How much have SFHs appreciated

Question

I am wanting to learn more about appreciation in Indiana.

In your city, what is the lowest priced 3 bedroom SFH you've seen sell recently (move-in condition)?  How much would that house have sold for at the bottom of the last recession (move-in condition)?

Thanks!

Lee Smith · Answer

@Ryan Mullin Haughville is also in an area with massive growth because of IUPUI expansions.. There are definitely markets that are speculative like Haughville, Bates-hendricks, fountain square, etc. It really depends on your risk tolerances.. Some may say the investing Ryan has done is very speculative. I looked at houses in Fountain square a few years back and saw ARV's no higher than 80k within quarter mile, and then two chicks and a hammer, and I believe Ryan etc took the gamble, and we started seeing sales of 150k+ within 1-2 years... I didn't have a crystal ball, and I am not a speculator so I didn't get in.. Some of my clients did though.. I prefer tried and true numbers. By and large I am not a speculator, but I do not begrudge anyone who is.. As long as you go in with the facts and know what you are up against, go for it!  At the end of the day, it's your money.Ryan, Laura hit me up with those 3 properties of hers, back in December, in what she calls "Old Southside" and none of my guys wanted to touch it because they thought it was too speculative, but I hear you bought 1-2 of them.. hehe You speculating dog you! haha

Ryan Mullin · Answer

I think there is 2 different questions here...

Because @Lee Smith who has been buying houses here since 1991 ( I think i was in 3rd grade) will see that 3% over time..  many ups and downs in the economy and RE cycles.  But overall will equal out to roughly 3%.

But me...   I started buying in 2008 / 2009.   And that time, when compared to now, is way different IMO.  In 2009 I bought houses in Haughville (good example of low income area that Lee referenced) for 20 - 25k all in...   rent for 600 or  650.    That same house today would be 45 - 50k all in.  Same rent, same crime, same neighborhood.  To call that true "appreciation" is a stretch but the question in the beginning of the thread was asking about the same house at the bottom vs top of this RE cycle.

Just throwing that out there.   I think its a really interesting concept and topic for a thread.

Lee Smith · Answer

@Isi Nau Indiana has about a 3% appreciation or depreciation rate.. If you want to see that you will need to be in homes with a 100-150k ARV. You can most likely be into those homes for 80-125k. Typically these homes will rent for $800-1500 a month.. The average is probably $1000-1200.

We have low income houses that will see very good cashflow, but they never see appreciation. Same houses in 1991(when I first started buying), that were 60k are still 60k today.. Typical example would be a house you are all in for $35-60k and they are renting for $600-800.

Zillow/Trulia is HORRIBLE, at least in Indianapolis market. Our local MLS reformed as a BLC so they could try to hide historical data from the internet.

Hope that helps!

Isi Nau · Answer

Thanks a lot @Lee Smith.  That's very helpful.

Isi Nau · Answer

Man, you lost me at statistical aggregate.  Lol.  I almost wish that's what I was asking for so I could impress myself with how smart I was.

As for subjective vs. objective, that I can follow.  I believe I am asking for pretty objective figures.  What did House A sell for in 2007 (or whenever the bottom of the recession was in the specific area) and what did it sell for in 2016.  No guessing, no crystal ball, just actual figures from these time periods.  Again, I am not familiar with these areas, but I assume it would be fairly easy for an investor, and certainly a realtor, to provide this information.

But it looks like my bigger problem is becoming more creative in my forum post titles/body.  Hahaha!

Steve B. · Answer

true, but your asking for objective data to answer a subjective question.  No one knows what house X at time Y with finish level Z sold for in statistical aggregate in average as an exact number.  Zillow estimates that with some pretty advanced math and it's going to provide you the best fit answer to your question.  You can gather more data but than your just getting a poll of polls and you haven't necessarily increased the accuracy of your answer

Isi Nau · Answer

Thanks @Steve B.  for the welcome.  It has been a great 15 years.

I am not familiar with Indiana or Oregon, but here Zillow is hardly reliable due to inconsistency across a zip code.  Zillow is definitely one source of data, but to be taken with a grain of salt. I would not trust my money or my clients' money based upon Zestimates.  Conversely, I realize that not all contributors on BP are totally accurate either.  Hopefully with a combination of data sources I can get a clearer picture.

Isi Nau · Answer

I am running the numbers to compare a rental here versus Indiana.  Big differences in cash flow and appreciation.  For example, here:

-pre-recession (2003-2008) prices rose 100%

-recession (2008-2011) prices dropped 20%

-post-recession (2011-2017) prices have risen 65%

A $150k condo in 2003 is now worth $400k, which averages out to almost $18k a year.  Current cash flow (assuming 20% down when originally purchased) would be about $7k a year.

*the last piece of the puzzle for my calculations is appreciation rates/values in Indiana.  Long-term or short-term.  Any help is appreciated as I consider personal and client strategic plans.

How much have SFHs appreciated

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