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Archive for June, 2011

50% of Appraisers Would Leave Profession? Some Say Depression

June 20th, 2011

Bracing Ourselves For This Week’s Housing News as Summer Begins

On Sunday, Timothy R. Homan of Bloomberg got “ahead of the curve” with his report titled “U.S. Home Sales Probably Fell to Year’s Low.”  Mr. Homan wrote that the median projection of economists surveyed by Bloomberg News was for a 4.8% decline in home sales (new and existing) in May to an annualized rate of 5.11 million, the lowest monthly figure this year.  The National Association of Realtors (NAR) will be reporting later today on their existing home sales figure for May but the economists surveyed by Bloomberg predicted a decline of 5.0%.  A link to the Bloomberg report is found here: Home Sales Probably Dropped to Year’s Low: U.S. Economy Preview

Also writing on Sunday, David Streitfield of the New York Times discussed the huge foreclosure backlog existing throughout the country and cited the extreme example of New York where it would take 62 years for lenders to repossess the 213,000 homes in severe default or foreclosure if the current pace of activity went unchanged.  He reported that it would take 49 years in New Jersey, also a state like New York that handles foreclosures through the courts, while Florida, Massachusetts and Illinois would need about a decade.  Mr. Streitfield noted that in the 27 states where the courts do not play a role in the foreclosure process, the pace is reduced, citing time periods of 3 years in California and 2 years in Nevada and Colorado.  These statistics cited by Mr. Streitfield were from LPS Applied Analytics, a real estate data firm, which also reported that new foreclosure cases and repossessions were down by about 1/3 since last fall. Mr. Streitfield stated that “…some analysts suggest that banks are reluctant to take too many houses onto their books at any one moment for fear of flooding a shaky market.”  A link to the New York Times article is found here: Backlog of Cases Gives a Reprieve on Foreclosures

Reporting for CNBC last Friday, Diana Olick wrote that:
“All real estate is local, but confidence is national. Potential summer buyers, who are historically few and far between, will be watching the national numbers, as they try to time the bottom of the market, which is of course impossible to do.

You can’t time the bottom of this market, because it will likely bounce along the bottom for several years. You also have no historical perspective because we’ve never seen a crash like this ever before. The two greatest factors that will keep us bouncing are the huge volume of distressed properties and uncertainty over the direction of new regulation in the mortgage market.” 

Writing a day earlier after reviewing the monthly foreclosure numbers from RealtyTrac, Ms. Olick argued that the impact of foreclosures were everywhere and not limited to a handful of extremely distressed states.  Links to both of her reports are found here: US Real Estate: Struggling to Make a House Call on Confidence – CNBC

Foreclosure Effects Are Everywhere – CNBC

On June 12th, David Paul (President of Fiscal Strategies Group) wrote in the Huffington Post of the long wait ahead for the housing market to recover and a link to this article is found here: Those Waiting for a Housing Market Rebound May Have a Long Wait Ahead

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US Housing Crisis is Now Worse Than Great Depression Says CNBC’s Jeff Cox

On June 14th, Mr. Cox published an article under this title when he noted that Case-Shiller data indicated that prices have now fallen 33% since the market collapse, a figure greater than the 31% drop in the period that began in the late 1920s and culminated in the early 1930s.  A link to the full report by Mr. Cox is found here: US Housing Crisis Is Now Worse Than Great Depression

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20 Cities You Don’t Want to Live in… Yet

You know that you don’t want to look at that traffic accident on the other side of the highway, yet, it is hard not to.  Here is a link to a slideshow, courtesy of CNBC and City-Data.com that we dare you not to view (while the “rust belt” is well represented, there are also a few surprises here): 20 Cities You Don’t Want to Live In…Yet

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Just What Are Appraisers Thinking About All of This?

According to published reports, 89 appraisers have more than the current depressed state of the housing market to be concerned about as they have been named in the lawsuits filed by the FDIC against LSI and CoreLogic that we discussed in our last newsletter.  Again, we know your curiosity is too great to avoid posting this, so here is a link to a list that we found on the website aboutfloridalaw.com from June 16, please remember that we have not confirmed this list and nobody has been convicted of anything yet: 89 Different Florida Appraisers Are Listed in FDIC’s Claims of Fraudulent Appraisals in Lawsuit Against Lender Processing Service: Is Your Appraiser On The List?

While the number of appraisers engaging in unprofessional or fraudulent activity is a small fraction of the overall number of appraisers, a growing number of appraisers do express dissatisfaction with their profession.  The following two links graphically depict the result of AppraisalPort polls of appraisers showing their unhappiness and the reasons why:
Poll: If you could, would you get out of the appraisal business right now?

Poll: If over 50% of appraisers said they would leave the business if possible, in your opinion, what is the main reason why?

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So, Where Do We Go From Here?

In the present political climate, it does not appear as though actions to support the residential or commercial real estate markets have support and much energy will need to be expended just to counter regressive legislation and regulations that would further tighten credit and reduce demand.  Not only are prospective homebuyers and purchasers of small commercial property nervous, but lenders have clearly indicated their concern about exposure in a market where the bottom cannot be seen.  On June 16th, Bloomberg’s Dakin Campbell reported on the withdrawal of Wells Fargo and Bank of America from the reverse mortgage business, with Wells Fargo reportedly laying off 1,000 employees.  The article reported that a spokesperson for Wells Fargo in a statement distributed by Business Wire said that “The decision was made based on today’s unpredictable home values.”

Reporting for Bloomberg on June 17th, Bob Willis and Alex Tanzi discussed just how out of sync Main Street was with Wall Street.  They noted that a tight correlation between the Bloomberg Consumer Comfort Index and the Dow Jones Industrial Average that had lasted for more than two decades has broken down with their consumer confidence index currently stalled at recession lows while the Dow has risen 83% from its low in March 2009.

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Appraiser News Makes a Prediction

During the near term, price declines and lack of demand will continue with even greater percentages of the population impacted through inability to refinance due to lack of equity, inability to relocate due to same, lack of equity to tap into to pay for home improvements, etc.

The mountain of statistics that Americans not involved in the real estate industry have seen this year will, however, lead to pressure on those in power to do something and initiatives such as credits for first time homebuyers (just one initiative out of many needed) will be revisited and considered. 

A house is not a home.  America has always prided itself as a nation of homeowners, not a nation of renters, and government support for housing and homeownership has a lengthy history.  It is our opinion that the political discourse will change as more middle class Americans feel the pain caused by this Real Estate Depression and understand that support for housing and homeownership does not necessarily mean just bailing out bankers or people who never should have owned a home in the first place. 

America is a special place and I cannot believe that we can’t come together to solve this mountain of a problem.  Nobody can rationally deny the problem anymore so it is up to us to find solutions.  Appraisers can lead the way with their ability to interpret and describe what all of this information means.

One positive force that we see is the growth of the internet from its “messy adolescence”, as Arianna Huffington described it, into “…a brave new world of community, connections and engagement.” Writing in the Huffington Post on June 16th, she discusses how the connections built from trust over time on the internet lead us to believe the information they provide us with out of the overwhelming amount of information available online. As we become more sophisticated online and are better able to sort out the “real from the fake”, Ms. Huffington notes that the conversation becomes “authentic” or it does not make an impact.  Lastly, she notes that “…the grown-up Internet is all about engagement and community…”.  A link to the entire piece by Arianna Huffington is found here:
The Internet Grows Up: Goodbye Messy Adolescence

Appraisers have seen the explosion of information available on the internet and are connecting locally, regionally and nationally in many ways.  While we may not always agree on specific economic or political ideologies, the growing alliances that we form over particular issues can achieve much if we continue our efforts to help both our profession and our nation.

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Rates & Dates

Freddie Mac and the Mortgage Bankers Association (MBA) both announced that interest rates remained low in their most recent weekly reports.

Freddie Mac reported that rates for 30-year fixed-rate mortgages were essentially unchanged at 4.50% for the week ending June 16th in comparison with the 4.49% rate reported on June 9th.   

The MBA in its most recent Weekly Mortgage Applications Survey for the week ending June 10th reported a drop in its average to 4.51% from the previous week’s rate of 4.54%.   

In their press release of June 15th, the MBA also reported a 13.0% increase in mortgage applications during this most recent week, mostly due to the 16.5% increase in refinance applications with purchase applications rising at a lesser 4.5% rate.  Mike Fratantoni, the MBA’s Vice President of Research and Economics noted in the press release that:
“Mortgage rates have declined for 8 of the past 9 weeks. Coming off of the Memorial Day holiday, refinance application volume increased significantly, as borrowers jumped to lock in the lowest mortgage rates since last November.  The volume of refinance applications still remains 28 percent below levels seen at that time, as borrowers with an incentive to refinance remain constrained from doing so by lack of equity in their homes.”

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

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Ask Angie

We want to congratulate our most recent winner: Bob Allen, a Certified Residential Appraiser with AAS Valuations from Port St. Lucie, Florida. He was the first to accurately answer that Henry David Thoreau was the author of the quote "It is not enough to be busy, so are the ants. The question is, what are we busy about?", Erik Qualman noted that "We don’t have a choice on whether we do social media, the question is how well we do it" and that Woody Allen (not Yogi Berra) said that "Money is better than poverty, if only for financial reasons."

Today’s questions:

1. Who Said: “The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty."

a) Winston Churchill
b) Napoleon Hill
c) Donald Trump
d) Jamie Dimon
e) None of the above

2. Who said: “Everything is something you decide to do and there is nothing you have to do."

a) Sarah Palin
b) Rip Van Winkle
c) Tina Fey
d) Denis Waitley
e) None of the above

3. Who said: “The best place to hide anything is in plain view."

a) Anthony Weiner
b) Bernard Madoff
c) Edgar Allen Poe
d) Houdini
e) None of the above

The first person to respond with the correct answers wins a choice of one of the below:

One Free Regular Listing on AppraiserHelp.com

A Free Copy of the 12/10 UPDATED Directory of Appraisal Management Companies (Available Now to Members of AppraiserHelp.com and FHAAppraisers.com FREE!)

One Free Trade Show Pass to Valuation Expo 2011 in Las Vegas

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Tell us what you think!

We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: bill@appraiserhelp.com with your thoughts!

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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

Regards,

Bill Collins, Appraiser Help Inc.

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