was also my favorite children’s book as a kid.

As it turns out, this story preempted current London construction methodology (h/t boingboing.net).

So, many of the squares of the capital’s super-prime real estate, from Belgravia and Chelsea to Mayfair and Notting Hill, have been reconfigured house by house. Given that London’s strict planning rules restrict building upwards, digging downwards has been the solution for owners who want to expand their property’s square-footage.

This trend reflects the appraisal concept of highest and best use for the equipment despite the inherent wastefulness. Does it make sense to leave the equipment in the basement? With all the concern in the US about below grade empty oil tanks and the environment, I wonder how this practice is allowed, cost effectiveness aside.

Given the exceptional profits of London property development, why bother with the expense and hassle of retrieving a used digger – worth only £5,000 or £6,000 – from the back of a house that would soon be sold for several million? The time and money expended on rescuing a digger were better spent moving on to the next big deal.

You really need to read the book.

Tags: London, Mike Mulligan and his Steam Shovel, oil tanks

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Commercial Grade is a weekly post by John Cicero, MAI who provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. John looks forward to the day when appraisers are not seen as a nuisance, and its sooner than you think.

Disclosure: John is a partner of mine in our commercial real estate valuation concern [Miller Cicero, LLC](http://www.millercicero.com) and he is, on Thursdays on Mondays, one of the smartest guys I know. …Jonathan Miller

Our offices closed at 10 am Monday morning. I came out of Grand Central Station after my morning commute and immediately smelled gas. The smell stayed with me during the four block walk to the office and up the elevator. Some of the appraisers in the office smelled it and some did notbut the longer we smelled it the more concerned we got. A few of us started to get dizzy, others started to get nauseous.

Maybe it was psycho-somatic (I was a psychology major, after all!) but when 1010 Wins (the local news radio station) described it as a “mysterious gas-like odor” and [officials had not yet identified the source](http://www.1010wins.com/pages/179017.php?contentType=4&contentId=284961) there was a brief tinge of panic.

I was in midtown the morning of 9-11 five years ago and watched the towers burn from the corner of 40th and 5thhow could you not think the worst when there are reports of mysterious gasses enveloping Manhattan, extending to Jersey and Brooklyn? For a moment, however brief, I thought …bio-terrorism.

So, my employees and I each worked from home that day and by noon it was clear that perhaps I had been a bit of an alarmist. But then againI’d probably do the same thing tomorrow.

Tags: Soapbox Blog, Radio, Commercial Grade

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John Philip Mason is a residential appraiser with 20 years experience and covers the Hudson Valley region of New York. He’s a good friend and a true professional who provides unique insight to appraisal issues of the day. Here is his weekly post called Solid Masonry. This week John addresses how real estate location does not necessarily adhere to the tried and tested rules of thumb anymore. Jonathan Miller

It would seem the old adage of defining the value of real estate by “location, location, location”, has been turned on its ear. Whether by efficiency or through over competition, the airline industry seems to be a factor contributing to higher real estate values in “second home” markets. In a recent article by Les Christie of CNNMoney.com, [Real Estate: The JetBlue Effect [CNN/Money]](http://money.cnn.com/2006/04/03/real_estate/cheap_fares_second_homes/), we find that those cheap air fares are finally good for something as more and more people are now flying off to their second homes.

Now I believe I speak for many of us who have a hate love relationship with the cheap fares. They’re great when you want to get away from it all or to go someplace special. But, we’ve also been hounded by distant relatives (we’d like to keep distant), who kept reminding us they are only two hours and a $59 plane ride away!

In the article Mr. Christie states, “You don’t have to be affluent to fly off to your weekend getaway anymore — with the rise of discount flyers like JetBlue and Southwest Air, second-home buyers have expanded their target areas outward.” He goes on to say, “In a survey last year, [Escapehomes.com](http://www.escapehomes.com) found that 60 percent of respondents planning to buy a second home were looking more than 500 miles away from their primary residence.”

So it would seem many people are no longer content with a simple country home just minutes from the highway or with a beachfront house within a few minutes walk from the ferry. The idea of a nearby place to get away from everyday life has a whole new twist. Neither the high cost of fuel nor post 9/11 security concerns seem to be putting a dent into this trend.

While Americans like to think they are always at the head of the pack, Europe is leading the way in terms of airfare pricing. Mr. Christie points out, “Although some of the fare deals sound pretty great, American carriers are still way behind the Europeans. In Europe, low air fares are transforming the vacation-home market. It’s now possible to fly from one European country to another for less than the cost of riding the bus to the airport.” The writer indicates the results are equally evident, as he goes on to say, “The UK’s Abbey National Bank estimates that some 1.2 million Brits now own second homes in France and on the Iberian Peninsula. Germans own some 300,000 homes in Spain. The French are even buying homes in Britain, to the tune of about 20,000.”

So now the term “location” is hardly a thought for anyone with access to airlines providing cheap fares. And being able to tell everyone you’re flying off to your “weekend place” is bound to impress, well, everyone! So what about location, location, location?

Forgetaboutit!

[about a month ago, I flew Jet Blue and there was a lot of turbulence and I promptly turned green. I now dub them: Jet Green -ed]

Tags: Soapbox Blog, John Mason, Solid Masonry

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The Stamford Review, Spring/Summer 2006 is the third issue and was just released. It can be [downloaded for free on their web site after a simple registration](http://www.stamfordreview.com/downloads-current.php) or hard copies can be purchased for a nominal fee. The intention of the publication was to bring together a diverse group of writers who are passionate about their topics to write about issues that affect New York City real estate, land use, architecture, and urban affairs.

[See full post for more information [Matrix]](http://matrix.millersamuel.com/?p=423)

Tags: Soapbox Blog

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[This series of photos taken during home inspections](http://www.stargroup.com/hnt/index.htm) by [StarGroup, a home inspector in California](http://www.stargroup.com/ResidentialInspections.htm?hnt/index.htm~mainFrame) should be interesting to many readers since appraisers see a lot of suspect conditions during an interior inspection.

Photo Caption: “Drop in sometime” A
doorway should never open over a descending
staircase. A majority of accidents in the home
occur on staircases. Such doors are not unusual
in older homes.

The photos are amazing 😉

Tags: Soapbox Blog, Home Inspection

1 Comment

This has turned out to be a larger disaster than anyone imagined. [Here are some ideas on how you can help in the relief effort.](http://www.msnbc.msn.com/id/9115520/)

Relief Organizations

[[American Red Cross through Apple iTunes]](https://phobos.apple.com/WebObjects/MZFinance.woa/wa/com.apple.jingle.app.finance.DirectAction/buyCharityGiftWizard)

I used Apple iTunes (100% goes to the Red Cross) but all are great organizations.

[[American Red Cross]](http://www.redcross.org/)

[[Salvation Army]](http://www.salvationarmyusa.org/USNSAHome.htm)

[[North American Mission Board Disaster Relief Fund]](https://www.kintera.org/site/c.9qKILUOzEpH/b.238542/k.9A2/Disaster_Relief_Fund/apps/ka/sd/donor.asp?c=9qKILUOzEpH&b=238542&en=idLGJFOjE5JxHFNiFaIDJNOxElITKSMoGaIJLQNlGaKJLXPEG)

[[FEMA]](http://www.fema.gov/)

Tags: Soapbox Blog

4 Comments

The National Association of Realtors has created a resource area called Field Guide to Power Lines. Part of the problem with this issue is that there has been a battle of competing health studies that of course, are on the opposite side of the sprectrum.

Position: Power lines don’t affect property values
This party claims that since there is no definitive proof of a health risk, no loss in value should occur to property owners. The key driver of this movement has been the powerline industry.
[Links]
[American Transmission Co.](http://www.atcllc.com/TP_gardnermorgan_faq.shtml#question_answer_9)
[American Trails](http://www.americantrails.org/resources/ManageMaintain/PowerLineBC.html) From an operational perspective, EMF is not much of an issue for trail activities…
[Colgate Univ Term Paper](http://classes.colgate.edu/wpeck/fsem039/Power.html) Just a term paper and not a scientific study but it concludes that there is more evidence that says there are limited health risks and on that basis, possibly not detrimental to value.

Position: Power lines affect property values
This party claims that since there is evidence that there is a health risk, a loss in value to property owners should be recognized. The key driver of this movement has been the environmental groups.
[Links]
[University of Missouri-Kansas School of Law](http://dirt.umkc.edu/dds/dd97/dd072597.htm) A review of a case where “…that a tax assessor’s opinion that the proposed power line would not change the assessed value of the property for tax purposes was incompetent and prejudicial…”
Wave-Group An exerpt of the correspondence: “Late last year, New York’s highest court, the Court of Appeals, ruled that the owner of property adjacent to a utility’s high-power electrical transmission lines could seek damages for a decrease in the market value of the property caused by the fear that the power lines might cause cancer, even if such a fear was not medically or scientifically reasonable. That decision has already begun to change the outlook on electromagnetic field (EMF) litigation for utilities.”

Valuation Links
[Power Lines and Property Values: The Good, the Bad, and the Ugly](http://www.powerlinefacts.com/Property%20Values/Power_Lines_and_Property_Values.htm) An incredibly detailed discussion on valuation approaches for powerline properties.
[Realty Times Columns](http://realtytimes.com/rtcpages/20030710_electro.htm) Concludes that homeowners would probably pay less for a property near a powerline just because of the uncertainty.

Common Sense Application for Appraisers
In a valuation matter, where an appraiser is asked to value the effect of power lines on property values, wouldn’t it come down to how the typical homebuyer in a market felt about the uncertainty of risk? In other words, if two properties are identical, but one is located under or near a powerline and one is not and the former sells for less, isn’t that indicative of the effect on value? Whether or not EMF causes cancer or not, if a buyer pays less, it would seem to me that the difference before and after is a quantifiable measure of effect.

What do you think?

Tags: Soapbox Blog, Appraisal Process, power lines, EMF

3 Comments