August 23, 2024
What’s in This Newsletter (in Order, Scroll Down)
- Construction Progress Reports: ADUs & Remodels
- What Is an Appraisal Review and Who Can Be a Reviewer?
- Billionaire Getty Heir Puts Extraordinary Greek Temple (Temple of Wings) on the Market for $5 Million
- Redfin Reports Investor Home Purchases Post Biggest Increase in Two Years
- The Biggest Home in Each State
- Objectionable Valuations Become Hate Speech, Inflating Home Prices
- Mortgage applications decreased 10.1 percent from one week earlier
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What Is an Appraisal Review and Who Can Be a Reviewer?
Excerpts:
Topics:
- What is an appraisal review?
- Fact-checking vs appraisal review
- Types of appraisal review reports
- Why are appraisal reviews needed?
- Who requests a property appraisal review?
- Who can review a property appraisal?
The client base for appraisal reviews is vast and diverse, encompassing a wide range of sectors and needs.
- Lenders rely on reviews to ensure the accuracy and reliability of appraisals before making lending decisions.
- Investors use them to evaluate the value and risk of potential investments.
- Attorneys order reviews to support legal matters involving property valuation, including disputes and condemnation cases.
- Insurance companies use them for verifying property values in underwriting and claims.
- Government agencies may request reviews for regulatory purposes, tax purposes, or right-of-way acquisitions.
To read more, Click Here
My comments: Comprehensive info on reviews. Short and well written. The best I have read, whether you are a reviewer or an appraiser being reviewed. Reviewing is an excellent option for fee appraisers and staff appraisers.
Personally, I quit doing lender reviews many years ago. I preferred to do the appraisal rather than reviewing an appraisal where I have to also appraise the property. Back in the “old days” I reviewed competent local appraisers I knew.
The final blow later for me was a 4 unit property where the appraiser appraised it as a home. There were 4 electrical meters and lots of cars. When I called my client, they just wanted to know if the value was the same as a house or 4 units. I did not reply. It was my last review for lending purposes. I verified with the city that it was a 4 unit property. There was no information that it had been converted to a single family home. Mortgage rates and requirements are lower for SFRs.
On the other side, many appraisers who do lender reviews say they learned a lot about how appraisers appraise.
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Extraordinary Greek Temple (Temple of Wings) in Berkeley, CA on the Market for $5 Million
Excerpts: 3 bedrooms, 4 baths, 3,724 sq.ft., 0.38 Acre lot.
The astonishing Greco-Roman-style villa comes with 16 Corinthian columns and sweeping views of the San Francisco skyline and the Bay.
Getty (the owner) purchased the remarkable property in 1994 for $950,000, according to Realtor.com® records. He and his wife meticulously maintained the historic home throughout their tenure.
The home features a dramatic entrance with an outdoor semicircular pavilion with 16 Corinthian columns and a mezzanine level.
The three-bedroom home spans almost 4,000 square feet and is divided into north and south wings.
The north wing features sliding glass doors to the living spaces for an indoor-outdoor flow for both casual and large-scale entertaining.
The finishes include cement stone flooring, high ceilings punctuated with the original frescoed beams, and a wood-burning fireplace with marble and wrought-iron detailing.
To read more, Click Here
My comments: Over the years I have done many appraisals in Berkeley. A local appraiser told me to drive by and see the “Greek Temple” from the street. I saw A Very Special Home!
And a challenging appraisal assignment with a High Fee…
For lots more info, Google Temple of Wings Berkeley CA.
There are other unusual homes in Berkeley, such as the Fish House, which I wrote about in a previous newsletter. An appraiser I know had appraised it.
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Redfin Reports Investor Home Purchases Post Biggest Increase in Two Years
Excerpts: Investors purchased 16.8% of U.S. homes that sold in the second quarter—the highest second-quarter share on record aside from 2022. That’s down from an all-time high of 20.8% hit during the pandemic but up from 16% a year earlier.
Investor purchases of U.S. homes rose 3.4% year over year in the second quarter—the largest increase since the second quarter of 2022. That is according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.
Investors purchased $43 billion worth of homes in the second quarter, up 13.7% from a year earlier—also the biggest gain in two years.
Investor activity in the housing market is stabilizing following several years of dramatic ups and downs. Investor home purchases more than doubled during the pandemic homebuying boom in 2021, and then plunged nearly 50% last year as declining rents and home values ate into potential profits.
“One reason real estate investors are coming out of hibernation is to take advantage of robust demand from renters,” said Redfin Senior Economist Sheharyar Bokhari. “Elevated home prices and mortgage rates have pushed homeownership out of reach for a lot of Americans, which is fueling demand for rentals. Investors, many of whom can afford to pay in cash to avoid the sting of high mortgage rates, are cashing in on that demand.”
To read more, Click Here
My comment: This is definitely affecting some local real estate markets with homes being rented instead of available for sale.
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Review: Residential Property Appraisal Buy This Book!!
By Mark Ratterman, MAI, SRA
Residential Property Appraisal is the best well-written appraisal books I
have ever read, published in February 2020. Understandable with excellent
“real life” examples. The book is still relevant in 2024.
This book is very useful for all residential appraisers, especially those
who work for lenders, with many references to Fannie guidelines, USPAP,
etc.
Fannie and USPAP are unfortunately misunderstood by many,
especially lender reviewers. You could copy and paste from this book
(PDF) and include the excerpt in your response to “reviewer” questions.
The new book explores all aspects of homeownership, value, and
economics and details all the appraisal process steps. The book thoroughly
discusses specialty residential property types and markets.
Each chapter includes examples illustrating common scenarios
encountered in appraisal practice and presents definitions of key terms to
help the reader understand the important concepts presented. The text is
comprehensive and accessible, making it suitable for both classroom
instruction and individual self-study.
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The Biggest Home in Each State
Just For Fun!
Excerpts: Check out the biggest houses by square footage in the U.S. The biggest ones might surprise you.
Biltmore Estate, North Carolina
The Biltmore Estate in Asheville, North Carolina, is the largest home in the U.S. and comes in at a staggering 175,000 square feet. That’s nearly 70,000 square feet more than the next biggest home in the U.S.
The estate was built for the Vanderbilt family, which built its fortune through railroads, and had 35 bedrooms, 43 bathrooms and 65 fireplaces. It was officially opened in 1895, six years after construction started. In 1930, the estate opened to the public and is now the top tourist attraction in Asheville.
To read more, Click Here
My comments: What’s the biggest home in your state? I don’t know where they got the info, but it is fun and interesting.
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Objectionable Valuations Become Hate Speech, Inflating Home Prices
By Jeremy Bagott August 21, 2024
Excerpts: The censorship, scapegoating and sidelining of appraisers has done real damage to borrowers and the purchasers of bonds…
To avoid claims of censorship, Freddie and Fannie have been simply waiving appraisals under a program dishonestly called “value acceptance.” It’s the new “liar loan.” This time, the lying is about the value of the collateral (in the run-up to the 2007-2008 financial crisis, it was the borrower stating his or her own income with no third-party verification).
Among other things, the waived appraisals have allowed predatory closing costs to be hidden in inflated contract prices as sellers try to recoup concessions paid on behalf of cash-strapped buyers. Appraisers are required to adjust out atypical concessions in their valuations. “Often, agents attempt to have the seller pay for the buyer’s closing costs, which inflates the true market value of the property being appraised,” said appraiser Richard Hagar, who has taught classes on real estate, mortgage, and appraisal fraud to law enforcement officials since 2004.
To read more, Click Here
My comments: Interesting analysis, typical for Bagott’s posts.
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Mortgage applications decreased 10.1 percent from one week earlier,
WASHINGTON, D.C. (August 14, 2024) — Mortgage applications decreased 10.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 16, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 10.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 11 percent compared with the previous week. The Refinance Index decreased 15 percent from the previous week and was 90 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 8 percent lower than the same week one year ago.
“Both mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a quick drop in mortgage rates. Applications were lower last week, led by a 15 percent decrease in refinance activity despite the 30-year fixed mortgage rate declining for the third consecutive week to 6.5 percent, the lowest since May 2023,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The level of refinance applications remains 23 percent higher than a month ago and the past two weeks have seen the strongest weekly readings since 2022, as borrowers have sought lower rates. FHA refinance applications bucked the trend and increased for the sixth straight week.”
Added Kan, “Purchase applications also declined last week, reaching the lowest level since February 2024. Home sales have slowed despite rising inventory levels. Even with lower mortgage rates, potential buyers might be more selective now that there are more options.”
The refinance share of mortgage activity decreased to 46.3 percent of total applications from 48.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.5 percent of total applications.
The FHA share of total applications increased to 15.6 percent from 13.5 percent the week prior. The VA share of total applications decreased to 15.3 percent from 16.8 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.50 percent from 6.54 percent, with points increasing to 0.60 from 0.57 (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 $766,550) decreased to 6.68 percent from 6.78 percent, with points increasing to 0.56 from 0.37 (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 6.42 percent from 6.49 percent, with points increasing to 0.78 from 0.77 (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 increased to 6.04 percent from 5.96 percent, with points increasing to 0.71 from 0.65 (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 6.25 percent from 6.04 percent, with points decreasing to 0.57 from 0.87 (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.
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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, Click Here.
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 and down. Many appraisers are not busy. Some are busy, usually with non-lender appraisals. Loan originations are going up and down weekly. Mortgage applications decreased 10.1 percent from one week earlier
WASHINGTON, D.C. (August 14, 2024) — Mortgage applications decreased 10.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 16, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 10.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 11 percent compared with the previous week. The Refinance Index decreased 15 percent from the previous week and was 90 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 8 percent lower than the same week one year ago.
“Both mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a quick drop in mortgage rates. Applications were lower last week, led by a 15 percent decrease in refinance activity despite the 30-year fixed mortgage rate declining for the third consecutive week to 6.5 percent, the lowest since May 2023,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The level of refinance applications remains 23 percent higher than a month ago and the past two weeks have seen the strongest weekly readings since 2022, as borrowers have sought lower rates. FHA refinance applications bucked the trend and increased for the sixth straight week.”
Added Kan, “Purchase applications also declined last week, reaching the lowest level since February 2024. Home sales have slowed despite rising inventory levels. Even with lower mortgage rates, potential buyers might be more selective now that there are more options.”
The refinance share of mortgage activity decreased to 46.3 percent of total applications from 48.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.5 percent of total applications.
The FHA share of total applications increased to 15.6 percent from 13.5 percent the week prior. The VA share of total applications decreased to 15.3 percent from 16.8 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.50 percent from 6.54 percent, with points increasing to 0.60 from 0.57 (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 $766,550) decreased to 6.68 percent from 6.78 percent, with points increasing to 0.56 from 0.37 (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 6.42 percent from 6.49 percent, with points increasing to 0.78 from 0.77 (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 increased to 6.04 percent from 5.96 percent, with points increasing to 0.71 from 0.65 (including the origination fee) for 80 percent LTV loans. The effective rate increased from la
The average contract interest rate for 5/1 ARMs increased to 6.25 percent from 6.04 percent, with points decreasing to 0.57 from 0.87 (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.
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Ann O’Rourke, MAI, SRA, MBA
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