Can you use comps from a different neighborhood?

By Ryan Lundquist
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.

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To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on What is an Island, mortgage origination stats, Covid tips for appraisers, etc.

What Is an Island, Exactly?

Just for Fun!!

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 ;>

In San Francisco, $1 Million Buys an ‘Earthquake Shack’

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.


Check out the fotos and 2 listings from 2016 here. Fascinating!!

Home Improvement Ramps Up in 2018

Excerpt: Sixty-five percent of homeowners say they’ll do at least some of the work themselves, and 35 percent say they’ll tackle their projects entirely on their own… The popularity of outdoor improvements remains strong.  Projects such as decks, patios and landscaping rank at the top of the list for the fifth year in a row, with 43 percent of homeowners planning to transform their outdoor spaces, up five percent over last year.

Interesting graphics at:

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Residential Highest and Best Use Analysis: More than Just a “Check Box” –
Reviewers and state boards want to see more explanation

By Denis Desaix, MAI, SRA

Excerpt: For residential mortgage assignments, the Fannie/Freddie report forms must meet the reporting requirements of SR2-2 (appraisal report). These forms provide a check-box answer “yes” or “no” to one aspect of the H&BU analysis: “Is the highest and best use of the subject property as-improved (or as proposed per plans and specifications) the present use?” Simply checking the box does not meet the USPAP’s summary requirements. 


The form must be supplemented with appropriate summary of the analysis. This 8-page article includes many examples with suggested comments. 

In the February 2017 issue of the paid Appraisal Today, available to paid subscribers.  

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10 years after financial crisis, Senate prepares to roll back banking rules

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.

Call to action to oppose Senate Bill 2155, also opposed by an overwhelming majority of Americans…

Excerpt: Senate Bill 2155 has a provision, (sec 103) which allows a bank to waive an appraisal in rural communities. This will be detrimental for homeowners and communities in rural areas. A loss of income will also occur for appraisers who cover rural counties.

Could Fannie and Freddie Be Eliminated Without Legislation?

Excerpt: GSE reform has been a hot-button topic ever since Fannie Mae and Freddie Mac came under government conservatorship during the financial crisis, but it’s one of those talking points that often seems heavy on the talk and light on the corresponding action. This week an assembly of analysts and think tanks, including the American Enterprise Institute, introduced a proposal outlining how President Trump could, at least theoretically, move to eliminate the GSEs without having to rely on Congressional support…

My comment: No Fannie Formz??
HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to 
Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample issue go to or send an email to . Or call 800-839-0227, MTW 7AM to noon, Pacific time.
Mortgage applications increased 0.3 percent from one week earlier

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.

Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
2033 Clement Ave. Suite 105
Alameda, CA 94501 Phone 510-865-8041
Fax 510-523-1138

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