Tuesday, August 30, 2005

Madison Real Estate

Terry Teachout writes:
• Total cost in 1937 of the 1,340-square-foot Herbert and Katherine Jacobs House in Madison, Wisconsin, including Frank Lloyd Wright's architect's fee of $450: $5,500

• The same amount in today's dollars, courtesy of Inflation Calculator: $73,341.81

(Source: Doreen Ehrlich, Usonian Houses)

Happens to be a house I've actually been in (a family acquaintance from not-Madison rented it for a semester). Anyway. I'd guess it's worth easily far in excess in $300,000, probably more like...$400,000 or $500,000? There you go: a house once in a far suburb that's now in a (relatively) close in suburb is an okay investment (at least quadrupled or quintupled in value in 68 years, so at least a 4 percent annualized return).


Blogger Tom Bozzo said...

The 2005 assessment for the Jacobs house is $252,000, but the house hasn't changed hands since the mid-eighties, so that's probably below market value. I'd expect there would be an FLW premium, but more than $400,000 would be a lot for a Westmorland house of that size. I'll have to drive by on the way home from work.

This also dramatizes how CPI understates inflation in construction costs using what were once traditional finishes, which are now mostly high-end (I'll throw a Usonian in that category); those can easily exceed $200/fsf.

4:26 PM  
Blogger Isaac said...

Right. I guess my perceptions of real estate values in Madison is deeply skewed by the first hand knowledge being limited to University Heights.

Word on the street -- a random real estate agent -- has it that homes in Madison are selling for about $60,000 or $70,000 above assessment, but this was in March or April, so maybe everything has changed.

The Usonian House is stunning aesthetically but shockingly unfunctional: the kitchen is designed for a family that orders take-out, for example (there is no counter space)...

10:41 PM  
Blogger Tom Bozzo said...

From what I can tell (as enough time has now passed since purchase of the current house that I'm no longer following the near-west side market obsessively), Madison houses that are impeccable or relatively affordable are still moving briskly. Existing-house inventory is high, though, and I've seen a lot of downward asking price adjustments, making me glad that I'm not a seller.

Assessments seem to have mostly kept pace with the market the last few years, but I think the models for the routine assessment adjustments didn't catch the start (in 1998-2000) of the runup in prices very well. So a place across the street that just sold (having been in the previous owners' hands for about 8 years) went for about 20% over assessment; our place had been revalued the year before we bought for some major remodeling, and we paid about 10% over. I've seen some places priced at or under assessment, including distressed houses in high-appreciation neighborhoods and the odd case of over-improvement.

The Jacobs house looks pretty neat, even if it will require an expensively clever kitchen remodel and the removal of a line of overgrown arborvitae clumsily screening it from passers-by.

4:21 PM  

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