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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (317391)	12/31/2006 4:23:48 PM
From: tejek	Respond to of 1578012

Big houses crush value of little ones Tear-down trend makes many lots worth more than dwellings There are actually two issues here. One has to do with tear downs and what zoning allows. The other has to do with the way appraisers determine value. The first became a problem starting in the late 80s in Beverly Hills. At that time, no city had experienced the tear down phenomenon.....at least not in recent history where single family houses were torn down for single family houses......usually single family was torn down for apts. Consequently no one knew what to do about it. Finally, zoning laws were revamped discouraging tear downs by making new single family construction on the site very prohibitive. Of course, not all communities adopted that approach in Los Angeles and tear downs continue unabated in some parts of the metro area. The second issue has to do with how appraisers determine value. It became a big issue in the 1980s in neighborhoods where historic properties were being restored. As you well know, there are three ways an appraiser can determine value. The one most often used is similiar to the way accountants depreciate the value of housing........they give each component of the house a certain life value denoted in years. As the life of that component expires, the component's value drops to zero. The appraiser calls it obsolescence. Over time, the value of the structure drops to zero. To get around that problem with historic properties so that they are able to get a loan, the appraisers were forced to use another appraisal method: the cost of component replacement to determine value. As simple as that sounds, it took many years and court battles to get lenders and appraisers to use that approach. I am surprised it is just happening to Nashville now........but I am not surprised that some parts of Nashville are encouraging tear downs. Tear downs mean more tax money.