Low appraisals, weed, & rent control
By Ryan Lundquist
Excerpt: I’ve been getting lots of phone calls and emails about low appraisals over the past couple months. Is something in the water? What’s going on? Let’s talk about this briefly. Then I have some quick thoughts on weed and rent control.
Excerpt: 5 things to remember about “low” appraisals:
1) This is common when the market slows.
2) This is even more common in a declining market.
3) It should happen if the contract is too high.
4) It can spur negotiation instead of kill a deal.
5) The value of course is too low sometimes.
To read more To read more, click here
My comment: Keep a close watch on your market. Don’t miss it when prices start going down!! But, No One Knows when the peak occurs!! I tell people that If I knew, I would be rich and probably not writing this newsletter ;>
On the other side, people ask me all the time about our very high prices (median around $900,000). I tell them to wait for the inevitable crash. I have been through three here when prices in my city dropped 30-40%. Other nearby cities were up to 80% declines. They stay down for a long time. Unfortunately, few buy then. “Herd” mentality, I guess. Do what everyone else is doing – not buying. The last property I purchased in 1995 for $375,000 I got 100% seller financing. It had been on the market for two years. I sold it in 2004 for $1,000,000. It recently resold for $1,700,000. Crazee price changes!!
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Fannie Mae September 2019 Appraiser Update
Sept. 13, 2019
– Forms for appraisers performing PDC and desktop appraisal
– Desktop appraisals, assumptions, and hypothetical conditions
– Locked rooms
– Consumer protections
– State board notifications
Only 5 pages. Easy to read and informative. To read more, click here
Fannie Mae Appraiser Home Page
Everything Fannie In One Place!!
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Rural vs. Urban recession recovery – the gap gets bigger
Rural areas lagging behind in post recession recovery
Excerpt: In the decade following the Great Recession, job growth has been disproportionately concentrated to the largest U.S. job centers, and home values in these markets have risen accordingly. The 25 largest job markets have accounted for more than half of employment growth and nearly two-thirds of home value growth in the U.S. since July 2009, according to a new Zillow® analysis.
Good data and analysis To read more, click here
Here’s why home prices are rising faster in large cities than in small towns
Excerpt: During the previous expansion from the early- to mid-2000s, job growth was strongest in small or rural areas, and home value growth was more aggressive in the very largest and very smallest markets. At that time, rural areas accounted for 14.8% of job growth and home values outperformed the national average by 7.1%.
But, during the expansion since the Great Recession, the proportion of job growth has fallen by more than half to 7%, while housing in rural areas has underperformed the national market by nearly 10%.
To read more, click here
My comments: There is a wide discrepancy here in California. Most of the state is rural and recovery is lagging. CA coastal cities such as the Bay Are and Los Angles, are doing great. Cities outside of commuting distance, most of the state, are not doing well. FYI most of CA is red but lightly populated. Urban coastal cities are blue and lots more populated.
Higher Mortgage Rates Despite Fed Rate CUT. Here’s Why
Excerpt: One of the greatest potential sources of confusion for prospective mortgage borrowers is the relationship between the Fed and mortgage rates. While the Fed’s policy changes absolutely have a big impact on all sorts of interest rates (including mortgages), a drop in the Fed’s policy rate DOES NOT result in lower mortgage rates. In fact, the OPPOSITE was true today.
The main reason for confusion is the fact that there’s a huge difference from an investment standpoint between a rate that governs the shortest-term transactions (The Fed Funds Rate applies to loans that last for 1 day or less) and a rate that can remain in effect for up to 30 years in the case of mortgages…
To read more, click here
My comment: when rates start to go up, sometimes refis increase because borrowers want to refi before rates get higher. Spoke with an owner of a small AMC yesterday who said they are very busy. Hard to find appraisers for the tough properties. They only want to do tract homes, a very good idea (to me) to make more money while you can!
Are there three types of clients?
By George Dell
Excerpt: Three different types of clients , one appraisal type. Does this make sense?
Different user-clients have different needs. Lenders need to know the potential for loss, to balance against the benefit of monthly payments. Investors need to know what their potential income flow will be, and/or the probability of gain on sale. Other clients, such as tax assessors and the legal system usually need to arrive at a fair value as between litigants. (The eminent domain process is supposed to produce “fair” compensation to property owners when their property is taken by the government.)
Interesting post, as usual!! Another way of looking at appraising, Dell-Style. I love the merkats image above!!
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Disability – Your Greatest Risk
Excerpt: Many appraisers worry about the risk of getting sued on an appraisal, but one of your greatest risks is becoming disabled and unable to work. To appraise at your full capacity, you have to be able to walk, hear, and see.
If disabled, you may be able to continue working, but at reduced capacity. Or, you may not be able to do field work but you can do desktop appraisals and reviews. But, you will probably not be able to work at all for a period of time.
Since appraisers spend a lot of time driving, getting in an auto accident is a much higher risk than for people working in an office. Other risks include getting injured during an inspection, plus the risks we all have of a serious medical problem.
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The World’s Most Delightful Domes
17 half-spheres that do round right.
Just For Fun!!
Excerpt: have many tricks up their sleeves, but one particular feat of engineering has captivated onlookers since antiquity, right up to today: the majestic dome.
Employing massive hemispherical roofs first became popular with the ancient Romans—most famously the iconic Pantheon, built in the 2nd century. Since then, the feature has taken many forms across the globe, providing cover for everything from ancient tombs to futuristic houses. The circular nature of domes has special significance in religious houses such as churches and mosques, where it represents the eternal, with no beginning and no end.
For more info, photos, etc. click here
My comment: Fascinating! From all over: Detroit Michigan, Washington DC, Ohio, India, etc.
‘Iron Man’-Inspired ‘Razor House’ Sells for $20.8 Million
Excerpt: The “Razor House” in La Jolla, California, that was inspired by Tony Stark’s Razor Point mansion in the “Iron Man” film series, has found a taker for $20.8 million, according to the brokerage handling the listing.
The property was listed … for $24.995 million in June. They found a buyer within a week, and the sale closed on Monday, the brokerage said.
For more details and great fotos click here
Video: Students Perform Marvel-ous Avengers Themed 2019 Homecoming Dance Routine
Lotsa Fun – totally NOT appraisal related!!
Excerpt: Talented students on the award-winning PAC dance team at Walden Grove High School in Sahuarita, Arizona, who in 2018 performed a brilliant Harry Potter-themed halftime homecoming show, returned in 2019 showcasing an absolutely heroic Marvel Avengers theme. The routine ingeniously interpreted the storylines of both Avengers:Infinity War and Avengers: Endgame through dance.
To view the video click here
My comment: Could not resist including this Avengers link!! Of course, I am an Avengers fan. My current fave is the new female Captain Marvel (not the original mar-vel). But Iron Man is a close second. Doctor Strange is another winner. I have been reading comics and watching tv and movies since Superman. Loved Avengers Endgame.
I love Laughing Squid, where I found this video!! Lots of craze music stuff including very strange instruments. Every email I get has fascinating links. I have no idea how they find their material and why they do this as a promo for their web site hosting, but I am very grateful!
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Mortgage applications decreased 0.1 percent from one week earlier
WASHINGTON, D.C. (September 18, 2019) – Mortgage applications decreased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 13, 2019. Last week’s results included an adjustment for the Labor Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week and was 148 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index increased 16 percent compared with the previous week and was 15 percent higher than the same week one year ago.
“The jump in U.S. Treasury rates at the end of last week caused mortgage rates to increase across the board, with the 30-year fixed-rate mortgage climbing to 4.01 percent – the highest in seven weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinancing activity dropped as a result, driven solely by conventional refinances.”
Added Kan, “The purchase index increased for the third straight week to its highest reading since July. Additionally, the average loan amount on purchase applications increased to its highest level since June. This is a likely a sign that the underlying demand for buying a home remains strong, despite some of the recent volatility we have seen.”
The refinance share of mortgage activity decreased to 57.9 percent of total applications from 60.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.0 percent of total applications.
The FHA share of total applications increased to 10.9 percent from 9.3 percent the week prior. The VA share of total applications increased to 12.7 percent from 11.9 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.5 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.01 percent from 3.82 percent, with points decreasing to 0.37 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 4.01 percent from 3.84 percent, with points decreasing to 0.29 from 0.34 (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 increased to 3.89 percent from 3.76 percent, with points decreasing to 0.30 from 0.31 (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 3.42 percent from 3.28 percent, with points decreasing to 0.36 from 0.47 (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 increased to 3.54 percent from 3.42 percent, with points decreasing to 0.29 from 0.48 (including the origination fee) for 80 percent LTV loans. The effective rate increased 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
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