HomeMy WebLinkAboutA036 - Memo from City Assessor, evaluation of data, comparisons to other subdiivsions 1
515 Clark Avenue
Ames,Iowa 50010
Ames City Assessor Phone (515)239-5370
Fax (515)239-5376
DATE: 12/15/00
TO: Ames City Council
FROM: Richard Horn, City Assessor
RE: Somerset& Subdivisions
This is in response to your November 28, 2000 request for the City Assessor to make an
evaluation of the data regarding the rate of house sales in Somerset and to develop appropriate
comparisons to other subdivisions.
The information provided by the developers is based on their internal information. Until
recently, most new houses in Somerset, and all of Ames were not listed on the Ames Multiple
Listing Service and the eventual sales of the new houses are usually not reported to the MLS.
The developers have started marketing Somerset by making the vacant new construction
available to all Realtors instead of keeping them as "office exclusives", but that is a recent
change in policy. In short, there is insufficient information available to independently verify the
conclusions and summaries, or to analyze and compare the rate of sales with other subdivisions
using common measures such as "days on market".
Apartments
Much of the data supplied was in regards to multiple housing, or apartments. Much of the
information the conclusions were based upon is not independently available for analysis. In
particular,the data on building costs is difficult to analyze. Mr. Winkleblack cited costs ranging
from $48.50 per sq. ft. up to $65.00. Some of the "costs" obviously represent less than full cost,
since the buildings were constructed by builders and/or developers to keep as investments. Other
"costs" cited may have been for apartments built for third-party owners and these"costs"
probably included soft costs as well as hard costs. Soft costs can include items such as
construction interest, overhead, profit, appraisal and financing costs, lease-up costs, selling
expenses, etc. It is also not clear whether the buildings referred to were closely comparable in
unit size and amenities. Since the information provided is not fully explained as to what was
included in the different"costs", it is not possible to draw a conclusion about the relative costs of
different buildings from this data.
Mr. Winkleblack's summary of occupancy in Somerset illustrates what I regard as a normal
lease-up pattern for new apartments. Ames is very much an August to August city for apartment
leases. New apartments available in January or March have a very limited tenant base until the
next August. Most tenants have a place to live and it is leased until the next August expiration.
The nine buildings he presented became available for occupancy from November of 1999
through August of 2000. His data indicates all 76 units were leased by November of 2000. This
seems to be a normal pattern. The end result of 100% occupancy is exemplary. A 4%to 5%
vacancy is typical in Ames. At those rates we would expect 3 or 4 vacant units at all times.
Page 1 of 5 \\GIs_02\SYS\GRPDATAWSRGROUP\DOC\Somerset\analysis_mem.DOC
515 Clark Avenue
Ames,Iowa 50010
Ames City Assessor Phone (515)239-5370
Fax (515)239-5376
A discount of$50 per month for new apartments is also not uncommon. It is usually more
profitable to lease all the units at a 7 or 8% discount the first year or two rather than charge the
full desired rent and have 10 to 20%vacancies.
The rent comparison in the packet for the Nov. 28`h meeting included a column"Net rent" which
is not explained or defined. I assume this was net of all or part of the $35 per month per unit for
the owner's association. To compare accurately with other locations, $20 for the clubhouse
would be an appropriate deduction, except projects such as Wessex that have similar amenities.
The $15 maintenance would not be an appropriate deduction for comparison, since other
apartments may not have clubhouses but they all need maintenance.
Data my staff collects include current rents. We have received a limited number of returns for
Somerset apartments for 2000. Individual addresses are not identified but all units are located in
the Somerset Village:
Apartment Rents in Somerset Reported to the Assessor's Office Fall of 2000
Type of Data Source Apt. Size Net Rent Rent/sq.ft. Comments
in sq.ft. ($20 dues
deducted)
One Bedroom units:
Actual rents Apt. Manager 614 $530 $0.86 1 bath, 1-car garage, heat incl.
Actual& asking rents Apt. Owner 665 $580 $0.87 1 bath, 1-car garage,heat incl.
Two Bedroom units:
Actual rents Apt. Manager 800 $650 $0.81 1.5 baths, 1-car garage,heat incl.
Actual rents Apt. Manager 900 $715 $0.79 2 baths, 1-car garage,heat incl.
Actual& asking rents Apt. Owner 960 $745 $0.78 2 baths, 1-car garage,heat incl.
Actual& asking rents Apt. Owner 894 $730 $0.82 2 baths, 1-car garage,heat incl.
Conclusions & observations regarding apartments: It is difficult to identify a problem with
the Somerset rental market. Vacancies do not seem to be at a level different than other newly
constructed areas of Ames. A lease-up time of one to two years is typical. Rent and occupancy
rates will eventually stabilize at a level acceptable to the market. When vacancy is a problem,
most developers respond by slowing construction of additional units to allow the market to
absorb the vacant units.
Single Family Housing
Little data was provided for analysis or comparison. The sales data submitted by the developers
and other parties includes information that is not in our files yet. I researched our sales files and
categorized the information into the spreadsheets attached.
The following notes and explanations should be considered when reviewing the information on
the attached spreadsheets:
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515 Clark Avenue
Ames,Iowa 50010
Ames City Assessor Phone (515)239-5370
Fax (515)239-5376
Somerset: Lots subdivided through the 7`h addition are included. They are divided between lots
for attached housing and detached housing. The "Village Cottage" lots were not included, nor
were any of the commercial or multiple unit housing lots included.
Detached housing is defined as a lot improved with a dwelling having two side yards and a front
and rear yard; the dwelling is not attached to another owner's dwelling. In competing
subdivisions these lots include a few duplex structures.
Attached housing is defined as a lot improved with a dwelling unit attached to another owner's
dwelling unit by a common wall. Each dwelling owner has title to the land under the structure.
These lots include several building types. Most of the units outside Somerset are one-story units
attached to one other unit (sometimes referred to as PUD's or zero-lot-line houses) except the
Ironwood Estates units are up to 6 units attached. Somerset subdivisions include a few similar
units, but most are row houses and townhouses. Attached housing does not include true
condominium developments, where all land and the exterior surfaces are jointly owned.
Older attached housing projects included row or townhouse style units. These include Meadow
Village, Briardale Square, and North Park Villa.
Bentwood Subdivision: This project included a large federal subsidy at the start for low-income
housing programs. The first two years of building and the initial phase of the subdivision were
affected by the subsidy and the restrictions on ownership qualifications.
Jewel Park: This subdivision was eligible for Urban Revitalization tax abatements and most
buildings constructed received the exemption.
Spring Valley: This west Ames subdivision started with an extremely low volume of building.
There was only one house built during the first 3 years.
Selected Subdivision Development and Build-out Rates
The first attached spreadsheet represents considerable research of old files. We attempted to
include subdivisions that are either recent or had significant amounts of new construction since
1995. This was not all-inclusive of lots available in Ames, but it is the majority of them. The lot
types were segregated into whether they were intended for detached housing or attached housing.
Several subdivisions have developed at slower rates than Somerset Village. For instance:
■ The detached house lots in Amethyst Place are all still vacant 2 '/2 years after the subdivision
was approved, although two lots have transferred from the developer.
■ The 26 attached housing lots created in Dauntless subdivision have had only two lots built
upon since the subdivision was approved in January 1999.
■ Not included in the spreadsheet were the first 20 additions of Parkview. That development
took approximately 26 years to develop from 24' street on the south to Bloomington Road on
the north.
Page 3 of 5 \\GIs_02\SYS\GRPDATA\ASRGROUP\DOC\Somerset\analysis_mem.DOC
515 Clark Avenue
Ames,Iowa 50010
Ames City Assessor Phone (515)239-5370
Fax (515)239-5376
■ Suncrest Addition in south Ames had only 12 of 20 lots, or 60%, built upon during its first
four years of existence.
Attached & Detached House Sales
The second attached spreadsheet details all normal sales of houses during a 23-month period
commencing January of 1999. The sales include new and existing houses.
In addition to the neighborhood sales data, these figures were also compiled for the first 11
months of 2000:
■ The average selling price of 630 existing houses sold in Ames was $135,800
■ The median selling price of 630 existing houses sold in Ames was $122,000
■ The average selling price of 98 newly constructed houses sold in Ames was $193,900
■ The median selling price of 98 newly constructed houses sold in Ames was $177,400
Observations regarding single-family housing
Attached housing is a limited market segment in Ames. During the past 17 years, new attached
housing units built in Ames averaged 14.3 per year. Sales of existing attached housing units
averaged about 77 per year. Somerset added 53 units to the supply in just 3 years,while
competitors added 64 units. The 3-year build-out of 117 attached houses was an 8-year supply of
new construction at the historical absorption rate for new construction, and more than an 8-
month supply at the rate of absorption for existing units.
Not surprisingly, a temporary oversupply of attached housing inventory exists. When supply
exceeds demand, longer selling times are an inevitable result, as are decreased prices. This is
borne out by the developer's recently announced sales incentives for the row houses.
This situation is not uncommon in the Ames real estate market. For instance:
■ The Dauntless developers subdivided 26 attached housing lots in January of 1999. So far
they have built only two units and 24 lots are vacant.
■ The Ironwood Estates subdivision added 15 attached housing lots in 1986. Seven were built
soon after, and the remaining 8 lots sat vacant from 1988 until 1999.
■ The most active attached housing development in Ames is Stone Brooke. Over 17 years 168
lots were subdivided and 24 remain vacant, for an average of 8.5 units added per year.
It is difficult to attribute the difficulty in selling newly constructed attached houses in Somerset
to the village zoning and infrastructure requirements. It is more likely a simple oversupply
situation that will cure itself in time if additional units are delayed until the oversupply is
absorbed.
Page 4 of 5 \\GIs_02\SYS\GRPDATA\ASRGROUP\DOC\Somemet\analysis_mem.DOC
515 Clark Avenue
Ames,Iowa 50010
Ames City Assessor Phone (515)239-5370
Fax (515)239-5376
Lot sales: The material submitted to the Council by the developers listed lot sales. It is difficult
to draw conclusions about the lot sales when the supply is not considered. It is also difficult to
compare subdivisions using lot sales since many lots in Ames are not actually available for
purchase until the house is constructed. In that case,the lot doesn't sell until the house is built.
Summary
The purpose of the presentations and discussions at the November 28, 2000 meeting was to
consider the developer's request for expansion of the Urban Revitalization area to include all
undeveloped lots in Somerset Village.
I have administered the Urban Revitalization exemptions in Ames since their inception in 1982.
The theory behind Urban Revitalization has been that certain areas need re-developed and that
the tax abatements will spur development. Sometimes that appears to occur, but whether the
theory applies in all cases is the subject of wide disagreement.
Expansion of a tax abatement program to an area of Ames that was previously vacant agricultural
land should be carefully planned with clear and obvious objectives. A complete understanding
of the effects of the program, to the tax base and to the marketability of competing properties, is
necessary.
There are a variety of possible alternatives and refinements, such as reduced areas for abatement,
a cap on the value of the property exempted, use of a TIF instead of abatement, etc. that might
merit consideration. I would be pleased to assist the staff and the developers with the analysis of
various alternatives.
This report was requested on relatively short notice and at an extremely busy time of year for the
Assessor's office staff, so there was little time to review and proofread the information. I
apologize if a few units are counted incorrectly or are in the wrong column, or if a subdivision
was omitted. The substance of the report and the spreadsheets is intended to assist the Council in
understanding the development rate of vacant lots and the rate of construction of houses in Ames
for the past several years for the major subdivisions.
Page 5 of 5 \\GIS_02\SYS\GRPDATA\ASRGROUP\DOC\Somerset\analysis_mem.DOC
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Attached & Detached House Sales
during 1999 & 2000 by Area in Ames, Iowa
Attached 1-Family Sales by Neighborhood - Jan. 1999 thru Nov. 2000 - New & Existing
Neighborhood: #Sold Average Average Price per Average
Price Hse Size sq.ft. Year Built
Briardale Square 17 $91,242 1,173 $77.77 1972.2
North Park Villa 19 $115,605 1,149 $100.60 1976.0
The Greens 1 $183,550 1,235 $148.62 1980.0
Meadow Village/Southdale 28 $76,441 973 $78.59 1972.2
Bluestem Area 13 $131,458 1,185 $110.96 1986.0
Green Hills 8 $184,375 1,294 $142.54 1988.9
Stone Brooke 18 $197,777 1,541 $128.35 1991.9
Somerset 29 $168,530 1,555 $108.38 1999.0
Arbor on the Green 2 $258,250 1,715 $150.58 1994.0
Other-North Ames 21 $140,836 1,306 $107.84 1997.8
Jewel Park 6 $141,317 1,238 $114.13 1998.3
Other-West Ames 12 1 $122,867 1,177 1 $104.43 1988.6
Totals&Averages 174 $135,053 1,271 $106.22 1986.3
NOTE 1:Sales groupings do not include condominiums,duplexes,or detached houses.
NOTE 2:Recent sales may include unverified sales information&all sales are subject to correction.
NOTE 3:Several recent new construction sales are not included due to incomplete data collection.
Detached 1-Family Sales by Neighborhood -Jan. 1999 thru Nov. 2000 - New & Existing
Neighborhood: #Sold Average Average Price per Average
Price Hse Size sq.ft. Year Built
Northridge 106 $288,467 2,459 $117.31 1996.6
Somerset Village 23 $181,623 1,696 $107.09 1998.7
Veenker, Clear Creek,Acreages 43 $216,874 1,922 $112.82 1971.2
Bloomington Hts&Gilbert Dist. 88 $154,704 1,697 $91.19 1996.5
Parkview,Prairie View areas 79 $168,028 1,670 $100.60 1974.2
N. &NE-N of 13th St,E of Hoover 208 $119,394 1,253 $95.25 1958.2
Brookside,Roosevelt areas 80 $110,215 1,367 $80.64 1933.5
Old Town&IDOT areas 140 $96,592 1,350 $71.53 1923.1
Kate Mitchell, Southdale areas 57 $139,476 1,324 $105.37 1982.5
Country Club&Crawford area 52 $145,247 1,614 $90.02 1944.9
S&W ISU-mixed rental area 13 $108,638 1,476 $73.63 1929.4
Edwards Dist. &College Crk.area 176 $144,811 1,464 $98.92 1977.5
Sawyer District, W. Ames 145 $133,103 1,336 $99.62 1 1970.6
Totals&Averages 1,210 $148,632 1,531 $97.08 1965.5
NOTE 1:Sales groupings do not include condominiums,duplexes,or attached houses.
NOTE 2:Recent sales may include unverified sales information&all sales are subject to correction.
NOTE 3:Several recent new construction sales are not included due to incomplete data collection.
Ames City Assessor's Office
515 Clark Ave,Ames, IA 50010
Date updated:12/15/00 515-239-5370 TWNHS SOLD NHD.XLS