Appraisal News and Business Tips

3-21-19 Newz: Using Previous Sales – 12 Tech Tools – Floating Neighborhood

The problem of giving too much weight to previous sales (or not enough)

By Ryan Lundquist

Excerpts: It must be worth more than it sold for in the past, right? In many cases, YES. But sometimes NO. Let’s talk through some things to consider when pulling comps and noticing a previous sale. I find many of these points coming up lately in conversation, so I hope this is helpful.

8 issues are discussed.
Here are a few
2) Unique property:
3) Unicorn buyer overpaid
8) Not penalizing because it sold too low

Closing advice: I recommend paying close attention to previous sales to get clues to understand how a property fits into the market. But don’t get so stuck that you don’t see the most important thing – current comps.

Good topic I have not seen discussed in detail before. Worth reading. Lots of comments!!
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Sound the Alarm! Must-See Converted Firehouse in Chicago

Excerpt: What kind of buyer should sound the siren? A history buff would be attracted to the notion of waking up in a piece of Chicago’s history every morning. However, it’s the conversion’s unique design-with an eye on luxury-that warms up the place and keeps it from feeling cold and modern.

“It’s not traditional, obviously,” says Buczynski. “It’s not what you would typically see here, as everything is traditional in design. I’ve had interest from people who entertain a lot.”

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Education

The Appraisal Report – A Conversation with Jim Park, ASC Executive Director

Recorded Thursday, February 28, 2019

Live recorded interview on video. Worth listening to.
Lots easier than traveling to a conference to hear Jim Park speak!

https://youtu.be/yg8sldCRcFc

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Sustainable floating neighborhood is a glimpse of the future

Schoonschip is an Amsterdam housing development on water

Excerpt: Schoonschip Amsterdam is a unique residential area: floating, sustainable, circular and initiated by a group of enthusiasts with a shared dream. Space & Matter has been working on this exceptional project since 2010 and it is expected to be completed in 2020.

Together with a team of consultants, Space & Matter translated the ideas of the Schoonschip initiative group into a smart urban plan and supervising the residents as they realised their own home within that plan. Schoonschip consists of a total of 30 water plots, on which 46 unique water dwellings are being built for more than 100 residents. The first seven houses are now in place.

Very interesting!!

My comments: There are houseboat communities in marinas here in the bay area, but they avarying from funky to expensive. Sizes are limited to the marina locations. Similar to mobile homes in some areas, nowhere to move them.

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12 Technology Tools for Your Appraisal Business

If you could adopt ONE new technology tool, what would it be?
Here are a dozen technology tools appraisers said they’d like to adopt for on-the-job use. Tablets and iPads, drones, and laser measuring tools were among the most popular choices.

1. Tablet or iPad
2. Drones
3. Disto laser measuring device
4. Cloud storage software (e.g., Google Drive)
5. Sketching software/3D drawing software

Click here for more.
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An Animated Map Visualizing the Enormous Population Growth of the United States Between 1790 and 2010

Excerpt: This map shows how the population moved almost exclusively westward during the nascent years of the country, fulfilling their “Manifest Destiny”. With the Louisiana Purchase in 1803, people began to move southward and the California Gold Rush filled in some the West coast.

My comment: It is good to look at the past to understand the present. Take a short break from appraising and check it out!!
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A significantly improved appraisal process has reduced the riskiness of refinance mortgages

From Urban Institute Blog
Excerpt: Historically, purchase mortgages have performed better than refinance mortgages, or “refis,” defaulting less often. But changes made in response to widespread appraisal bias during the crisis have improved the industry’s risk assessment and management abilities overall and, accordingly, have decreased the expected default rate on all mortgages.

We looked at the data and concluded that these improvements have reduced the difference in how purchase and refi mortgages perform. And while the models used in FHA, Fannie and Freddie underwriting systems are not public, our results suggest an update may be in order.

Relatively short. Worth reading.

https://www.urban.org/urban-wire/significantly-improved-appraisal-process-has-reduced-riskiness-refinance-mortgages

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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 
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 https://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 7AM to noon, Pacific time.

Mortgage applications increased 1.6 percent from one week earlier

WASHINGTON, D.C. (March 20, 2019) – Mortgage applications increased 1.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 15, 2019.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 1 percent higher than the same week one year ago.

“Mortgage rates declined once again, as concerns about the slowing global economy and status of Brexit continued to drive investors’ demand for U.S. Treasuries, ultimately pushing yields lower,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting. “Rates for most loan types were at their lowest levels in over a year, with the 30-year fixed mortgage rate falling to 4.55 percent – its lowest reading since last February. Although lower rates sparked a 3.5 percent increase in refinance applications, purchase activity was up only slightly last week and from a year ago.”

Added Kan, “Entry-level housing supply remains weak and is likely hindering some would-be first-time buyers from finding a home. This – along with faster growth in the higher price tiers – is why the average loan application size has risen to a new high for three straight weeks.”

The refinance share of mortgage activity increased to 39.2 percent of total applications from 38.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.1 percent of total applications.

The FHA share of total applications remained unchanged from 10.4 percent the week prior. The VA share of total applications increased to 10.6 percent from 10.2 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.55 percent from 4.64 percent, with points decreasing to 0.42 from 0.47 (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 $484,350) decreased to 4.37 percent from 4.45 percent, with points decreasing to 0.23 from 0.34 (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 decreased to 4.59 percent from 4.61 percent, with points increasing to 0.50 from 0.47 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.97 percent from 4.02 percent, with points decreasing to 0.40 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.99 percent from 4.09 percent, with points increasing to 0.29 from 0.26 (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
Email   ann@appraisaltoday.com

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