Comps From Different Neighborhood for Appraisals

Excerpt: BIG CAUTION: If one area has smaller homes, heavy fixers, not enough data, more foreclosures, or more remodeled properties, we might draw the wrong conclusions when looking at stats if we’re not careful. In other words, we need to know how to think through the numbers rather than taking them at face value.

Good analysis and graphs from Sacramento area, but applies to many other locations. Worth reading.

My comments: Going to another neighborhood is tricky if a location adjustment is required. However, I do it occasionally. If the two neighborhoods are similar, it is easy. FYI, I attended a Fannie webinar last week that showed how CU displays comps in neighborhoods, based on census tract blocks, showing how median prices vary. I will be writing about how underwriters use CU in next month’s paid Appraisal Today newsletter.

Every once in a while, Josh Calder goes out to Rock Creek in his home city of Washington, D.C., and peers across the water at a little gravel bar. The small spit used to barely be visible at all, but it’s growing more robust, and vegetation has started cropping up there. When Calder swings by, he’s checking to see if a specific alchemy has occurred. He’s waiting for it to become an island.

If you close your eyes and picture an island, what do you see? In the popular imagination, the word conjures up somewhere stable, contained, and understandable: maybe a little rocky outcropping covered with gulls…

“They’re winking in and out of existence every minute,” says Calder. “Some island in the Congo River just collapsed finally and disappeared. Another one just arose out of the Baltic.”

My comment: Fascinating article!! I have lived on an island since 1980. There is definitely an “island” mentality. I have not been taking any appraisal work outside of Alameda for awhile. I hate leaving it for any reason ;>

Excerpt: As reported by SFGate recently, San Francisco is recently seeing a spike in demand for so-called “earthquake shacks.” It’s a colorful name with an equally colorful history, with the colloquial name “earthquake shack” used to describe small cottages constructed in the aftermath of 1906’s earthquakes and fires. Those paired natural disasters left 500 city blocks obliterated and nearly half of San Francisco’s population homeless. Needless to say, the city needed housing, lots of it, and it needed it quickly.

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Excerpt: The core of the new bill exempts about two dozen financial companies with assets between $50billion and $250billion from the highest levels of scrutiny by the Federal Reserve, the nation’s central bank. Supporters argue that the legislation would bring much-needed relief to midsize and regional banks that were treated like their much larger counterparts under the 2010 legislation known as Dodd-Frank. Opponents say it would weaken the oversight needed to stave off the type of dangerous lending and investing that brought the U.S. economy to its knees.

WASHINGTON, D.C. (March 7, 2018) – Mortgage applications increased 0.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 2, 2018. The previous week’s results included an adjustment for the Washington’s Birthday (Presidents’ Day) holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 13 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index increased 13 percent compared with the previous week and was 1 percent higher than the same week one year ago.

The refinance share of mortgage activity remained unchanged from the previous week at 41.8 percent of total applications. The adjustable-rate mortgage (ARM) share of activity increased to 7.3 percent of total applications, its highest level since June 2017.

The FHA share of total applications decreased to 10.1 percent from 10.3 percent the week prior. The VA share of total applications decreased to 9.9 percent from 10.7 percent the week prior. The USDA share of total applications increased to 0.9 percent from 0.8 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since January 2014, 4.65 percent, from 4.64 percent, with points decreasing to 0.58 from 0.63 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.56 percent from 4.57 percent, with points increasing to 0.52 from 0.51 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged from the week prior at 4.68 percent, with points increasing to 0.79 from 0.75 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since April 2011, 4.11 percent, from 4.07 percent, with points increasing to 0.64 from 0.59 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.81 percent from 3.85 percent, with points decreasing to 0.46 from 0.59 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.