What Determines Property Values

SCCA CC&R'S have kept property values down!

What Does and Does Not Determine Property Values

By Therese Daniels

Among the 10 letters I received in eight days last month for assorted alleged violations, are statements like this: “One responsibility is seeing that all residential property is maintained at a level that will not detract from overall property values.” In the SCCA UPDATE that explains the proposed amendments, they talk about wanting to make these changes to keep up property values in the core of Sun City. They want to create architectural rules, reduce rental to 15%, and control landscaping. What is amazing to me is what qualifies the SCCA board to determine property value? What background as landscapers, architects, or realtors do they have to assume they know value? Judging by the tired, sterile, and dated way Sun City Core looks, I would have to say they don’t know the first thing about beauty and property value..



During my past thirty years as a realtor I saw markets rise and fall, interest rates range from as high as 22% and as low as 3.5%. Neighborhoods, communities, and all kinds of properties appreciated or depreciated according to the general market conditions of the times across the nation. The classic real estate definition of value is what a willing seller and a willing buyer agree upon in a reasonable amount of time. New home buyers in HOA communities with abundant CC&R’s think the enforcement of the CC&R’s is what helps keep up their property values. They are convinced by the builders that a well landscaped, neat community is more desirable than a run down community, because no one wants to live in a deteriorating neighborhood. Builders have to convince people this is a good idea. How else can they justify $150 to over $10000 a month homeowner’s dues? Almost everyone believes this is what keeps up property value. While there is wisdom in that concept, it ain’t necessarily so.



“It ain’t necessarily so.” Because, if it were “necessarily so,” the worst-gang-infested, curb-service-drug-and-prostitution-deals-with-constant-gun-fights-neighborhood in Venice, California wouldn’t be selling 955sq. ft. to 1200 sq.ft. from 1920 to 1940’s built tear down houses with weeds, rats, and trash on 3000 sq. ft. to 5000 sq. ft. lots with for $800,000 to over $1,500,000. How do you explain that? Here are properties that give the bird to everything you thought you knew about property value. They are getting prices you could never believe. What fool would pay over $1,000,000 to live in a slum? Brand new 1500 to 3000 sq. ft. houses in Menifee Valley on 7000 to 8000 sq. ft. beautifully landscaped in a conforming community are only selling from $450000 to $650000. Tish, tish! Might there be something know-it-all-people don’t know when it comes to property values? There are lots of homeowners who believe if there are CC&R’s, it will keep all the houses on their block perfectly landscaped and thus keep their property values up. They believe this is a way to “Control” their neighbors. If that were so, then what happens to their values if the market goes sideways? How is it that all the properties under HOA protection depreciated as low as 50% in the 90’s? How are CC&R’s going to protect value if suddenly the lender money dries? What they don’t realize, (they who think they do no wrong) are also being “controlled”. So what if there is an old junker on the block? The reality is: If there is a junky, funky deteriorating property on your block, it will not depreciate the value of your property. Only general market conditions can do that. If your property is the neatest and most beautifully landscaped property on the block and market conditions are hot, you will get the highest and best price for your property in spite of that old funky, junky eye sore property you would love to tear down. If market conditions are poor, you may have to keep your property on the market for a very long time—even though your property may be the most beautiful on the block. If that old funky, junky property ever goes on the market, (hot or cold market) chances are it will sell for below the market to some “fixer/upper” addict. Then it will become gorgeous. I get more requests for “fixer uppers” than for any other type of property on the market.

Please, do not misconstrue my words and take this to mean I am advocating property owners to let property deteriorate. I am not. I am merely pointing out an interesting fact about property value. I love to see well kept properties.

The point of all this, is that market conditions, location, lender money, interest rates, supply and demand, and the amenities of home and community create value. Holding rentals to 15%, harassing residents for CC&R violations does not create value. It creates de value. For most people, purchasing a home is the biggest investment of their lifetime. Investment it is. Most people who buy want to get the benefit of appreciation so they can build equity. They maintain their properties because of pride of ownership. They add upgrades, improve the landscaping, and keep up their properties. They have been doing this since before the revolution. They have been doing this long before there were HOA’s, CC&R’s, and code enforcers. As a matter of fact there is a neighborhood in Sun City between Bradley and the Freeway that was built in 1989. Though there is an HOA, they pay no dues and there are no code enforcers. Everywhere you look, one property seems to be more beautiful than the other. This is an absolutely lovely neighborhood. I keep wondering how all these families have managed to create such a lovely neighborhood without Donald Miller and his war chest of CC&R’s.



When I return to Sun City core from that or other new neighborhoods, I notice how archaic the core properties look. It looks treeless, sterile, boring and tired. When it was built in the mid sixties, it was state of the art. The Web and Presley homes were well designed and even ahead of their time. For their day, they were fabulous. They are still great homes today. During the past 40 years new materials, new energy efficient concepts, new designs, and new living styles have come forward. With the reign of the computer, almost every home has a computer or home office room. Many homes have their own gym space or room. Master bedrooms with their master baths are huge. Some even have sitting rooms with them. Who ever thought of all that in the mid-sixties? Sun City is surrounded with the latest in new homes. Sun City needs to catch up with the times. As the old resident’s transist from one life form to another, the new and younger seniors are moving in. They want the best this world can offer them. Sun City simply needs some upgrading to bring it into the 2005 standards and amenities. New home buyers in the core want to do so. In this very hot climate, Sun City needs plants, shrubs, and trees. It needs about 1000 times more trees, plus shrubs, and bushes to beautify the landscape and help create shade to cool Sun City down. The CC&R’s are 45 years old. Is it any wonder it looks antiquated with CC&R’s that restrains freedom of expression? The long term residents don’t want to do anything really beautiful to their properties because no matter what, there is some CC&R that says they can’t. There’s always some sneaky, vindictive neighbor willing to file a written complaint. There’s always Donald Miller to intimidate them backed by the support of the board who think he is doing a great job. The new buyers come here filled with enthusiasm and plan to bring these old houses up to date. Then they discover the hidden monsters, the SCCA Board. Not being able to build your “castle” because of some archaic CC&R’s is crushing to people. This is a pitiful way for people to have to live in this twenty first century during their golden years. This is oppression. The reason for all this is the ignorance of the SCCA Board about what determines property value. They simply assume the CC&R’s they have been brow beating residents over were Gospel. They are not interested in property beautification and improvements, they are only interested in forcing people to conform to out dated, ridicules standards that no longer apply to today’s modern life style. Now they want to set themselves up as architectural censors of esthetics. The board of SCCA has a whole lot of information to gather before it knows or can determine property value or esthetics. Property value is not determined by CC&R’s. Just drop the age limit—which is governed by CC&R’s—to 45 and watch property values soar!