Three 2022 Residential Appraisal Forecasts
The 20 appraisal events that will surface, occur or continue on into 2022
By Tim Andersen, MAI
Excerpt of three of the Events:
6. So far, appraisers have not organized themselves to fight the bogus bias and discrimination charges against them. Despite the need for such pugilistic organization, however, the status quo won’t change.
9. More and more state appraisal and taxing authorities will recognize Fannie Mae’s move to use the ANSI measurement standards by adopting those standards themselves. While this is likely a positive step, it will result in another level of regulation and standards imposed on appraisers.
10. State appraisal boards will continue their migration toward becoming consumer advocacy agencies; thus, their migration away from their original purpose, the credentialing, educating, and disciplining of real estate appraisers.
Warning: some are very controversial!
To read all 20, click here. I posted this on my blog, so you can make comments!
Settling on a New Normal for Appraisals in 2022
By Appraisal Buzz
Short, with three topics: Modernization, Desktops, and a more equitable future.
Excerpt: The appraisal industry has remained unchanged in many ways over the past 70 years. However, as the world shifts to more remote and technology-aided job opportunities, you’ll likely witness lasting transformations within the profession, even in the near future.
…After decades of turning a blind eye, the profession is finally acknowledging its shortcomings. Now, it’s promising to address racial bias, employee shortages and other related issues that affect the mortgage process.
2022 Appraisal Outlook: Appraisers Cast Optimistic Eye On Coming Year
Interviews with appraisers and overall comments
Excerpt: “Many changes will come in 2022,” predicts Alan Hummel, sole proprietor, of The Hummel Group (St. Paul, Minn.). “The top ones are reconsideration of values, and growing prevalence of desktop appraisals. Increasing numbers of people are asking the appraiser to give more information on how they reached their conclusions. Transparency from the appraiser will be key to mitigating reconsideration of value requests: a combination of more robust narrative reporting, as to why some sales are comparable and some aren’t, and a visual representation with charts, and maps.”
Hummel explains that one of the parties to the transaction will often question the sales used as comparables. If appraisers can provide more information as to why they selected those comparables, fewer questions will ensue.
UAD to Assist Local Assessors?
By Dave Towne
Excerpt: Kaegi (Cook County, Illinois) has suggested that the Uniform Appraisal Database maintained by the federally chartered mortgage buyers Fannie Mae and Freddie Mac might help plug the gap. The UAD contains information on the condition and quality of millions of U.S. homes that were appraised for mortgages.
Kaegi recruited 15 other tax officials from major urban areas — including Seattle, Miami, Philadelphia, and Dallas — to join him in asking for access to that information.
My comment: Appraisers want it also!! UAD has many fewer choices for quality than California assessors. Appraisers need standardized square footage!!
A New ‘Standard’ for ROV Requests
By Dave Towne
Excerpt: Since beginning using this Standard, I have had ZERO ROV requests.
I’m making this new Appraisers’ ROV Standard available to you, which you can use as written if you like, or modify it to your liking. No other similar ROV Standard exists, as far as I know.
By the way, the only way this will become effective across the appraising spectrum is if it is used! Do so!
If client (or anyone else with a financial interest in this property) disputes the Opinion of Market Value (OMV) as reported, the client may submit to the appraiser within 9 business days of report submission no more than three additional recent property sales with similar characteristics as the subject** for evaluation, along with a written explanation stating why these are better than the comparables included in the report. Additional sales must NOT be based only on ‘sale price.’ These must be within the same geographic neighborhood area or in reasonable proximity (x miles or less) to the subject’s location.
If additional sales are submitted to client by someone with a financial interest in the property, the client must FIRST evaluate those for appropriateness to this assignment, before sending to the appraiser for consideration.
If upon the appraiser’s analysis, any new submitted sales are deemed more appropriate than the original comparables in the report, the appraiser reserves the right to modify the report’s OMV and submit a revised report with a changed value. But there is no guarantee that any value change will be made.
**Similar characteristics: Design/Style, Gross Living Area (GLA), Age, Updates, Lot Size, Outbuildings, Location in area
In the statement above, you define the (x miles or less), based on the subject’s location and neighborhood within the region.
To read more plus many appraiser comments, click here
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What you need to know about the new ANSI standards will be in the February issue of the Monthly Appraisal today Newsletter!
I started researching it on December 15, the day the announcement came out. I read all the material about how the standard was developed, including all the suggestions, who is on the Consensus Committee, what is ANSI, etc. Plus taking webinars and classes on the topic. I will be interviewing people to find out the “back story”: Who, What, Why, and When.
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NAR President Charlie Oppler Apologizes for Past Policies that Contributed to Racial Inequality
Excerpt: “What Realtors® did was an outrage to our morals and our ideals. It was a betrayal of our commitment to fairness and equality. I’m here today, as the President of the National Association of Realtors®, to say that we were wrong,” Oppler said. “We can’t go back to fix the mistakes of the past, but we can look at this problem squarely in the eye. And, on behalf of our industry, we can say that what Realtors® did was shameful, and we are sorry.”
NAR initially opposed passage of the Fair Housing Act in 1968, and at one time allowed the exclusion of members based on race or sex. This discrimination was part of a systematic policy of residential racial segregation, led by the federal government and supported by America’s banking system and real estate industry, and driven by practices like redlining.
This is a short article
The National Association of Realtors Is Sorry About All the Discrimination
Excerpt: Real estate agents helped create today’s deeply segregated communities. In the 1930s they provided the raw neighborhood intelligence, using starkly racist language about “negro-blighted” districts and the “infiltration of undesirable racial elements,” that aided in the creation of the infamous redlining maps denying federally backed loans to people of color. They came up with the idea of loading property deeds with restrictive covenants that kept Black people out of the most desirable neighborhoods. The NAR’s predecessor organization opposed the Fair Housing Act of 1968, which barred discrimination in home sales. In case that all sounds like ancient history, multiple instances of members airing racist views on social media in 2020 led the group to adopt a formal code barring hate speech.
This is a longer article, including differences of opinion in NAR. Warning: some political comments.
My comments: Appraisers complied with lenders not doing loans in certain areas during the redlining areas. Discrimination by appraisers is rare today. Mostly incompetency. Once again appraisers are the victims. This is Nothing compared with what real estate agents did. Some are still doing it. My house was redlined. Some Bay Area cities show the effects now: segregation by neighborhoods, some of the highest in the country.
ANSI Update – Problems ordering Standards, New video
ANSI Update – Problems ordering Standards, New video
It may be hard to order and receive the ANSI standards document. It is copyrighted and can’t be sent to other appraisers as they don’t have online ordering. I guess Fannie didn’t tell them about their Dec. 15 announcement. I purchased mine the next day. 20,000 appraisers need a copy!!
The provider, Home Innovations, is getting thousands of requests to purchase the standards for $25. You have to fill out a credit card form and fax or email it. They will email you the report. Link to purchase the Standards https://www.homeinnovation.com/z765
Last week’s Friday newsletter had a long list of ANSI resources. To read it, click here.
If you already use ANSI, or just want info on the changes, watch a 45-minute update ($39.95) No CE, by Hamp Thomas from appraiserelearning.com To watch, click here . I watched it – very good.
Hopefully, Fannie will have training available, such as a webinar.
Fannie, E&O companies, appraisal organizations, etc. have been getting many calls from appraisers. Many are complaining about the Standards. In my opinion, we have needed standards for residential home measurements for decades. BOMA set up their standards for office buildings about 50 years ago!!
This ANSI standard is nothing compared with UAD and 1004MC!!! Of course, Fannie sending the notice out on Dec. 15 was not the best time as many are thinking about the holidays.
Fannie attended the original meetings prior to the first standard in 1996 and has been saying for a while they would do something. But, Fannie takes so long to make changes, so I didn’t pay much attention. Many other organizations attended those meetings.
One Man’s Very Dark Vision: $250K All-Black Octagon Home in Illinois
Excerpts: What the pictures show is an all-black, two-bedroom residence in Lincoln, IL, that looks like a Goth teenager’s dream home. If you’re not into dark colors, be prepared to buy plenty of paint.
“It’s not creepy inside when you’re actually in the house. It doesn’t have a dark depressing vibe—like I think a lot of people may think it does,” Goodman says. “I’m definitely not Gothic and I’ve never had an all-black house before. To me, when you’re inside, it’s a very modern, clean, and unique look.”
On the market for $250,000, the 1,547-square-foot home has undergone a major update from Goodman.
He adds that he had always had his eye on the unique home, which is built in the shape of an octagon.
“When the opportunity presented itself, I bought it. I just thought I would modernize this place, and then I’ll spin it. I started with the black roof, and then it all kind of went from there.”
To read more and see lots of photos inside and outside, click here
My comment: Cost to Cure. Painting
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. I have been following this data since 1993. 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 7 AM to noon, Pacific time.
Mortgage applications decreased 2.7 percent from two weeks earlier
WASHINGTON, D.C. (January 5, 2022) – Mortgage applications decreased 2.7 percent from two weeks earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 31, 2021. The results include adjustments to account for the holidays.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.7 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 32 percent compared with the two weeks ago. The holiday adjusted Refinance Index decreased 2 percent from the two weeks ago and was 40 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from two weeks earlier. The unadjusted Purchase Index decreased 32 percent compared with the two weeks ago and was 12 percent lower than the same week one year ago.
“Mortgage rates continued to creep higher over the past two weeks, as markets maintained an optimistic view of the economy. The 30-year fixed rate increased 6 basis points to 3.33 percent – the highest since April 2021. The higher rates to close 2021 caused refinance activity to decrease 2.2 percent. Refinance demand continues to dwindle, as many borrowers refinanced in 2020, and in early 2021 – when mortgage rates were around 40 basis points lower,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The purchase market also finished the year on a slower note, with the final week coming in at the weakest since October 2021. Even though average loan sizes were lower, home-price appreciation remains at very high levels.”
Added Kan, “Despite supply and affordability challenges, 2021 was a record year for purchase originations. MBA expects 2022 to be even stronger, with total purchase activity reaching $1.74 trillion.”
While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only.
The refinance share of mortgage activity increased to 65.4 percent of total applications from 63.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.3 percent of total applications.
The FHA share of total applications increased to 9.2 percent from 8.5 percent the week prior. The VA share of total applications decreased to 11.3 percent from 11.4 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.33 percent from 3.31 percent, with points increasing to 0.48 from 0.38 (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 $548,250) decreased to 3.31 percent from 3.35 percent, with points increasing to 0.38 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 increased to 3.40 percent from 3.39 percent, with points increasing to 0.42 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 15-year fixed-rate mortgages remained unchanged at 2.60 percent, with points increasing to 0.31 from 0.29 (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 2.45 percent from 2.74 percent, with points increasing to 0.33 from 0.22 (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
1826 Clement Ave. Suite 203 Alameda, CA 94501