NAR Appraisal Survey 2022
Excerpts from NAR Report (link below):
In May 2022, NAR Research conducted a survey of all 9,700 appraiser members and 50,000 randomly-selected non-appraiser members.
54% of appraisers report that appraisal management companies (AMCs) have been among the greatest challenges in their businesses in the past year; 30% cite expanding regulations.
The typical appraiser reports a 40-mile radius in which they conduct appraisals. 68% report practicing within a radius of 20–59 miles.
Virtually all appraiser respondents (97 percent) have conducted an in-person appraisal, and 79 percent have done so by desktop/drive-by appraisal. Eleven percent cite evaluations (non-appraisal opinions of value). The eight percent who cite other valuation methods most often explained that they use a hybrid approach or mostly an exterior appraisal.
Two-thirds of appraisers (66 percent) are asked monthly or more often to conduct appraisals outside of the geographic area or the property type in which they feel their expertise is. Close to one-third conduct an appraisal outside their area of expertise on a weekly basis. Twenty-three percent of appraisers report never having to conduct an appraisal outside of their geographic area or area of expertise.
Appraisers are significantly more likely than other members to say that the most competent are not being selected most of the time (22 percent vs. nine percent) or at all (16 percent vs. six percent) and much less likely to say they are being selected most of the time (12 percent vs. 23 percent).
A few comments:
- “Appraisal Management Companies are destroying our profession.”
- “Appraisers are the “truth tellers” in this process. While agents can “puff” we cannot! If a property is listed at $315k, with an offer of $345k, do not harass the appraiser when the appraisal comes in at list!! If it had a market value of $345k, it would have listed at $345k!”
- “AMCs are a significant issue for not only appraisers but for the consumer. They bid out each appraisal to maximize their profit, usually harming turn times and passing on costs to the appraiser and to the borrower.”
To read the report, click here
My comments: Read the PDF report. Easy to read with good graphics, similar to the graphic above. Since it was done in May, it focuses on appraiser shortages and delays, mostly from the non-appraiser respondents.
It has both appraiser and non-appraiser survey questions, which is a bit tricky to read. Some of the questions are relevant today, such as AMCs. Other questions are not as relevant, such as fees, as the appraisal market in many areas is not as strong as in May when the survey was done.
How much appraisers travel was interesting. I only work in my island city, 1 mile by 3.5 miles. I hate leaving the Island! Island mentality, I guess ;> I used to work in a much larger area, of course.
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NOTE: Please scroll down to read the other topics in this long blog post on Fannie Mae, Real estate market, Disbility, Redlining, unusual homes, mortgage origination stats, etc.
The Tectonic House in Venice Beach, CA – $5.8M
Excerpts: Year Built: 2001. 2,522 square feet (four bedrooms, three-and-a-half baths). Lot Size: 0.06 acres. The multistory home bucks convention, boasting an eccentric, inverted design.
The Simpsons writer and producer J. Stewart Burns acquired the property in 2014 for $2,300,000. “Owning this house is a bit like being a celebrity in very weird, eclectic circles,” he said in a recent interview, noting how architecture students would regularly visit to study the home’s sculptural construction.
The residence is comprised of two steel-framed towers, connected via a wooden bridge.
To read more click here
My comments: In the past, Venice was a good place to buy an affordable home, with small lots and houses next to the Pacific Ocean. Recently it has become much more expensive, like many other gentrified areas. 34-minute freeway drive from Los Angeles is a significant factor, of course.
Fannie Mae’s Quality Insider, written for lenders
First table: How do you identify and address appraisal defects?
Table of Top 5 appraisal defects, with Sample Defect Details and CU info
- Inadequate Comparable Adjustment(s)
- Failure to Adjust Comparables
- Use of Physically Dissimilar Comparable Sale(s) – GLA
- Inappropriate Comparable Sale(s) Selection Due to Location
- Use of Dissimilar Comparable Sale(s) Due to Site Characteristics
To read more, click here
My comment: Worth reading to find out Fannie’s advice to lenders on appraisal defects. Good tables and explanations, with references to the Selling Guide. The report also shows how lender reviewers use Collateral Underwriter.
Disability is your greatest risk
Excerpts: 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, speak and see.
If disabled, you may be able to continue working, but at a reduced capacity. Or, you may not be able to do field work, but you can do desktop appraisals and reviews. 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
For appraisers that work solo, the risk is significantly higher, as there is no one else to do appraisals to provide income.
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Three articles about the current housing market “Big Picture”
I have three links below showing that markets vary widely around the country. Of course, this is aggregated and does not focus on market segments such as neighborhood and price range.
Housing Prices Plunge in 77% of U.S. Metro Areas: ‘The Turn Has Finally Happened’
By Edward J. Pinto | Shawn Tully AEI. September 28, 2022
One page, easy to read. AEI does excellent analyses of housing data.
“In the Fortune article below, Shawn Tully discusses the recent downtown in the housing market and what the market could like like over the coming months with Ed Pinto, the Director of AEI’s Housing Center.”
To read more, click here
Affordable Midwest and East Coast Markets Are Holding Up Best as the U.S. Housing Market Cools. September 27, 2022.
Redfin reports Chicago, Albany, and Milwaukee are among the housing markets holding up better than others as the U.S. faces high mortgage rates and an uncertain economy
In places like Illinois and upstate New York, homebuyer demand is almost as strong as earlier in the year
To read more, click here
Housing Market Update: Rising Prices Amid Falling Demand and Supply Reflect a “New Weird” September 22, 2022
Few people are choosing to buy homes with mortgage rates well above 6%; even fewer homeowners want to sell.
“There has been a lot of talk of a ‘new normal,’ but what’s happening in the housing market feels more like a ‘new weird,’” said Redfin Deputy Chief Economist Taylor Marr.
To read more, click here
My comments: There are lots of opinions, data analysis, and other writing on today’s changing market. I have included links to three that I consider reliable articles above. I love the “the new weird” comment!
As we all know, this is aggregated historic information and is out of date from the day it is published. Only the “boots on the ground” appraisers look at what is happening in market segments where they appraise. We look at trends in sales, pendings, listings, days on market, expired, number of offers, etc. I regularly look at the listing history if there are expired listings. Sometimes real estate agents take them on and off the market.
Lakeland Bank To Spend $13M To Settle ‘Redlining’ Claims
The agreement with N.J. bank is the third-largest redlining settlement in Justice Department history.
Excerpts: Lakeland engaged in a pattern or practice of lending discrimination by “redlining” in the Newark metropolitan area. The settlement provides over $13 million to ensure equal home loan opportunities.
The new initiative represents the department’s most aggressive and coordinated enforcement effort to address redlining.
The gap in homeownership rates between white and black families is larger today than it was in 1960.
To read more, click here
My comments: Appraisers don’t make any more money if biased. An appraiser can easily lose a lender client because they were low on an appraisal. Lenders, real estate agents, etc. make more money. That’s why they discriminate. This is one of the few articles I have seen about lenders and bias.
Bonita Domes and Pool in Joshua Tree, California
Excerpts: One of a kind architecture, Bonita Domes has been recently built to code, constructed in the Cal Earth technique of Super Adobe.
Inside the dome suites you’ll find two large social domes, each with two sleeping pods and a full bathroom with shower. Connecting the domes is a kitchen and breakfast nook with everything you should need to prepare meals during your stay.
Each of the four sleeping pods is like a private bedroom; a bump out in the dome wall, with new high quality mattresses built into each.
To read more, click here
My comments: I have no idea why there are so many strange homes in Joshua Tree way out in the desert!
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.mba.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 go to www.appraisaltoday.com/order Or call 510-865-8041, MTW 7 AM to noon, Pacific time.
My comments: Rates are going up. Some appraisers are very busy, and others have little work. Varies widely around the country.
Mortgage applications decreased 14.2 percent from one week earlier
Mortgage applications decreased 14.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 30, 2022.
The Market Composite Index, a measure of mortgage loan application volume, decreased 14.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 14 percent compared with the previous week. The Refinance Index decreased 18 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 13 percent from one week earlier. The unadjusted Purchase Index decreased 13 percent compared with the previous week and was 37 percent lower than the same week one year ago.
“Mortgage rates continued to climb last week, causing another pullback in overall application activity, which dropped to its slowest pace since 1997. The 30-year fixed rate hit 6.75 percent last week – the highest rate since 2006,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone. The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37 percent behind last year’s pace. Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12 percent of applications.”
Added Kan, “There was also an impact from Hurricane Ian’s arrival in Florida last week, which prompted widespread closings and evacuations. Applications in Florida fell 31 percent, compared to 14 percent overall, on a non-seasonally adjusted basis.”
The refinance share of mortgage activity decreased to 29.0 percent of total applications from 30.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 11.8 percent of total applications.
The FHA share of total applications increased to 13.2 percent from 12.5 percent the week prior. The VA share of total applications remained unchanged at 10.7 percent from the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.75 percent from 6.52 percent, with points decreasing to 0.95 from 1.15 (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 $647,200) increased to 6.14 percent from 6.01 percent, with points increasing to 0.79 from 0.70 (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 6.60 percent from 6.17 percent, with points increasing to 1.51 from 1.31 (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 5.96 percent from 5.70 percent, with points decreasing to 1.08 from 1.33 (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 5.36 percent from 5.30 percent, with points decreasing to 1.02 from 1.28 (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