Why do clients complain?
By George Dell
Excerpts: … As you might guess, there are issues with general sloppiness and just plain errors. But the gloomy, uneasy complaints are about two basic issues: 1) poor selection of comps; and, 2) lack of “support” for adjustments. Let’s look at each of these two issues, and what might be solutions. Why do appraisal clients complain?
Comparable Selection
We have been taught to select sales which are competitive, similar, and therefore comparable. Unfortunately, those three words are used circularly to define each other. USPAP is of no help either. Although the word “comparable” is used dozens/hundreds of times – it’s never defined.
No wonder we have problems. This one word, this one concept – so central to the “process” of valuation – no one seems to know what one is! (Except me: You can trust me – I know a good comp when I see a good comp.)
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NOTE: Please scroll down to read the other topics in this long blog post on hypervacancy, zombie homes, $760k parking space, mortgage origination stats, etc.
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A $760,000 Parking Space ($5,000 per sq.ft.)
By Jonathan Miller
Excerpt: In 2007, I analyzed Manhattan parking spaces that made page one of the NY Times (oh, and my wife broke her leg that day). The takeaway was that parking spaces sold for about the same price per square foot as a typical apartment in the same building. Typical parking spaces run about 150 square feet in size.
This US $760,000 Hong Kong parking space sale (a flip) was a little more than $5,000 per square foot in a luxury project. The average residential sale is US$3,182 per square foot. Based on what we see for Hong Kong housing prices, that price really doesn’t sound so crazy.
In the greater reality, it sounds absolutely nuts. Without the context of an HK$100M condo nearby…
Scroll down to Appraiserville for a long story about a VA appraisal “gone bad” plus lots more good stuff at:
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Surf’s Up! America’s Most Affordable Beach Towns, 2018 EditionExcerpts: These aren’t the country’s best known and rarified ocean towns (sorry, Hamptons and Malibu!), but each one has a great beach and a cool and distinct vibe, from ruminative to rowdy, serene to (sorta) swanky.
Here are a few:
1. Gulfport, MS
Median home list price: $184,100
2. Jacksonville, NC
Median home list price: $184,600
9. Coos Bay, OR
Median home list price: $274,200
Lots more detail at:
https://www.realtor.com/news/trends/americas-most-affordable-beach-towns-2018-edition |
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Vacation Home Markets Have Yet to Rebound From Housing BustExcerpt:
Home values are now 14 percent above their pre-crisis peak in the markets with the smallest share of vacation homes but remain 9 percent below their pre-crisis peak in the markets with the most vacation homes.
Markets with the highest densities of vacation homes have underperformed the market in all but one year since 2010.
Homes in vacation markets saw an exaggerated boom and bust over the past decade and have been slower to recover than homes in other markets. As the appeal of vacation homes has steadily eroded over the past decade, markets with the highest densities of vacation homes have underperformed the market in all but one year since 2010.
My comment: I love putting contrasting articles right next to each other ;>
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Peak prices & “bubble” conversationsBy Ryan Lundquist
Excerpts: We’re about to have more real estate “bubble” conversations. Why? Because prices are very close to where they were at the previous peak of the market. Here’s a few things that come to mind when these conversations come up.
No formula: As a friendly reminder, there is no “bubble” formula that says the market will plummet if we get back to prices from 10+ years ago.
Preaching doom: Some preach doom & gloom, and that’s fine. My advice though? Be realistic about your ability to predict the future.
And lots more at:
My comment: worth reading. How is your market doing? Are you worried about a bust? To me, it seems like too many people are looking at the past to predict the future, such as the last crash was 10 years ago. If I knew when the market will peak, I would be very, very rich. I always know when it bottoms out as it stays that way for awhile, often years. |
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Cities with the Highest Share of Vacation, Investment and Second HomesExcerpt: There is a clear regional break. Cities with the most non-owner occupied properties were located in the South or the West while those with the least are in Northeast and Midwest.
Southern cities may be attracting investors due to low prices and growing populations. Many residents in Southern cities may not be able to access home ownership due to lower median salaries, creating a ready pool of renters.
In the West, the opportunity for rapid price appreciation is likely attracting investors. But high prices also suppress homeownership, creating a pool of renters.
In the Northeast and Midwest, affordable homes mean the opportunity to be a homeowner is high and less appreciation attracts less investors.
Lots more info at:
My comment: In my area, investors are still snapping up houses, although there are fewer international buyers, similar to other areas. What is it like where you are? I know that the ratio of owner occupied to rented makes a difference. |
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10 years after the housing crisis, thousands of zombie homes are still stuck in foreclosure limboExcerpt: A lot of us still feel the effects of the financial crisis. But there are places in the country where you can actually still see them – places where houses got stuck in foreclosure limbo, were abandoned and are still sitting empty years later. People call them zombie homes. And while there are many fewer zombies than there used to be, there are still more than 14,000 of these homes. They’re clustered mainly in cities and towns where there are a lot of protections for homeowners, so foreclosures take longer. We went to Long Island, New York, which has the biggest zombie population in the country, to check in on the unwinding.
Click here to watch the video and listen to the Marketplace podcast.
My comment: I get NPRs marketplace downloaded to my iphone every day, and really like it for business news and analysis. I listen to my podcasts while exercising and driving. Interesting story about why certain areas still have zombie homes. |
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The Empty House Next Door: Paper Examines ‘Hypervacancy’Excerpt: Since the Great Recession, cities and rural areas have been grappling with increased housing vacancies–or in many cases, “hypervacancies.”
In a new study by the Lincoln Institute of Land Policy, Cambridge, Mass., The Empty House Next Door: Understanding and Reducing Vacancy and Hypervacancy in the United States, researcher Allan Mallach said hypervacancy–defined as areas in which at least one in five properties are vacant within a given area–have disrupted neighborhoods and housing markets.
“Houses sell, if they sell at all, only to investors at rock bottom prices while the neighborhoods become areas of concentrated poverty, unemployment and health problems,” Mallach said. More info here:
Link to full study:
My comment: The above NPR story looks at one area plus the big picture. This article is more “academic” but is about the same topic.
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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 www.mbaa.org
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Mortgage applications increased 5.1 percent from one week earlierWASHINGTON, D.C. (June 20, 2018) – Mortgage applications increased 5.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 15, 2018.
The Market Composite Index, a measure of mortgage loan application volume, increased 5.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 6 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 3 percent higher than the same week one year ago.
The refinance share of mortgage activity increased to 36.8 percent of total applications from 35.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.0 percent of total applications.
The FHA share of total applications decreased to 10.1 percent from 10.6 percent the week prior. The VA share of total applications decreased to 10.2 percent from 10.7 percent the week prior. The USDA share of total applications decreased to 0.7 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) remained unchanged at 4.83 percent, with points decreasing to 0.48 from 0.53 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to 4.79 percent from 4.74 percent, with points decreasing to 0.36 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.82 percent from 4.83 percent, with points increasing to 0.84 from 0.78 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 4.27 percent from 4.23 percent, with points increasing to 0.53 from 0.51 (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 4.06 percent from 4.11 percent, with points decreasing to 0.54 from 0.56 (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.
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