- Does Anyone Doubt a Double Dip in the Real Estate Market?
- Mortgages and Modifications, Both Difficult to Obtain
- Financial Oversight, or the Lack Thereof?
- Some Good News? Let’s hear it from Lawrence Yun, Chief Economist for the National Association of Realtors
- Appraising the White House: Our Readers Respond
- Rates & Dates
- Ask Angie
- Tell us what you think!
- Closing Remarks
The negative reports continue, including an article in Monday’s Wall Street Journal by Nick Timiraos. The article cited the Wall Street Journal’s latest quarterly survey of market conditions which found that housing prices declined in all of the 28 major metropolitan areas that they tracked during the last quarter of 2010 in comparison with the same quarter in 2009. The article also noted that “The size of the year-to-year price declines was greater than the previous quarter’s in all but three of the markets, the latest indication that the housing market faces considerable challenges." Mr. Timiraos also noted that the rising inventory of homes in many markets along with the weak demand and tight credit conditions.
The Standard & Poor’s/Case-Shiller index for November, released on January 25th, reported similar findings with 16 of the 20 cities showing year to year price declines and 19 cities showing declines from October. David Blitzer, chairman of the S & P 500 Index Committee is quoted by CNBC.com as saying that: “Everything in this report is unfortunately still sagging and still pointing downward” and that "a double-dip could be confirmed before Spring.” A link to the CNBC.com article and a video clip of David Blitzer is found here: Price Drop Points to Likely Double Dip in Housing Market
A new book by Yves Marchand and Romain Meffre called Ruins of Detroit provides what the Huffington Post described as “haunting images” of that city’s decline in an article on January 26th, an illustration of one of the hardest hit regions in our country. A link to this article and to a slideshow of some of the book’s disturbing photos is found here: Haunting Images of Detroit’s Decline
Yesterday, CNBC.com’s Diane Olick reported on just released Census data which indicated that 11% of the homes in the United States were now vacant, a statistic that she finds “more concerning” than declining homeownership rates.
Bloomberg.com reported yesterday on Congressional proposals by both Republicans and Democrats that would make mortgage loans more difficult to obtain. The article notes that the concern of lawmakers and regulators to “…make the market less vulnerable to another credit crisis…” will result in fewer borrowers qualifying for loans and a continuing decline in homeownership rates. The article cites Census Bureau figures stating that ownership rates, which peaked at 69.2% during the middle of the last decade, have dropped to 66.9%. It notes the prediction of John McIlwain, a senior fellow at the Urban Land Institute, that homeownership rates will drop as low as 62%.
A link to the Bloomberg.com report is found here:
Mortgage Finance Overhaul to Raise Costs, Reduce Home-Ownership
On January 29th, CNBC’s Suze Orman vented her frustrations with the challenges and difficulties of obtaining mortgage modifications due to current bank practices and a link to this video is found here:
Moneylogue: Modification Trials & Tribulations
On January 27th, Bloomberg.com reported on the efforts of regulators to provide greater oversight of mortgage servicers in order to reduce the number of “botched” foreclosures and increase the number of mortgage modifications for struggling homeowners. FDIC chairwoman Sheila Bair is quoted in the article as saying that “If we fail to act decisively now to deal with the foreclosure crisis, we risk triggering a double-dip in U.S. housing markets” and that “The problem is serious, and the need for action is urgent.” A link to the entire Bloomberg.com report is found here: U.S. Regulators Target Loan Servicers to Fix Foreclosures
Last Thursday, the Financial Crisis Inquiry Commission released its lengthy report, which the New York Times stated involved 18 months of document review and interviews with 700 witnesses. Writing in the Times on January 28th, Joe Nocera credits the Commission with providing new details and good analysis in some areas but faults it for providing too many details without really analyzing some of the root causes of the financial collapse. Also writing one day later in the New York Times, Sewell Chan stated that:
“The final judgment of the official inquiry into the 2008 financial crisis — that it was an avoidable disaster, brought about by regulatory neglect and Wall Street recklessness — was an admonition to the government never to let it happen again. Most experts aren’t holding their breath.”
Interested in understanding the financial crisis better? My recommendation is to skip the lengthy Commission report and go see the academy award nominated documentary Inside Job, directed by Charles Ferguson and narrated by Matt Damon. You can check it out by clicking on the following link: Inside Job – Movie Website for the Documentary Film
Some Good News? Let’s hear it from Lawrence Yun, Chief Economist for the National Association of Realtors
O.K., let’s celebrate, open up some of that special Kool Aid and take in the most recent (January 27) comments of Mr. Yun on the housing market:
“Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions. Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit.” We know you want to hear more from our favorite real estate prognosticator, so here is a link to the January 27th press release of the NAR, including a video by Mr. Yun! (What is really fun to do is to go back and read his predictions from last year and see how they turned out!) Pending Home Sales Continue Uptrend
We received a variety of responses to our “solicitation for fee quotes” to appraiser the White House. While we don’t nearly have the space to include all of the responses, we want to thank everybody who e-mailed us. Here are several responses from appraisers who enjoyed imagining with us what such an assignment might involve:
“I am a residential appraiser…with approximately 20 years of experience, including 5 years working for a bank as a Mortgage Underwriter. Since this appraisal could not possibly pass muster with any underwriter in today’s world, the appraisal would surely be less complex….i.e. I probably would not have to supply an additional comparable that contained 132 bedrooms, 35 Bathrooms, 28 fireplaces, and 3 elevators which was located within one mile and closed within the past 6 month-HA HA!
Seriously, I believe a cost approach would be necessary in this case as “comps” would be few and far between. Comps may be located in competing countries, but how many national leaders actually sell their residences?
…it would be very complex. Turn time would be 12-18 months, and the fee that I would charge would be a minimum of $250,000 plus travel expenses (I would anticipate many trips to foreign countries for comp research and inspection. If hired, I would put all of my other clients on hold and only work on this assignment.”
New York State Certified Residential Appraiser
“(You certainly wouldn’t get)…an adequate appraisal for $25,000. More like $100,000 to $200,000, depending on the scope. Most importantly, you would need access. Presidents approval, security clearance, SS clearance, and there is no way they are going to show you every section, so, extraordinary assumptions would be required for sections where no access was granted, such as defense system sections, underground ‘bunkers’, etc.
Location value, land value, historical value, government value, prestige value, value of having your own missile defense system, etc. Value of breaking it apart and selling columns to people wanting to build a house with an actual part of the WH. At best, you would get a range of value that is somewhat credible…It’s in the eye of the beholder, and only relevant to those who could afford it. Without information on what Bill Gates, Oprah and a few thousand other people in the world might be willing to pay, a valuation would be useless."
–Raymond E. Willis,
Capt, USMC (Ret)
“How did Zillow come up with that value? Did they do a Cost Approach? That would have be the primary approach to value. They don’t build houses with bunkers like that anymore.
How do you put a value on an historical national treasure? What is the value of something that cannot be bought or sold?…What is Mount Vernon worth? The Hermitage? Mount Rushmore? Lincoln Memorial?
If this is for real, I’ll appraise the White House for traveling expenses from Florida to Washington, plus per diem, and yes it would include a Cost Approach.” –Reginald Bonanno,
Certified Residential Appraiser,
Freddie Mac reported that rates for 30-year fixed-rate mortgages rose to 4.80% for the week ending January 27th from the 4.74% rate reported on January 6th.
The Mortgage Bankers Association (MBA) in its most recent Weekly Mortgage Applications Survey for the week ending January 21st reported an average rate of 4.80%, a slight increase from the previous week’s rate of 4.77%.
In a press release dated January 26th, the MBA reported that mortgage applications were down 12.9% on a seasonally adjusted basis for the week ending January 21st but the four week moving average seasonally adjusted Market Index declined at a lesser rate (1.0%). Refinance applications constituted 70.3% of mortgage activity in this most recent weekly report.
Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey PMMS – Freddie Mac
Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association
We want to congratulate our most recent winner: George Hollenback, a Certified General Appraiser with Hollenback Appraisal Co. of Florida, Inc. in Fort Myers, Florida. George has over 22 years of appraisal experience with all property types and has also been an instructor of appraisal classes for more than 15 years. George was the first to accurately report that Ezra Solomon and John Kenneth Galbraith both have the following quote attributed to them: “The only function of economic forecasting is to make astrology look respectable;” he also accurately answered that John Kenneth Galbraith was the author of the quote “The conventional view serves to protect us from the painful job of thinking.”
1. Who said, "The biggest mistake people make in life is not trying to make a living at doing what they enjoy most"
a) Malcom Forbes
b) Warren Buffett
c) Sarah Palin
d) Hugh Hefner
e) None of the above
2. Who said: "You always pass failure on the way to success"
a) Donald Trump
b) Mickey Rooney
c) Napoleon Hill
d) Oprah Winfrey
e) None of the above
3. Who said: "It’s not that I’m afraid to die. I just don’t want to be there when it happens."
a) Mickey Rooney
b) Jon Stewart
c) Woody Allen
d) Jerry Seinfeld
e) None of the above
The first person to respond with the correct answers wins a choice of either:
One Free Regular Listing on AppraiserHelp.com
A Free Copy of the UPDATED Directory of Appraisal Management Companies (Available Now to Members of AppraiserHelp.com and FHAAppraisers.com FREE!)
We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: firstname.lastname@example.org with your thoughts!
We really hope you find our newsletter to be informative! If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue. If you want to look back at past issues you can see our archive at www.appraisernews.com
Bill Collins, Appraiser Help Inc.