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Appraising Sandy

April 22nd, 2013 by Bill Collins Leave a reply »

Hurricane Sandy is Keeping Northeast Appraisers Busy

As we approach the six month anniversary of “Sandy’s” destructive landfall, many appraisers have been faced with an onslaught of appraisal assignments unlike those previously encountered.

The Appraisal Institute, in Guide Note 10 “Development of an Opinion of Market Value in the Aftermath of a Disaster” offers guidance to appraisers and their clients in the aftermath of a natural or other catastrophic type disaster.  It notes that certain characteristics of market value are absent in a “chaotic or unstable market” following a disaster and that:
“Quite often, in the aftermath of a disaster, these characteristics are absent from the transactions that occur-if any occur at all.  For example, buyers and sellers might choose to act before they have full information.  Because of the disaster, they might be extraordinarily motivated to buy or sell.  Exposure times for properties on the market might become extended, or might suddenly become contracted.  Sometimes, market activity will virtually cease altogether in the aftermath of a disaster…The lack of data only further exacerbates the challenge for the appraiser”.

The Appraisal Institute’s Lum Library is a great resource for appraisers faced with challenging (and stressful) assignments related to the storm.  A link to the library (available to members and candidates of the Appraisal Institute) is found here: Appraisal Institute Lum Library

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AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers support and grow their businesses. Please consider supporting us today by seeing what we and our sponsors have to offer.

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Recent Real Estate Reports

In a report released yesterday, John Krainer (a senior economist of the Economic Research Department of the Federal Reserve Bank of San Francisco) discussed the apparent “disconnect” between near historically “low cap rates and weak fundamentals” in the commercial real estate market.   He concluded his analysis by attributing the “improvement in commercial real estate cap rates” to the “recovery in the credit markets” and states that:
“The concern is that low rates may be boosting commercial real estate prices excessively. At this point, this concern does not appear to be warranted. It’s true that cap rates are at historic low levels. But it’s important to compare cap rates with other financial market yields rather than with cap rates during other periods. Many market interest rates are at or near historic lows, so low cap rates are not anomalies”.  

A link to the entire report by Mr. Krainer is found here: Commercial Real Estate and Low Interest Rates

In another news release yesterday, the National Association of Realtors (NAR) reported that sales of existing-homes declined by 0.6% in March from a downwardly revised figure in February.  This figure, though, is 10.3% higher than the NAR reported in March last year.  Lawrence Yun, the NAR’s chief economist, stated in the release that “Buyer traffic is 25% above a year ago…” and the release cited the “limited inventory” as one of the factors in the month to month sales decline.  At the same time, however, housing inventory increased by 1.6% to 1.93 million existing homes available for sale.  The rise in inventory (which is still down 16.2% from one year ago) at a time where buyer traffic is up appears to be attributed by the NAR to tight lending conditions.

The NAR also reported that the median existing-home price last month was $184,300, up 11.8% from March of 2012.  Sales of “distressed homes” made up 21% of transactions last month (down from 25% in February and 29% in March 2012) with foreclosure sales comprising 13% and short sales 8%.  The NAR reported that foreclosure transactions sold at 15% below market value and short sales were discounted 13%.

Median time on the market was reported by the NAR to be 62 days last month, compared with 74 days the previous month and 91 days in March of 2012.  First time buyers were involved in 30% of last month’s sales, the same as in the previous month and down from 33% in March of last year.  30% of transactions last month were all cash sales, down from 32% in February 2013 and 32% in March of 2012.  Investors were involved in 19% of the sales last month, a decline from 21% in the previous month and 23% in March of 2012.

Sales in the Northeast were unchanged from one month earlier and up 6.8% from March of 2012; median prices were up 3.0% from the same month last year to $237,000.  Midwest existing-home sales rose 1.8% from February 2013 and 14.9% from the same month last year; the median price was up 7.8% from one year ago to $141,800.  Existing-home sales in March declined by 1.5% from the previous month but were up 12.7% from March of 2012; the median price increased by 10.4% from March of 2012 to $161,700.  Sales of existing-homes in the West dropped by 1.7% month to month but rose 4.4% from a year ago; the median price rose by 26.1% from March of 2012 to $258,100.

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AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers support and grow their businesses. Please consider supporting us today by seeing what we and our sponsors have to offer.


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Appraisers Approaching License Renewal: McKissock’s 7 Hour 2012-2013 USPAP Online Course is Now Available in Most States

McKissock Education, the official provider of the Appraisal Foundation’s online 2012-2013 USPAP courses, is now available in most states. Last year, the Appraisal Foundation and McKissock announced their partnership and the online course is now available in most states. See if courses are available in your area and save up to 20% on course fees by going to our Online McKissock Portal.


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Rates & Dates

Freddie Mac and the Mortgage Brokers Association (MBA) both reported declines in mortgage interest rates in their most recent surveys. 

On April 18th, Freddie Mac reported that 30-year fixed-rate mortgages were down to 3.41% from the previous week’s rate of 3.43%. They also noted that last year at this time the 30-year rate was 3.90%. 

The MBA in its most recent Weekly Mortgage Applications Survey released April 17th, for the week ending  April 12th, reported that 30-year rates with conforming loan balances ($417,500 or less) decreased to 3.67% from the previous week’s rate of 3.68%.   The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) also declined to 3.77%, down from 3.79% one week earlier.  Rates for FHA backed mortgages fell to 3.37% from the previous week’s rate of 3.43%. 

In their press release of April 17th, the MBA reported an increase of 4.8% in mortgage applications.  Refinance applications represented 75% of all applications, unchanged from the previous week’s percentage but at the highest level in three months. 

The MBA also announced on April 17th that the volume of commercial and multi-family loans increased in 2012 to $244.2 billion, a figure that is 33% higher than the previous year.  Fannie Mae, Freddie Mac and the FHA accounted for $77.6 billion in originations last year with commercial banks and savings institutions next with $56.9 billion in loan volume.  Multi-family properties led the way with $103.2 billion in originations followed by retail properties, office, industrial, hotel/motel and health care.  Jamie Woodwell, the MBA’s Vice President of Commercial Real Estate Research stated that:
“The multifamily market continued to be a major driver of activity, and nearly every investor group increased their activity from the year before.  With a continuation of low interest rates and improving property markets, originations are on track for continued growth this year.”

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 would first like to congratulate our most recent winner: California appraiser Kathy Christianson of Five Star Appraisals.  Five Star Appraisals covers the central California counties of Alameda, Contra Costa, San Joaquin and Solano.   Kathy was the first to answer correctly that Robert Shiller stated (on 1/24/13) that “The housing market has been declining for six years now, it could go on, that’s my worry” and Groucho Marx exclaimed "I was married by a judge.  I should have asked for a jury”.

Today’s questions:

1. Who Said: "Markets can remain irrational longer than you can stay solvent."

a) John Maynard Keynes
b) Alan Greenspan
c) Groucho Marx
d) Jamie Dimon
e) None of the above

2. Who said: "Markets are constantly in a state of uncertainty and flux and money is made by discountin gthe obvious and betting on the unexpected."

a) George Soros
b) Howard Marks
c) Harpo Marx
d) Robert Shiller
e) None of the above

3. Who said: "Outside of a dog, a book is man’s best friend. Inside of a dog it’s too dark to read."

a) Groucho Marx
b) Chico Marx
c) Harpo Marx
d) Michael Hart
e) None of the above

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

One Free Regular Listing on AppraiserHelp.com

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

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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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