Real Estate Analysis

Introduction

Through the process of real estate analysis, this report will attempt to "sell" a home (currently listed for sale) in the Third Ward neighborhood in Eau Claire, WI as well as determine its fair-market value. Additionally, it will identify a "target consumer" prototype in order to understand the market for this particular home.

In order to make these determinations, this report examines;

• the unique features of the home
• the location of the home (in the Third Ward neighborhood) within the context of the surrounding area
• future development affecting the value of the home
• a comparison of the home to other houses for sale or recently sold in the Third Ward

Data pertaining to homes for sale, the Third Ward Neighborhood, and surrounding regions comes from Zillow, the City of Eau Claire Comprehensive Plan 2015, and FindtheHome.com.

1524 Frederic Street

• 4 Beds ~ 4 Baths

• 3,398 sq. ft.

• Built: 1928

• Lot: 6,969 sq. ft. 

 Basic Features

• Fireplace

• Flooring: Hardwood, Tile

• Finished Basement, 600 sq. ft. 

• Detached Garage, 1 Space

Nestled deep in the quiet, cozy, historic Third Ward Neighborhood (see Figure 1) between downtown Eau Claire and the University of Wisconsin - Eau Claire campus, this expansive home at 1524 Frederic Street offers a high level of comfort amenities, accompanied by a degree of safety and prestige unparalleled in the city of Eau Claire. 

Figure 1: The home at 1524 Frederic Street within the historic Third Ward neighborhood in the heart of Eau Claire, WI

Unique Features

Making this home stand out, 1524 Frederic Street additionally features:

• An ideal 16 x 23 ft. loft above detached garage

• Cedar-shake siding

• Picturesque Porch

• Master Bedroom and Bath

• Dramatic use of windows

• Extensive Renovations
• Electrical
• Plumbing
• HVAC
• Roof

This home, built in 1928, possesses character and style newer

homes simply cannot match while also featuring essential 

updates ensuring this house matches modern homes in both quality, longevity, and future value.

Third Ward Neighborhood

Location

The historic Third Ward neighborhood is ideally positioned within the city in terms of access (see Figure 2). Surrounded to the east and south by a high ridge and, at the base of the ridge by the scenic Putnam Trail, this neighborhood possesses an element of solitude. 

On the other hand, with the bustling UWEC Campus to the west (census tract 17) and the re-energized central business district to the northwest (census tract 11.01), it retains a position near the cultural and intellectual heart of the city (see Figure 2). 

Figure 2: The Third Ward neighborhood is part of Census Tract 17

Source: Eau Claire Comprehensive Plan 2015

Housing Stock

Comparing the housing stock in the Third Ward Neighborhood Census Tract to others in the city of Eau Claire reveals that it possesses the oldest overall housing stock in the city with the smallest percentage of houses built after 1970 and, consequently, the largest precentage of houses built pre-1970 (see Figure 3). 

Figure 3: Percentage of Housing Stock per Census Tract in Eau Claire  based on the year the home was built

Source: Eau Claire Comprehensive Plan 2015

While the housing stock in the third ward is the oldest in the city, the homes in the part of the Third Ward neighborhood where 1524 Frederic Street is found possesses exclusively between 0 - 2 defects (see Figure 4), among the lowest in the city. Measuring this neighborhood with the more college-student inhabited portion to the northwest would paint an entirely different picture. However, the high quality of the homes surrounding 1524 Frederic Street is very apparent. 

Figure 4: Average of Number of Defects in homes in the city of Eau Claire

Source: Eau Claire Comprehensive Plan 2015

The impeccable quality of the homes likely contributes to the Third Ward neighborhood possessing the highest percentage of houses valued at $150,000 + by a considerable margin (see Figure 4). This is despite Census Tract 17 also including an area of extensive college rental units. Therefore, the area around 1524 Frederic Street likely contains almost exclusively homes exceeding $150,000 in estimated value. 

Figure 5: Value of Owner Occupied Housing Percentages by Census Tract for the city of Eau Claire

Source: City of Eau Claire Comprehensive Plan 2015

As noted earlier within this section, the Third Ward Neighborhood also includes college rentals, and thus college-age students. Using ESRI Tapestry Segmentation to gain a better understanding of this neighborhood would appear to contradict the data presented thus far. It indicates that the Third Ward falls 100% into the 'College Town' tapestry defined by non-family households, low-rent apartments, and people with limited income (see Figure 6).

Figure 6: ESRI Tapestry Segmentation indicates that the Third Ward neighborhood is 100% College Town

Further data dispels this notion, showing that, while the rental percentage is just above 50%, this leaves another 48% approx. of single family homes (see Figure 7). 

Figure 7: Percentage of Rental Occupied Housing by Census Tract in the city of Eau Claire

Source: City of Eau Claire Comprehensive Plan 2015

At first glance, this percentage might be enough to detract some people from this area a closer look reveals two completely different sections within the Third Ward neighborhood. The pattern of land use shows that the college rentals are located to the north and west while the south and east remains exclusively single-family residential (see Figure 8). 

Figure 8: Pattern of land use in the Third Ward Neighborhood of Eau Claire, WI

Source: City of Eau Claire Comprehensive Plan 2015

Demographics

Taking a look at the people who reside in the Third Ward Neighborhood, the expected high percentage of college students is found (39.42%). However, and notably, the second-largest age group in the Third Ward is children and teenagers indicating that there are a large number of families living in houses such as 1524 Frederic Street in the more exclusively single-family residential section. 

Figure 9: Age Distribution of Third Ward Residents compared to larger surrounding regions

Source: Findthehome.com

Taking a look at annual income, the college student population influence gives the Third Ward a higher percentage of residents below $25,000 than the surrounding city, county, state, and country (see Figure 10). However, tied to the approx. 40% of single-family residential homes in the neighborhood, 40% of residents have an annual income above $50,000. It is safe to conclude that most single-family residential homes in the area are occupied by people with this income or higher.

Figure 10: Annual Income of Third Ward Residents compared to larger surrounding regions

Source: Findthehome.com

Important to note, the Third Ward neighborhood possesses significantly higher percentages of people with graduate degrees compared to surrounding regions (see Figure 11). This reflects both the proximity to UWEC as well as the quality of the homes attracting people with white-collar jobs reflecting their high level of education. 

Figure 11: Highest Degree Attained for Third Ward Residents compared to larger surrounding regions 

Source: Findthehome.com

The commute times for residents in the Third Ward, noticeably lower than the larger surrounding regions (see Figure 12). also suggest that this region has a high level of access. Access possesses value, and professional residents of this neighborhood can afford to pay for it. 

Figure 12: Commute Length for Third Ward residents compared to the larger surrounding regions

Source: Findthehome.com

Future Development

The area around the Third Ward including the central business district of downtown Eau Claire is growing exponentially with many recently completed projects such as Phoenix Park, new major business additions like JAMF Software and RCU Corporate, and new high-end apartments. Not only that, but there are several future developments that bode well for the value of the Third Ward Neigborhood. These include the just-approved Fine Arts Center as part of the Confluence Project currently underway (see Figure 13), the UWEC Event Center and YMCA Tennis Center locating across the street from each other on Menomonie Street (see Figures 14 and 15), and the conceptual Cannery District redevelopment (see Figure 16) potentially featuring a public market as well as two new brew pubs already in place. All of these additions are located within two miles of the Third Ward neighborhood.

Figure 13: Confluence Project consisting of Fine Arts Center and Mixed-Use Development Property

Figure 14: UWEC Events Center conceptual design

Figure 15: YMCA Tennis Center conceptual design

Figure 16: Cannery District conceptual design

Housing Comparison

Two houses in the Third Ward sold in 2015 are comparable to 1524 Frederic Street. These homes at 1718 Frederic Street and 334 Lincoln Avenue both feature four bedrooms, more than two baths and two-car garages. In addition, they are all fairly similar when it comes to square footage (see Figure 17). 

Both homes sold for $240,000 setting a baseline for the sale of 1524 Frederic Street. The home at 1718 Frederic Street sold below its Zillow estimate (likely valued higher due to being built in 1975) while 334 Lincoln Street sold very close to its estimate. 

The one thing potentially impacting 1524 Frederic Street in a comparison to these homes is lot size. This is a large determinant of property value especially in an high-end, established neighborhood with limited or no growth potential. Still, 1524 Frederic Street received a Zillow estimate between $40,000 to $70,000 lower than the comparison properties. The additional difference appears to be a reflection that Zillow has not taken into account the extensive renovations done on the property. 

Figure 17: A comparison of two houses similar to 1524 Frederic Street that were sold in 2015

An additional comparison to homes currently for sale in the Third Ward reveals that 1524 Frederic Street is ideally suited to take advantage of the housing market.  Three other relatively similar homes in number of bedrooms and bathrooms. as well as square footage all are priced in $10,000 increments above its current asking price. Lot size appears to be the main differentiating factor for the other three comparison houses which helps place 1524 Frederic Street at or below them in value. The Zestimate differentials between the homes is exorbitant but this seems to be an aberration negatively reflecting on the home.

Figure 18: A comparison of three houses similar to 1524 Frederic Street that are currently for sale

Conclusion

Based on overall quality, the strong set of amenities offered, an ideal location of 1524 Frederic Street in the heart of the historic Third Ward district, and demographics pointing to high income and professional occupations, the following target market is recommended.

Target Market

• Families with children

• Annual Income >$75,000

• White collar work force reflecting graduate/professional/doctorate degrees

• Progressive, community-oriented people

Suggested Sale Price

In addition to the above-mentioned characteristics of the home and the neighborhood setting, this home has a window for sale between $240,000 (from the price of similar homes recently sold) and $279,000 (based on the prices of slightly better homes for sale in the Third Ward). 

By sliding in just underneath the prices of this better homes, they will be able to attract potential home-buyers who do not see a great deal of difference between these homes for sale in the Third Ward. While the value of the home may actually be closer to the homes recently sold at $240,000 the market allows this home to be priced at:                                                                                                                                                                        $258,900