Appraisal News and Business Tips

6-6-19 Newz: What’s Fannie Doing and Why – Shadow Banks – Photoshopping

Tracking the Economy Through New-Home Square Footage

Excerpt: The U.S. housing market may not be synonymous with the business cycle, as a famous 2007 paper proclaimed, but the ups and downs in housing, which represents a big part of the economy, usually do offer hints about what’s going on more broadly.

That’s why economists closely watch housing market indicators like sales volumes and home prices — as well as how Americans are accessing the market and managing their obligations to mortgages, rental costs, taxes, and so on.

To read more, click here

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The shadow banks are back with another big bad credit bubble

Excerpt: If regulators wait to act until they can say with certainty that a credit bubble is about to burst, they’ve waited too long.

That’s particularly true when it comes to the opaque and unregulated “shadow” banking system on Wall Street that has now supplanted regulated banks as the leading source of credit for businesses and consumers. This shadow system gets its money from big investors rather than depositors, and it revolves around hedge funds, investment banks and private equity funds rather than banks.
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Definition of shadow banking: A shadow banking system is the group of financial intermediaries facilitating the creation of credit across the global financial system but whose members are not subject to regulatory oversight. The shadow banking system also refers to unregulated activities by regulated institutions.
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To read more, click here

My comment: for more info, google shadow banking and click on news. I had never heard the term “shadow banking” before I read this article. I have been hearing about non-banks such as Quicken Loans becoming very active in lending for a long time.

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Who is coming & going? A huge question to ask in real estate

By Ryan Lundquist

Excerpt: Changing markets: Migration can change a local real estate market in the obvious way of increasing prices and tightening supply, but it can also spur new construction and commercial development. We have to remember builders sometimes even cater their product to buyers coming from out-of-town. This is why locals sometimes look at a project and say, “Who can afford this?” Well, the answer might be wealthy out-of-towners.

To see Ryan’s humorous photoshopping, get more info and to read the many, many comments click here

My comment: I have been reading a lot about migrations in the U.S. It does affect local markets. The two articles below have lots of national and state info.

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Americans are on the move, but where are they moving to and from?

Excerpt: Jan. 2, 2019 – Americans are on the move, relocating to western and southern parts of the country. The results of United Van Lines’ 42nd Annual National Movers Study, which tracks customers’ state-to-state migration patterns over the past year, revealed that more residents moved out of New Jersey than any other state in 2018, with 66.8 percent of New Jersey moves being outbound. The study also found that the state with the highest percentage of inbound migration was Vermont (72.6 percent), with 234 total moves. Oregon, which had 3,346 total moves, experienced the second highest percentage nationally, with 63.8 percent inbound moves.

States in the Mountain West and Pacific West regions, including Oregon, Idaho (62.4 percent), Nevada (61.8 percent), Washington (58.8 percent) and South Dakota (57 percent) continue to increase in popularity for inbound moves. In tune with this trend, Arizona (60.2 percent) joined the list of top 10 inbound states in 2018.

To see the very good infographic and get more stats click here

My comment: This annual survey is widely used for moving stats.

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Why Some Americans Won’t Move, Even for a Higher Salary

Excerpt: Mobility in the United States has fallen to record lows. In 1985, nearly 20 percent of Americans had changed their residence within the preceding 12 months, but by 2018, fewer than ten percent had. That’s the lowest level since 1948, when the Census Bureau first started tracking mobility.

…Mobility rates have fallen for nearly every group, across age, gender, income, homeownership status, and marital status.

Declining mobility contributes to a host of economic and social issues: less economic dynamism, lower rates of innovation, and lower productivity. By locking people into place, it exacerbates inequality by limiting the economic opportunities for workers.

For lots more analysis and graphs click here

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Fannie’s Big Changes: New Forms, Revised UAD and Bifurcated Appraisals. What does this mean for you?

In the June issue, available NOW!!

Topics include:
– The Good (revised forms) The Bad (Bifurcated appraisals)
– What is Fannie’s “Modernization” plan?
– Why is Fannie making these changes?
– What does “dynamic” form filling look like?
– What do appraisers, and other stakeholders say they want?
– Fannie testing who is the best for doing inspections?
– What is the timeline for the changes?
– Will anything really happen?

I last wrote about Fannie’s plans in June 2018. There is lots more info available now. I spent a lot of time on this very long article, which combines lots of different sources, including “insider” interviews…

To read the full article, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

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The Swiss City That’s Full of Cat Ladders
Just For Fun!!

Excerpt: IMAGINE, IF YOU WILL, WHAT it’s like to be an average cat. You live with your owner on the fourth floor of an apartment building and, like so many of your fellow felines with exposure to the outside world, you have a fierce case of wanderlust. But until your owner gets home, you can do little more than sit on a sunlit windowsill, press your nose against the glass, and peer wantingly at the neighborhood below. You are beholden to someone who chooses to spend most of the day separated from you. No wonder your species is so notoriously moody.

For more info and fotos click here

My comment: Very interesting and fun!!

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Photoshopping & price per sq ft in real estate

By Ryan Lundquist

Excerpt: I have a new way to explain how price per sq ft works in real estate. It’s helpful but maybe a little creepy too. No matter what, we need word pictures in real estate to explain concepts, so let’s chat.

The big idea: Using a price per sq ft figure from a different house is sort of like photoshopping someone else’s body on your own. It just might not fit.

For more info click here

My comment: You just gotta see Ryan’s photoshopped body picture!! Plus read the many appraiser comments. Ryan regularly writes about sq.ft. Check out links to his other posts down the page.

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Why price per square foot is not the appraisers choice

By Rachel Massey

Excerpt: Often, buyers and sellers are under the impression that it is simple to price a house by its square footage. Nothing is further from the truth, unless of course, all the comparable properties considered are within a couple square feet of each other and have the same quality and condition and are in the same immediate neighborhood with no variation in the value of the site.

Underneath all is the land. This means that a house that sits on a hypothetical 60×120 sqft site should have the same underlying value if the house were 1,000 sqft or 2,000 sqft. If land is selling for $50,000 for this 7,200 sqft lot, then the value of the land does not change in value because it has a larger or a smaller house on it.

For more information and to check out the graphs click here

My comment: Good explanation and graphs. Written for buyers and sellers but a good explanation when you are trying to explain why Price per sq.ft. often is not reliable. Also, a very good blog post marketing to buyers, sellers and real estate agents.

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Use of Digitally-Improved Photos in Real Estate Marketing

Professional photo editing can go beyond simple furniture improvements. A couple clicks can inspire a different use of space by turning an office into a bedroom. Editing can remove eyesores like owner-occupied clutter or unsightly holiday decorations. The most popular uses of the technology are “twilight editing,” which creates a moody twilight effect, “blue sky editing,” which turns overcast skies into blue skies, and “green grass editing,” which makes patchy grass appear fuller.

These applications can’t be considered manipulative to buyers because they’re simple cosmetic changes that don’t affect the value of the home…

The power of Photoshop can easily make simple design updates to flooring, fixtures or paint in a home. More advanced users can pull off a full “Property Brothers” remodel if requested. While these orders can have a huge impact on opening the minds of buyers, the use of heavy alterations should be clearly disclosed to protect the consumer.

To read more, click here

My comment: When going on the weekly local open house tour, I am always amazed at the difference between listings that have been staged and those that are vacant or have owner’s furniture and stuff. I do know that homes that are not staged are more difficult to sell and sell for lower prices, especially in our current slow market.

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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 1.5 percent from one week earlier,

WASHINGTON, D.C. (June 5, 2019) – Mortgage applications increased 1.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 31, 2019. This week’s results included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index increased 6 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 0.5 percent higher than the same week one year ago.

“Mortgage rates dropped to their lowest level since the first week of 2018, driven by increasing concerns regarding the ongoing trade tensions with China and Mexico,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Some borrowers, particularly those with larger loans, jumped at the opportunity to refinance, bringing the index and average refinance loan size to their highest levels since early April. Additionally, refinances for FHA and VA loans jumped by 11 percent.”

Added Fratantoni, “Coming out of the Memorial Day holiday, and likely impacted by the financial market volatility caused by the trade tensions, purchase application volume declined for the week. Potential homebuyers may be more cautious given the heightened economic uncertainty.”

The refinance share of mortgage activity increased to 42.2 percent of total applications from 39.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.1 percent of total applications.

The FHA share of total applications decreased to 9.5 percent from 9.6 percent the week prior. The VA share of total applications increased to 11.3 percent from 11.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 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 4.23 percent from 4.33 percent, with points decreasing to 0.33 from 0.42 (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 4.09 percent from 4.18 percent, with points decreasing to 0.21 from 0.23 (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 4.24 percent from 4.33 percent, with points decreasing to 0.33 from 0.43 (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 3.65 percent from 3.73 percent, with points decreasing to 0.36 from 0.40 (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 3.62 percent from 3.74 percent, with points decreasing to 0.19 from 0.34 (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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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
www.appraisaltoday.com

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