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Appraisers In Hibernation

January 28th, 2014 by Bill Collins Leave a reply »

Frigid Temperatures, Frigid Business Conditions For Many Appraisers

January is the least favorite month for many appraisers with appraisal volume traditionally down and appraisers in many states slowed by icy roads and heavy snowfalls.  This month, however, may be the least favorite January ever with temperatures below zero in many areas and mortgage appraisal business down considerably.

Which makes it a good time to modernize your appraisal practice, download some new appraisal software (commercial appraisers check out our sponsor Narrative1), take continuing education classes and invest in the future growth of your appraisal practice.  It is also a good time to catch up with the year-end real estate reports and projections for the coming year.

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Putting 2013 To Bed: End Of Year Real Estate Reports

Last Thursday, the National Association of Realtors (NAR) reported that existing home sales rose 1% in December from their (downwardly revised) figure for November.  The December figure was 0.6% less than the same month last year but sales for all of 2013 rose by 9.1% from 2012 to 5.09 million.  This figure includes sales of existing single-family dwellings, townhouses, condominiums and co-ops. 

The median sale price in December was $198,000, an increase of 9.9% from December 2012.  Distressed sales (foreclosures and short sales) made up 14% of all sales in December, unchanged from November but down from 24% in December 2012.  10% of these sales were foreclosures while 4% were short sales. The NAR noted that some of the price appreciation was due to this falling percentage of distressed sales; they report that foreclosures and short sales sold in December at respective discounts of 18% and 13%.  Median time on the market for short sales was 122 days with foreclosure marketing time at 67 days and non-distressed home marketing time at 70 days.

First time home buyers made up 27% of the December’s sales, down from 28% in November and 30% one year ago.  Cash buyers closed on 32% of last month’s transactions, unchanged from November and up from 29% in December 2012. 
Sales in the Northeast fell 1.5% from November to December but were up 3.2% from December 2012.  The median price increased by 3.6% to $239,300 from one year ago.  Midwest sales fell by 4.3% from the previous month and 0.9% from December 2012.  The median sale price, however, increased by 7.0% to $150,700.  Existing home sales in the South rose by 3.0% in December from the previous month and by 4.6% from December 2012.  The median sale price increased by 8.9% from one year ago to $173,200.  Sales in the West rose by 4.8% from the previous month but were down by 10.7% from one year ago.  The median price jumped by 16% from December 2012 to $285,000.

Zillow reported their figures for December last Thursday which showed price appreciation of 0.6% from November and 6.4% from December of 2012.  Zillow projected an additional increase of 4.8% nationally in the next twelve months but cautioned that local and regional figures could vary widely.  Rents rose by 0.7% during the fourth quarter from the previous quarter and the increase from the fourth quarter of 2012 was 2.4%.

A link to the Zillow news release of January 23rd, which includes regional breakdowns, is found here:
Housing Recovery Entering Middle Innings in 2014, as Local Market Performances Are Expected to Vary Widely

On Sunday, writing in Econointersect, John Lounsbury discussed the question of why housing inventories are low (it’s complicated) and Calculated Risk’s Bill McBride predicted how much inventories would rise in 2014 (conclusion: 10% to 15%).  Links to both of these reports are found here: Why are Housing Inventories Low?

Question #9 For 2014: How much will housing inventory increase in 2014?

One further report on housing inventories: one week earlier, Redfin released their report which includes regional breakdowns, a link to which is found here: Dwindling Inventory Drove Atypical December Price Growth

The Lincoln Institute of Land Policy published an article in this month’s issue by James Alm, Robert D. Buschman and David L. Sjoquist titled “How Do Foreclosures Affect Property Values and Property Taxes”.  The (surprise) conclusion was that foreclosures had a negative impact on property values and a negative impact on property tax revenues.  A link to this report is found here: How Do Foreclosures Affect Property Value and Property Taxes? (Link opens a .PDF File)

On Sunday, Global Economic Intersection posted an article by Lee Adler from the Wall Street Examiner in which the author discusses the fact that the NAR’s reports along with the Case-Shiller Index are both lagging indicators and that the housing market is emphatically not recovering.  Mr. Adler states that: “The idea that the housing ‘recovery’ is contributing to economic growth is phony. The implication in all the pronouncements that housing is recovering is that home construction is rising. The fact is that new home construction has only had a dead cat bounce. It’s barely off the lows seen at the bottom of the housing crash in 2008 and 2009. The Commerce Department will release new home price, sales volume, and inventory data for December on Monday. It will again show that there is no recovery in the single family housing development industry. Multifamily bounced back in 2013, but there’s some question whether that can be sustained”.
A link to this article is found here:Home Prices Rising Not The Same As Recovery. There Is No Recovery

Mr. Adler was correct with his prediction on the Commerce Department report which came out yesterday and indicated that sales of new homes fell by 7% in December from the previous month.  Sales were, however, up 4.5% from December of 2012.  The median sale price rose by 8.4% from the previous year to $265,000.

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A Reminder for Commercial Appraisers

Check out Commercial Express from Narrative1. During these busy times, the need for short format commercial appraisal formats (which allow for quick data input, analysis and report generation) is great and we suggest checking out this new product from the number one commercial appraisal software company.

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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.

Narrative 1 Commercial Express

Click Here to learn more about Commercial Express by Narrative1


Appraiser Help’s 2014 Directory of AMCs and National Appraisal Companies is Now Available!

To help appraisers evaluate how AMCs will work for their appraisal practices, we have compiled this expanded directory of AMCs and National Appraisal Companies, listing complete, contact information and other details for each listing.

If you’re looking to maintain or expand your mortgage appraisal practice, our Directory of Appraisal Management and National Appraisal Companies is a great place to start. Order it today for $69.99 and download it immediately!

Please visit our website now to make your purchase securely or contact us at (877) 434-2825 for more information on this comprehensive directory!

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Putting the Housing Market In Perspective

In Saturday’s New York Times, Catherine Rampell and Shaila Dewan look back at the events of recent years and attempt to put the economics of homeownership in perspective by both looking at the “numbers” along with examples of individual experiences during this turbulent period.
Ms. Rampell and Ms. Dewan note that despite the “scars of the financial debacle”, homeownership still has a high rate of appeal to Americans.  They note that:

“In the aftermath of the crash, many have made the argument that public policy overly encourages homeownership. Robert J. Shiller, the Nobel-winning economist (and a contributor to Sunday Business), says that while owning a home may be worthwhile for many reasons, historically, most homeowners have reaped little financial return for their investment.

Chris Mayer, a real estate professor at Columbia Business School, argues that homeownership is its own kind of social safety net, whether or not it is profitable. Homeownership rates, he said, are higher in cities like Charlotte, N.C., where values are fairly stable, than in coastal areas where they consistently climb. ‘Just by living in your home, you’re saving for your retirement,’ he said. ‘This is a place where I think most homeowners get it right, compared to economists.”

A link to the entire New York Times article is found here:

The Tale of a House, and an Entire Market

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Appraisal Advisor Shuts Down

Last Tuesday, Matthew Biggers, co-founder of Appraisal Advisor, announced that they were ceasing operations on February 1st.  Mr. Biggers reported that only 3% of appraisers submitted reviews, a figure far below what was necessary to sustain the business.  He also noted that this and the fact that “appraisers had already spoken loudly that they wouldn’t pay directly for it either” effectively “cut off the only two sources of funding”.

Appraisal Advisor attempted to develop an extensive database of information about appraiser’s experiences working with appraisal management companies (AMCs).  We had our doubts about the success of this undertaking for many reasons (amount and reliability of data, the fact that a particular AMC may pay “customary and reasonable fees” in one region and not another, etc.) but regret that this potentially beneficial service for some appraisers could not get off the ground.

Appraisers are notably “pennywise and pound foolish” when it comes to investing in the growth of their appraisal practices but this was not the problem with Appraisal Advisor.  As they say on Shark Tank, “I’m out” was the not unwise response of appraisers to this enterprise.

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Rates & Dates

Freddie Mac, the Mortgage Brokers Association (MBA) and HSH Market Trends all reported falling mortgage interest rates in their most recent surveys. 

On January 23rd, Freddie Mac reported that 30-year fixed-rate mortgages fell to 4.39% from 4.41%. They also noted that last year at this time the 30-year rate was at 3.42%. 

The Mortgage Bankers Association (MBA) reported on January 22nd (for the week ending January 17th) that 30-year rates with conforming loan balances ($417,500 or less) dropped to 4.57% from 4.66% the previous week.   The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) also fell to 4.57% from the previous week’s rate of 4.58%.  Rates for FHA backed mortgages also declined, moving to 4.24% from 4.29% last week.  Mortgage applications increased by 4.7% from the previous week with refinance applications accounting for 64% of the total, up from 62% the previous week.

In a press release on January 16th, the MBA reported that their December Builder Application Survey (which reports on mortgage applications for new home purchases) showed a decline of 11% from November.  They estimated that new home sales for 2013 totaled approximately 445,000.

The survey reported that the average loan size was $300,444 in December (up from $295,523 in November).  Breakdown by loan type: conventional (63%); FHA (19.2%); VA (16.9%); RHS/USDA (0.9%).

On January 24th, HSH Market Trends reported that 30-year mortgage rates dropped to 4.51% from 4.53% the previous week. Rates for FHA-backed mortgages also fell from 4.15% to 4.09%.

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

Additional information from HSH can be found by going to: HSH.Com

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Ask Angie

We would first like to congratulate our most recent winner: North Dartmouth, Massachusetts Certified General Appraiser John Dwyer of Dwyer Appraisal Services.  John was the first to answer correctly that Dr. Seuss was the author of the quote “Be who you are and say what you feel, because those who mind don’t matter, and those who matter don’t mind”; Mark Twain quipped “Whenever you find yourself on the side of the majority, it is time to pause and reflect” and Mahatma Gandhi said “I will not let anyone walk through my mind with their dirty feet.”

Today’s questions:

1. Who said: “Order and simplification are the first steps toward the mastery of a subject."

a) Leo Tolstoy
b) Thomas Mann
c) Emily Dickinson
d) Confucius
e) None of the above

2. Who said: "There is no greatness where there is not simplicity, goodness and truth."

a) Thomas Mann
b) Leo Tolstoy
c) Emily Dickinson
d) Confucius
e) None of the above

3. Who said: "Forever is composed of nows."

a) Thomas Mann
b) Emily Dickinson
c) Leo Tolstoy
d) Confucius
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 Newly Released 2014 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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