This 170-year-old Swiss guesthouse built into the side of a mountain is best accessed by a cable car.
Excerpt: The guesthouse and restaurant is quite literally built into a cliff, and its back wall is made up of the rock itself.
Its precarious perch makes it difficult to get to, and it’s only accessible after a steep hike along a mountain path or via cable car (the piano in the living room was brought in by helicopter). It’s been around for 170 years, and was originally a home for farmers; the guestbook goes back to 1940.
To check out the interesting fotos and brief description click here
For lots more appraisal topics, Click Read More below!
NOTE: Please scroll down to read the other sections of this long blog post on Covid and home prices, Fannie Mae Covid changes, mortgage origination stats, etc.
For lots of Covid appraiser advice and news, go to my new covidscienceblog.com
Covid-19 Residential Appraisers Tips on Staying Safe
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What are home prices doing during the pandemic?
May 27, 2020 By Ryan Lundquist
Excerpts: What are prices doing? That’s the question I’m getting asked the most. Here are some thoughts about how to look at prices during the pandemic. I also have two brand new price visuals.
1) Eggs in one basket: I recommend watching multiple price metrics instead of putting all our eggs in one basket. So in addition to the median price we can watch the average sales price and average price per square foot.
2) Pure pandemic data: When May stats come out we’re likely going to see 80-90%+ of those sales having gotten into contract after mid-March when the pandemic began to affect us. Thus May sales will be a stronger indicator of pandemic trends than April sales.
3) Seasonal rhythm: It’s key to understand the seasonal rhythm of the market because it helps us spot what is normal and not. For example, the median price usually increases from March to April, but this year we saw the median price dip instead. What does this mean? We need time to understand it. For now we’re recognizing something has happened that is less common. It’s worth noting we often see the median price climax around May or so, which means if we see prices soften in coming months we’re going to have to ask whether it’s a seasonal thing, pandemic thing, or something else.
For more info and of lots of graphs click here
My comment: My big article on Fannie COVID changes, including recommended “disclaimers”, is in the June paid newsletter. See excerpts in the ad below. You MUST discuss market conditions in your appraisal. Ryan’s blog post, and his other posts, give you some good ideas of what to include.
The economy is tanking. So why aren’t home prices dropping?
COVID-19 has caused volatility in seemingly everything but housing
Excerpts: While both supply and demand have dropped, the relationship between the two went largely unchanged, meaning the drops in supply and demand were generally proportional to each other. Furthermore, home sales also dropped after the pandemic hit, and it’s hard for prices to move when there aren’t as many housing transactions to make prices move in aggregate. Together, this leaves prices much where they were before the pandemic.
This is consistent with how housing markets have fared in previous pandemics. A Zillow study looked at housing markets in cities hit by previous pandemics in Asia and found that whole activity dropped, home prices didn’t move much. A good way to think about the housing market at this moment is that it’s on pause—buyers and sellers have left the market, transactions have dropped in response, and prices aren’t moving…
And historically, the financial crisis was an aberration with regard to how recessions typically impact housing markets. While 2008 obviously destroyed the housing market, previous recessions have barely moved at all. If anything, prices went up.
Very good analysis, with graphs, including an infographic comparison of today with previous housing recessions. To read more, click here
My comments: Read this article!! This is the number one housing topic now. In my market, and many others, there has been a shortage of listings for many months. Also, with stay at home orders loosening here, real estate agents are now able to do showings with only two in the home. Spring is always our strongest home sale market. Some homes are selling for over list price. But, we all remember 2007-2008, when the market had huge price declines all over the country and we worry about price declines.
Of course, a big problem is the that last major pandemic in this country was 1918, with very limited, if any, housing data. However, now we can look at home sales in other countries who are ahead of us in pandemic timing.
Mortgage rates below 3 percent if you know where to look
Excerpts: One of the few silver linings for real estate in the middle of this devastating coronavirus pandemic has been record-low mortgage interest rates. And housing experts predict those ultralow rates will likely fall even further—venturing into the unprecedented 2% range…
“We expect mortgage rates to stay low and possibly slip lower,” says realtor.com Chief Economist Danielle Hale. “We’ll flirt with the 3% threshold for a while before we go below it.”
Although some lenders are offering rates in the high 2% range, rates averaged 3.28% for 30-year fixed-rate loans for the week ending May 14, according to the most recent Freddie Mac data. That’s more than a full percentage point lower than the 4.61% rate for the week ending May 17 last year.
To read more, click here
My comment: Well written and worth reading. For appraisers, the lower the rates the more appraisals!
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Fannie Temporary Appraisal Requirement Flexibilities
What They Are and What They Mean For You
In the June 1 issue of the Paid Appraisal Today
Fannie’s new exterior-only and desktop appraisals can be confusing. Appraisers have never done them before with the new Scope of Work. No one knows how long the GSEs, FHA and VA will be using them. The requirements were recently extended to June 30, 2020.
“Traditional” appraisals have not changed. Exterior-only and desktop requirements have significantly changed, including forms, photos and research.
I write about the best resources for appraisers, from Fannie, webinars, and other sources.
A few of the topics:
- What is the most useful information at www.fanniemae.com/appraisers.
- Three good webinars.
- The new COVID external-only are NOT the same as the “old” 2055 drivebys
- What photos are required?
- How do you know what types of appraisals are used for different loans and for Fannie, Freddie, FHA and VA?
- What if you don’t have adequate information to do the appraisal?
- Why Extraordinary Assumptions are not allowed
I also include a separate 19-page PDF addendum with the three documents you need to read to understand Fannie’s COVID changes. This article references information in the PDF addendum.
Excerpt: Some appraisers are adding disclaimers or extraordinary assumptions in an attempt to limit their liability due to COVID uncertainty instead of completing a detailed market analysis and acknowledging that the quality of the data is limited and providing a well explained reconciliation. This is not recommended.
Of course, no one knows what will happen tomorrow with the pandemic. For example, you could use: It is unknown the effect COVID-19 will have on the long-term market, economy, or real estate prices, but at the moment…. (discussion about your market: over listings, pendings, etc. plus graphs)
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Appraising During a Pandemic
Excerpt: Despite flexibilities that allow for alternative appraisal methods, initial reports indicate that many lenders are continuing to pursue full 1004 appraisals, including the interior inspection. That’s the good news and the bad news.
Michael Tedesco, Chief Executive Officer of Appraisal Nation, a national Appraisal Management Company (AMC), confirms that many of his clients prefer to receive an interior inspection appraisal report, even if the GSEs will accept a lesser product… Of course it is location specific. In New Jersey or New York, I don’t think anyone should be doing interior inspections, but in places like North Carolina where we’re headquartered, there is less risk because the number of cases aren’t as high,” says Tedesco.
Appraisal Nation also has a number of private lender clients that hold loans in their own portfolio, and Tedesco reports those clients are much less inclined to accept an exterior-only or desktop in lieu of an interior inspection report…
Currently, Tedesco says that less than 25 percent of his firm’s orders are exterior-only or desktops, but he sees that potentially increasing as time goes along.
To read more, click here
My comments: This article has interviews with an AMC and an appraiser who is not doing any interior inspections. My article in the June paid Appraisal Today newsletters is much longer, so it can cover many topics. See the ad above. How many exterior-only and desktops varies widely around the country. In many parts of California, such as the Bay Area, very few are done. But, overall it seems to be 20-25% (from several reliable sources, including Fannie Mae.) Many full appraisals are done in the northeast due to the large number of infected people.
Was It a Bad Case of Shingles? – It’s All About the Water and Not About the Pandemic!
Our dog, Whiskey says: “Hey buddy, I didn’t do it!”
Excerpts: Last month, I walked into our mud room and found a puddle of water on the floor. At first, I thought that our dog, Whiskey, had an accident. I do not know why I thought that. She is a good dog and rarely has an accident. Blaming our pets is just my knee-jerk reaction when I see a mess. When cleaning it up, I found that it was not that. Let’s just say it didn’t pass the smell test….
It was water. The puddle was next to a case of water bottles. So, my second thought is that perhaps one of the bottles sprung a leak. However, they were all full and dry. There is no plumbing in this room. The ceiling was dry, with no evidence of water intrusion. This had never happened before. I could not figure out where the water had come from. It was a mystery.
Flash forward a couple of weeks. It was a rainy day. I went into the mud room to find a puddle again, in the exact same place. This time, I saw water dripping from a canned ceiling light. Now I knew where the water was coming from. Was this a case of bad shingles?
How Water Travels
Water usually finds the path of least resistance. Sometimes, water can travel along surfaces, as gravity pulls it downward. It can enter into the smallest areas. A single missing shingle or nail hole in the roof, can be enough of a space for water to enter through. When water enters an area, it can continue to travel downwards, on different surfaces, until it meets a surface that stops it. In this case, it was our laminate flooring. If our flooring had been porous, the water would have continued through the floor to the crawl space.
Because of the way water travels, if you see a spot in your ceiling, or other area in which there is water intrusion, that does not always mean that the leak is directly over that area.
To read more and see some funny videos, animated gifs, photos, etc. click here
My comment: Water can destroy everything, even granite rocks eventually. One of my favorite documentaries is what happens to human construction decades after all (or most) humans are gone. Buildings, freeways, houses, landscaping, etc. etc. are gone. The land is returned to nature.
When appraising any property, I always look for leaks or potential leaks. If a roof is old, I tell the owners water will destroy their home and mention the documentary above. Get the leak fixed (or roof replaced) as soon as possible.
Tracking leaks is an art. I have a friend who is a “natural”. He can find a leak within 5 minutes.
Upstate New York Round (Circular) House, 7,500 sq.ft.
Excerpt: For what it’s worth, the Round House all started with a triangle. In 1966, before it rolled onto the property, an A-frame home was constructed on the 10-acre plot. Now attached to the back of the round residence, the original one-bedroom A-frame gives off a rustic and cool ski chalet vibe.
To read more and watch the very interesting video (with aerial views) click here
Note: there may be an ad. Worth waiting for it to finish. When I clicked on the video, the ad was in a foreign language for unknown reason.
My comment: Don’t ask me to measure this house! When viewed from above, the design is similar to a hula hoop.
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 firstname.lastname@example.org . Or call 800-839-0227, MTW 7AM to noon, Pacific time.
Mortgage applications increased 2.7 percent from one week earlier,
WASHINGTON, D.C. (May 27, 2020) – Mortgage applications increased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 22, 2020.
The Market Composite Index, a measure of mortgage loan application volume, increased 2.7 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 decreased 0.2 percent from the previous week and was 176 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 9 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 9 percent higher than the same week one year ago.
“The housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search. Purchase applications increased 9 percent last week – the sixth consecutive weekly increase and a jump of 54 percent since early April. Additionally, the purchase loan amount has increased steadily in recent weeks and is now at its highest level since mid-March,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite mortgage rates hovering near MBA’s all-time survey low, refinance activity was essentially flat but still 176 percent higher than last year. Conventional refinance applications increased 2 percent, while government refinancing was down almost 7 percent.”
The refinance share of mortgage activity decreased to 62.6 percent of total applications from 64.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.4 percent of total applications.
Looking at the impact at the state level, here are results showing the non-seasonally adjusted, week-over- week percent change in the number of purchase applications from Washington, California and New York:
The FHA share of total applications decreased to 11.2 percent from 11.5 percent the week prior. The VA share of total applications decreased to 12.4 percent from 13.4 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 ($510,400 or less) increased to 3.42 percent from 3.41 percent, with points remaining unchanged at 0.33 (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 $510,400) increased to 3.71 percent from 3.66 percent, with points decreasing to 0.29 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 3.41 percent from 3.46 percent, with points decreasing to 0.30 from 0.33 (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 2.87 percent from 2.88 percent, with points increasing to 0.30 from 0.27 (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 3.08 percent from 3.19 percent, with points increasing to 0.01 from -0.05 (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.
NOTE: NEW POSTAL ADDRESS
Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave. Suite 203 Alameda, CA 94501