| Author |
Message |
    
Octofoil
| | Posted on Saturday, February 17, 2001 - 6:00 pm: |     |
Jerry Ryan,
Understood. Are they left out of the database? If not, is there an indicator as to which sales were not arms-length sales? Is there a suggestion from from CV/Galante as to the magnitude of such in recent years?
A priori, one would assume that other than arms-length sales would be sales for less than market value. Any known instances otherwise?
Of course, if included, and if the assumption of lower-than-market values is valid, the entire sample and therefore any central tendency statistics would be biased downward. That also means that,if a given distribution is skewed with inclusion of arms-lengths sales, it is likely to be even more skewed once lower-valued non-arms-length transactions are removed.
Remember, a frequency distribution of sales prices of homes will almost necessarily be skewed to some extent. Unless things change dramatically, we're not going to start giving away houses or start paying folks to take them off our hands. Hence, the distribution will never be zero or negative, and will start at some positive number. On the other hand, the other end of the distribution is entirely open-ended and can assume any figure. The result is a somewhat greater tendency (its not automatic or a law of statistics or anything like that, merely easier to occur) for such distributions to be positively skewed. In which case, the usage of the arithmetic mean or "average" as most of us refer to it, might not provide a user with the measure being sought (which, one presumes, is an accurate measure of central tendency).
When considering the various ratios, even closer inspection might be required. Obviously, if you are using an arithmetic mean from a positively skewed distribution, you are using measure of central tendency that is biased upwards. Consequently, to the extent that you use that biased figure for any comparisons (usage in a ratio, for example), you're not going to get the correct answer.
So there you have a bit more detail on what I'm doing with the data. If you are aware or become aware of any other inquiries along this line, would certainly love to hear about it!
I know I'm repeating myself, but once again, thanks very much for your continued responsiveness to the concerns expressed on this board! |
Lseltzer
| | Posted on Saturday, February 17, 2001 - 6:41 pm: | |
New Map!
There's a new map up on the site (http://www.bpna.org/reval/) that shows the difference between the assessment and sale price for houses which were sold during the year 2000. In other words, if the assessment is $50,000 higher than the year 2000 sales price, it shows a markup of $50,000. If the assessment is $25,000 lower than year 2000 sale price it shows a markdown of $25,000.
I think this one is interesting. Let me know if you have any other ideas for interesting calculations we can do. |
Melidere
| | Posted on Saturday, February 17, 2001 - 7:26 pm: | |
Octofoil,
i wish i understood what you find so important about defining the 'average'. What exactly are the ramifications of that?
I would really be enormously grateful if you would focus some of your considerable talents on this 'bubble' question. I think a lot of people are under the impression that things would be a lot different if this had been done 4 years ago. A lot of other people are just as firmly convinced that this situation has existed for a long time. It's probably the biggest source of contention in this whole situation.
I would love to know the truth of the matter. Is there enough data there to sort it out? |
Townie
| | Posted on Saturday, February 17, 2001 - 8:17 pm: | |
Octofoil,
In my neighborhood, I believe that when less-than-arms-length or private sales were excluded, assessments went down overall. So I assume the private sales prices were above, not below, market. But double check with others.
k. |
Octofoil
| | Posted on Saturday, February 17, 2001 - 10:26 pm: | |
Melidere,
On averages: I keep coming across various benchmark ratios in the assessment process that use an average of one thing or another. See, for example, the discussion on another thread about the 15% thing that is statute mandated. The statue that mandates the use of this "average" specifies only that an "average" is used, without specifying how that average is determined. (If there is such a specification in the statute, I haven't been able to find it. Anyone that knows that there is such a thing, please post a link!)
On the "bubble": One way to get an indication of market activity over time is construct a time series based on market values that encompasses the interval under study. When the rate of change in that index becomes unsustainably high, or when an extrapolation of the recent trend produces nonsensical values, or when the market can be characterized by "irrational exuburance" (thank you, Mr. Greenspan), one might reasonably think of it as a "bubble".
In the stock market, we have the Dow, the S&P, the NASDAQ, etc. Unfortunately, we don't have anything ready made for our home-grown real estate market. Indexes per se are not that difficult to construct, so I'm attempting to construct a reasonable index of the local real residential estate market over the last few years.
The only problem with all of this, of course, is my day job! It keeps getting in the way and demanding too much time! I'll have to spend less time monitoring this board if I'm to ever get these things done! Either that or the kids won't go to college, or the mortgage won't get paid, or maybe win the lottery and retire...
And since none of those are good things, I'm just about to read the documentation on how to put up tables, etc., on the board, so depending on how long I can keep my eyes open tonite (us old guys need our sleep, you know!), I'll put up a table or chart or two to look at the data. Maybe not until tomorrow, though! |
Octofoil
| | Posted on Saturday, February 17, 2001 - 10:58 pm: | |
Townie,
Thanks very much for your feedback on private sales. I'm having a hard time reconciling a less than arms-length sale with a higher price. What economic reason could there be for a higher price with a non-arms-length sale?
There have been situations in which one party contracts to pay another a certain price in excess of some reference price (a comparable, for example) if the seller agrees to not offer the property publicly, but that would seem to be a situation in which the sale should be considered as a market clearing private, but still arms-length transaction. If this type of sale has been excluded from the process, someone will have to explain the economic logic to me!
I've been under the impression that the only transactions that should be excluded from consideration are those that are truly not arms-length, which in residential real estate I think typically means a transaction between related parties at an agreed-upon price which is less than that which could reasonably be expected in a public offering.
The distinguishing characteristic of non-arms-length transactions is, I think, that the price is influenced by extra-market factors. Could it involve a higher-than-market price? I suppose so, but I can't think of why.
Thanks for bringing up a good point and making me question my assumptions! Jerry? |
Gerardryan
| | Posted on Saturday, February 17, 2001 - 11:18 pm: | |
Octo: The non-arms-length sales are not marked as such in my spreadsheet.
I understand non-arms-length transactions to include estate sales, certain transfers of properties in divorce settlements, and other distressed sales. I also understand that certain bidding-war sales cannot be classified as arms-length. "Duress" on either side of the market is excluded... that's my layman's understanding. |
Townie
| | Posted on Saturday, February 17, 2001 - 11:39 pm: | |
I'm not at all sure I understood Gallante correctly at that obstructed school meeting -- or that I understaand Jerry now. Are you saying, Jerry, that certain bidding war sales could have been excluded because they were classified as non-arms-length? |
Jennie
| | Posted on Sunday, February 18, 2001 - 12:46 am: | |
Townie, you must recall that the nonrandom knock off of $50,000 or so from west side assessments was because bidding war sales were in fact included (if you saw my comparables, you would have no doubt that high sales were included and heavily weighted). |
Townie
| | Posted on Sunday, February 18, 2001 - 8:22 am: | |
Jennie,
Not sure what you're saying either. Included to begin with or included in the final result?
I've been assuming all bidding war sales were included to begin with by Certified. Were some subsequently excluded by Ed Gallante because they were less than arms length? That was my impression. Do you know? Anybody?
kathleen |
Ejt
| | Posted on Sunday, February 18, 2001 - 11:49 am: | |
Where was the obstructed(huh??)school meeting? Was there one I missed? |
Townie
| | Posted on Sunday, February 18, 2001 - 1:01 pm: | |
You may have missed it. It was at the high school. Some of us went believing that the meeting was not only a chance for people to speak, but for everybody to hear from the tax assessor about how residential and commercial property had been assessed. But boos and jeers from a number of people who came made it difficult to hear or for the tax assessor to continue. It was during that meeting that these arms-length-sales were referred to. Someone else who attended may have caught more of the explanation than I did, or they may have been explained more thoroughly at subsequent meetings that I didn't attend or watch on TV.
k. |
Ffof
| | Posted on Sunday, February 18, 2001 - 2:50 pm: | |
Frownie...I mean Townie(! honestly, that was a joke!)...Obstructed meeting? Hardly. The tax assessor was heard just fine especially when he began to speak directly into the microphone and I believe he stayed up there until he was finished with what he wanted to say. I don't believe he elaborated on arms-length-sales. |
Townie
| | Posted on Sunday, February 18, 2001 - 4:07 pm: | |
Ffof,
I don't know how much he elaborated, but my recollection is that Ed Gallante brought up the subject of arms-length sales at the school that night in the context of where he had already made neighborhood adjustments. If you're saying that he wasn't affected by the booing and jeering, I disagree. I, for one, came to hear about how commercial property was assessed, and a few seats away from me a man badgered him into changing the subject. Let's go to the videotape, as WW used to say, and you'll see a nervous Mr. Gallante finally looking helplessly at the TC after being persistently interrupted, and some on the TC trying to progress despite the difficulties, trying to get through a list of questions that had been submitted in writing.
"Obstructed meeting" is the right word for what went on that night. But we just keep having the same disagreement over and over, Ffof. You defend almost everything done in the name of protesting the reval. I think the protests quickly turned into something unproductive and an obstacle to arriving at a solution that's in the best interests of the whole town. But I appreciate your signals that you want to keep it humorous. Seriously.
Anybody able to answer the question about arms-length sales in case Octofoil is still trying to work with the numbers? |
Fairtax01
| | Posted on Sunday, February 18, 2001 - 5:50 pm: | |
I spoke with Glen Sherman from Certified after the Friday TC semi-closed meeting where Sherman was present. Mr. Sherman told me that they had excluded some but not all bidding war sales. I don't know if Mr. Galante later used the same sales as Certified did or not. I'm still not clear how they arrived at the "blanket reductions" - if that was by putting in different sales comps or some other methodology was used.
Lydia |
Townie
| | Posted on Sunday, February 18, 2001 - 10:27 pm: | |
OK. Still with us Octofoil? I thought I heard Gallante say, in the context of discussing bidding wars, that some sales were excluded which he classified as non-arms-length. Lydia says Certified told her it excluded some but not all bidding war sales, and I guess the term non-arms-length never came up. But some high value sales were excluded it seems.
I think Jerry is saying that, but I'm still not sure what to make of Jennie's post. Maybe she'll be back to clarify.
(Lydia, as an aside, I thought that some of the "blanket" reductions were made for noisy streets, but where I heard that, I don't know.)
Ffof: Others experienced the meeting at the school the way I did. I culled these quotes from previous posts to the message boards:
"As Ed Galante tried to say last night before being shouted down . . ."
"Hope it turns out to be really useful and not another opportunity to harass Mr. Galante without letting him present the info we need."
"Before he was shouted down, I think Mr. Galante was saying that sales in 1998 and 1999 were adjusted UPWARDS towards the peak of the bubble. This does not give weighting to 1998 and 1999--rather, it adjusts everything up. Is this what happened? Did others hear it this way?"
I hope the upcoming open town meetings, and maybe most especially the one to hear reports from the independent reviewers, aren't disrupted. I feel special arrangements were made and costs were incurred to provide this information to the town, and every taxpayer is entitled to hear it without interruptions. In general I wish the atmosphere at the meetings was more sincerely geared toward fact finding. |
Gerardryan
| | Posted on Sunday, February 18, 2001 - 10:55 pm: | |
Townie: yes I am saying that "certain bidding war
sales could have been excluded because they were classified as non-arms-length". |
Gerardryan
| | Posted on Sunday, February 18, 2001 - 11:00 pm: | |
Lots of folks have said very nice things about me and about Larry as it pertains to these maps. I appreciate it, and I think Larry deserves most of the pats on the back for figuring out MapPoint and how to link my spreadsheet in.
That said: any analysis from the maps? What are they telling people about sales trends, the bubble, neighborhood valuations, etc?
Oh, BTW, Octofoil: very easy to put a table from Excel onto the board:
- copy the region from excel that you want to post
- paste in into the "Add a Message" dialog
- put the characters \table{ at the start
- put the character } at the end |
Alidah
| | Posted on Monday, February 19, 2001 - 11:04 am: | |
Can anyone help me understand what the "markup/markdown from 2000 sales" map means? Does that mean the difference between the value of the last sale on the street to the current valuations?
Thank you. |
Lseltzer
| | Posted on Monday, February 19, 2001 - 11:31 am: | |
Alidah: yes, exactly. To quote my message above it's "the difference between the assessment and sale price for houses which were sold during the year 2000. In other words, if the assessment is $50,000 higher than the year 2000 sales price, it shows a markup of $50,000. If the assessment is $25,000 lower than year 2000 sale price it shows a markdown of $25,000." |
Jennie
| | Posted on Monday, February 19, 2001 - 6:13 pm: | |
Townie: My understanding of the adjustment given to west side neighborhoods was that it was to offset the inclusion of bidding war sales in Certified's numbers. I know that bidding war sales were included in calculating my assessment because I saw the comparables used. If high sales were excluded, it wasn't in my neighborhood. |
Njjoseph
| | Posted on Tuesday, February 20, 2001 - 8:56 am: | |
Jennie, if that's true, we on the east side who were victims of bidding wars should have had our assessments reduced. We didn't There's something else at play. |
Teach66
| | Posted on Tuesday, February 20, 2001 - 9:11 am: | |
I'm getting confused again. Njjoseph, how were you a "victim" of the bidding wars? How did the whole east side become "victims"? How did we even get an "east side"?? |
Njjoseph
| | Posted on Tuesday, February 20, 2001 - 9:41 am: | |
Teach -- victim may not have been the right word, but I can't think of another.
We got an east side because we have a self-appointed west side.
What is the intent of your posting? None of this has anything to do with my original point, which is that I don't believe the west side (as stated as such in Jennie's post) had their assessment reduced because of bidding wars, since the east side (opposite of the term west side as used in Jennie's post) did not have their assessments reduced because of bidding wars. What is correct procedure in one part of town should be correct in all parts of town, otherwise the methodology is flawed. |
Townie
| | Posted on Tuesday, February 20, 2001 - 10:14 am: | |
Jennie and Njjoseph:
My impression has been that what were excluded were "non-arms-length" sales. Those are what I would call private sales, where houses changed hands without being put on the public market. Those sales can be very low (your dad sells you his house) or apparently they can also be high (My sister offers my neighbor $50,000 more than the likely asking price when she hears my neighbor might sell because she wants to move next door to me). I have the impression that there have been a number of private sales on the westside in recent years where people privately paid an above-market premium for a house they really wanted very badly. And that these deals were struck apart from any bidding war. There were only two, not three or more, parties involved. I think the rationale is that, whether the non-arms-length sales were high or low, they really don't reflect normal market conditions, and therefore can't be used as comparables.
At the same time, all the other public bidding war sales were included on the westside in Certified's calculations and I believe still are part of the final calculations. So maybe the difference is the absence of private sales in your neighborhoods.
But others may have more information that I do. Take whatever I say as just my understanding, and I could be wrong.
kathleen |
Njjoseph
| | Posted on Tuesday, February 20, 2001 - 10:22 am: | |
Kathleen, you've made my point. |
Alidah
| | Posted on Tuesday, February 20, 2001 - 3:34 pm: | |
LSeltzer: Thanks for the answer. I thought I perused the thread for answers before I posted, but I guess not.
However, I have another question: Does this category apply to streets that had no sales in 2000? That is, if the last sale was in 1999, for example.
thanks. |
Lseltzer
| | Posted on Tuesday, February 20, 2001 - 4:20 pm: | |
Alidah: No, it only applies to houses which were sold in 2000. |
Alidah
| | Posted on Wednesday, February 21, 2001 - 5:05 pm: | |
Why would there be such a range above and below selling prices to the taxes? Shouldn't assessments equal selling prices (taking into consideration arm length sales etc)? |
Alidah
| | Posted on Wednesday, February 21, 2001 - 5:07 pm: | |
Un, in my first sentence substitute "assessments" for "taxes." |
|
Closed: New threads not accepted on this page