Newz: GSE Privatization, 2025 Forecasts, Unique Homes
January 10, 2025
What’s in This Newsletter (In Order, Scroll Down)
My comments on topics: This newsletter is long. Almost all the news items I have received are 2025 Forecasts, so I have included some of them in this newsletter.
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- LIA: Disclosing Identity of Complaining Party
- Why Selling a Unique Home Is Challenging — and Can Leave Some Owners Feeling ‘Stiffed
- 2025 Housing Market Predictions: Key Insights for Real Estate Appraisers The National View
- Real estate trends to watch in 2025 – The Local View
- Appraisal Industry Outlook Under Trump Administration
- Will Homeowners Finally Sell in 2025? Here’s What the Experts Say, Amid a Glimmer of Hope
- GSE Privatization A ‘Herculean Task’
- Mortgage applications decreased 3.7 percent from one week earlier
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Why Selling a Unique Home Is Challenging — and Can Leave Some Owners Feeling ‘Stiffed’
Excerpts: When Ann Levengood decided to let go of her beloved double-dome home two hours outside of Seattle, she thought she did everything a seller needed to do to get a good price.
“We built a new garage and completely did the heavy work with a $50,000 new roof, new drainage, new retaining walls, landscaping (including removal of alder trees), interior was completely redone, new lighting, new skylights, you name it. We had zero tasks upon inspection,” she tells Realtor.com®
“The inspector had never seen such a clean house.” But when it came time to price the Poulsbo property, Levengood and her agent didn’t see eye to eye. While the proud owner wanted to price the house at $425,000, the cautious agent listed it at $339,000.
The problem? The house, with its double domes, was unusual.
Even so, the home took only two months to close a sale at full price, leaving Levengood with the lingering feeling that she had been stiffed. “I couldn’t even get agents to come out and see it,” she says.
Not only can it be more difficult to find the proper buyer for such a home, but it is also challenging to find comps.
To read more, Click Here
My comments: Worth reading the article. All appraisers appraise unique homes, which are often very challenging, especially for comps and market analysis. This article helps appraisers understand the difficulties in selling unique homes. I have never read about this important topic.
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2025 Housing Market Predictions: Key Insights for Real Estate Appraisers – The National View
By Kevin Hecht, Appraiser and Economist
Excerpts:
Summary of Key Trends – The National View
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- Mortgage Rates: Expected to stabilize between 6% and 7%, with modest declines towards the latter half of the year.
- Home Prices: Predicted growth of 2.6% to 4% year-over-year, reflecting steady demand and incremental inventory improvements.
- Home Sales: Anticipated increase of 7% to 9%, driven by improved inventory and easing mortgage rates.
- Inventory Levels: Incremental improvement, with a forecasted 11.7% rise in available housing inventory.
- Policy Influences: Potential shifts due to tariff policies and deregulation under the current administration.
- Regional Trends: The Southwest is moving towards a buyer’s market, while multifamily developments in the South and Midwest enhance rental affordability.
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As an economist, I have witnessed the housing market evolve through varying cycles, and 2025 promises to be no different — a year of incremental recovery and stabilizing trends. Understanding these nuanced changes is crucial for real estate appraisers to deliver accurate valuations and stay ahead in a dynamic field. Let’s dive into the key insights for the year ahead…
Opportunities for Appraisers in 2025
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- Rising Transactions: More home sales will provide appraisers with increased opportunities, particularly in regions experiencing economic growth.
- Enhanced Expertise: With modest price growth and regional variations, clients will increasingly rely on appraisers to navigate market complexities.
- Policy Implications: Staying informed about the effects of tariffs, tax reforms, and deregulation will position appraisers as knowledgeable advisors.
- Adapting to Shifts: Expanding buyer’s markets and evolving rental trends will require appraisers to stay flexible and proactive in addressing client needs.
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To read more, Click Here
My comments: Worth reading. Good overall info for appraisers.
Real estate trends to watch in 2025 – The Local View
January 7, 2025
By Ryan Lundquist, Appraiser
Excerpts: NOTE: The housing market isn’t the same in every part of the country. I hope you get some value here, whether you’re local or not.
Sellers will continue to thaw out: Last year we saw more listings come to the market. In fact, we had about 3,500 more new listings than 2023 in the region. But the wild part is we were still missing over 11,500 new listings from the pre-2020 normal level. Can you see why prices have remained higher? Anyway, right now it looks like 2023 was a bottom for seller inactivity, which is a good thing. This year I expect for new listings in 2025 to outpace 2024 levels as lifestyle moves come up for sellers. We still won’t be anywhere close to a normal number of listings though.
New construction will do well again this year: Locally, I expect new construction to still do well. That may not be the vibe in some markets around the country, but 2024 was one of the strongest years we’ve seen over the past decade locally. Part of the success comes from buyers aching for quality inventory, so builders have a captive audience. But let’s be real that the huge x-factor is builders offering incentives.
Buyer demand will thaw out more: In 2024, we did better than 2023 and 2007. I know that’s not a huge flex, but having about 6% more closed sales in the region feels like a real win. What this means is we had over one thousand more buyers purchase homes last year. Look, the math still won’t work for many people, so don’t expect the floodgates of volume to open up in 2025, but we should get more buyers as long as rates hover around 7% instead of going higher.
To read the blog post, plus the appraiser comments, Click Here
My comments: Read Ryan’s other forecast topics and see his graphs for explaining what is happening in his market. How does this compare with your market?
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What are your best current and former AMC/lender clients? Now is the time to plan for the 2025 increase in appraisals.
In the January, 2025 issue of Appraisal Today
Excerpts: Business has been slow for lender appraisals, but is expected to go up in 2025. Mortgage rate drops are expected with stabilized interest rates. There is much pent up demand by owners for refis and buyers/sellers for sales
Your best clients for appraisal (and all) businesses are your previous
customers. Which are your best current and previous clients to focus on for getting business?
Don’t waste time randomly trying to get new lender clients. Instead, Use the
Rating Grid below to see which old clients you preferred or may be a good new client. You can research new clients and take one order to see if you like working for them.
Why previous clients?
A primary marketing advice I have always used, whether slow or busy: Your Best Prospects for Business Today Are Always Former Clients. This works for any business, but lender appraisals have significant increases and decreases in business. Why previous clients? They know you and you know them.
Of course any AMCs can change overnight from good to always taking the
lowest fee. Many see appraisers as all the same.
To read the full article with lots of tips on evaluating clients and a Client Rating Grid, plus 2+ years of previous issues, subscribe to the paid Appraisal Today at www.appraisaltoday.com/order .
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If you are a paid subscriber and did not receive the January 2025 issue emailed on Thursday, January 2, 2025 please email info@appraisaltoday.com, and we will send it to you. You can also hit the reply button. Be sure to include a comment requesting it.
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Appraisal Industry Outlook Under Trump Administration
January 6, 2025
by AppraisersBlogs
Excerpts: In a recent article, John D. Russell, JD explored the potential impact of the new Trump administration on the appraisal industry. With Republicans set to control the legislative process, Russell analyzed various documents and comments to distill expectations for how appraisal-related issues may be handled going forward.
He noted that the Trump administration’s efforts will likely reflect much of the Project 2025 platform, and that its approach to the GSEs and FHFA in the first term could mirror that of the previous administration. Late first-term efforts on housing finance reform may also provide insight into second term priorities.
Russell acknowledges the difficulty in predicting whether an administration’s policies and actions will ultimately benefit or hinder appraisers. However, he notes that the previous four years under the outgoing administration were characterized by an intense focus on appraisers and appraisals, particularly in relation to issues of bias and discrimination.
Russell reveals insights gleaned from numerous conversations with appraisers, many of whom express a profound sense of fatigue and a strong desire to simply carry out their professional duties to the best of their abilities – with objectivity, impartiality, and freedom from bias.
He suggests that the early phase of the Trump administration might offer a welcome respite for the appraisal profession, as the spotlight shifts to other priorities and allows appraisers some relief from the tumultuous scrutiny of recent years.
While the long-term effects remain to be seen, a change in focus could provide much-needed breathing room for appraisers to regroup and continue their important work without the added pressure of being under the political and social microscope.
To read the blog post, plus over 30 appraiser comments, Click Here
To read the original article, Click Here
My comments: Definitely worth reading this blog post and and/or the full article. I published a link to the original article in the November 25, 2024 issue and included a link to the original article listed above. The blog post above has excerpts from the article and appraiser comments.
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Will Homeowners Finally Sell in 2025? Here’s What the Experts Say, Amid a Glimmer of Hope
Jan 6, 2025
Excerpts: The ‘lock-in’ effect still grips homeowners
The projected above-6% mortgage rate for the duration of 2025 is bad news not only for prospective buyers, but also for would-be sellers, who have spent the past year in the grips of the “lock-in” effect, which has made them unwilling to list their properties and part with their current, significantly lower mortgage rates.
A report from the Consumer Financial Protection Bureau released back in September revealed that about 60% of the 50.8 million active mortgages had interest rates below 4%, way lower than the December rate of 6.91%.
Homeowners fortunate enough to be paying off their mortgage at the below-4% rate would think twice before moving to sell their home and then be forced to take out a new mortgage at a much higher rate.
“We expect the willingness of homeowners to sell their existing home and buy a new one to wane,” says Realtor.com Chief Economist Danielle Hale. “Put simply, potential home sellers and the market in general will still feel the effects of mortgage rate lock-in, which is more acute when rates are higher.”
To read more, Click Here
My comments: At 81 years old I am a few years ahead of the official boomer age. Why am I not selling? Very low mortgage payment with a low interest rate. Original price in 1986 was $120,000. Capital gains of about $1,000,000. The cost of a replacement home in my area is over $1,000,000.
At my recent Christmas family get together, I found out my niece is pregnant. There are relatively few births where I live and in other locations.
My niece’s mother in law was at the event and was looking forward to seeing her first grandchild and babysitting. But, she lives in Southern California. Her 4,000 sq.ft. home is way too big for her and her husband and she wants to sell. But, if she sells it and moves closer to her daughter and grandchild, after capital gains taxes, she will not have enough money to buy here.
Another major factor is parents wanting move closer to their children, one of the primary reasons for selling their home. If they live in an area with much lower prices than where her children live, they don’t have enough money to buy a home there. Sometimes the children moved to an urban area to get a job where there are higher priced homes.
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GSE Privatization A ‘Herculean Task’
Jan 07, 2025
Excerpts: Researchers say it’s difficult to see how GSE privatization would lead to lower mortgage rates.
Anticipation, uncertainty, and speculation continue to build concerning the impact on the housing market of policy shifts expected to be implemented by
the incoming Trump administration.
Possibly the most impactful item on the agenda for mortgage professionals pertains to the re-privatization of Fannie Mae and Freddie Mac, an effort begun during Trump’s first administration.
Ultimately, Patel and Shvartser assess it’s hard to see how GSE privatization would lead to lower mortgage rates that benefit the consumer. Privatization would carry significant execution risks and could adversely affect the secondary mortgage market, driving primary mortgage rates even higher.
The authors acknowledge that the push for privatization is not surprising considering that conservatorship was never intended to be a permanent solution.
The big question emphasized in their paper asks: What happens to the implicit guarantee of the GSEs by the U.S. government in privatization? Uncertainty of GSE support may have an effect on primary mortgage rates, hurting consumers. Also any guarantee that goes beyond what is offered by the Treasury ($256 billion) would need Congressional approval.
To read more, Click Here
My comments: For appraisers, mortgage interest rates significantly affect lender appraisal volume.
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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. We are all waiting for rates to drop in 2025.
Mortgage applications decreased 3.7 percent from one week earlier
WASHINGTON, D.C. (January 8, 2025) — Mortgage applications decreased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 3, 2025. This week’s results include an adjustment for the New Year’s holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 47 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 6 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 43 percent compared with the previous week and was 15 percent lower than the same week one year ago.
“Applications decreased last week as rising mortgage rates continued to discourage buyers from entering the market and put a damper on purchase activity. The 30-year fixed rate increased for the fourth consecutive week, reaching 6.99 percent – the highest rate since July 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications declined for both conventional and government loans and dropped to the slowest weekly pace since February 2024. Refinance applications increased despite higher rates, but the increase was compared to recent low levels and was driven entirely by an increase in VA refinances, which continue to show weekly swings.”
The refinance share of mortgage activity increased to 40.8 percent of total applications from 39.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.7 percent of total applications.
The FHA share of total applications increased to 16.9 percent from 16.6 percent the week prior. The VA share of total applications increased to 16.2 percent from 15.7 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.4 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.99 percent from 6.97 percent, with points decreasing to 0.68 from 0.72 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 6.99 percent from 7.13 percent, with points increasing to 0.74 from 0.64 (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 6.65 percent from 6.69 percent, with points decreasing to 0.91 from 1.05 (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 6.46 percent from 6.43 percent, with points decreasing to 0.62 from 0.75 (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 5.98 percent from 5.97 percent, with points decreasing to 0.26 from 0.65 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The survey covers U.S. closed-end residential mortgage applications originated through retail and consumer direct channels. The survey has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, thrifts, and credit unions. Base period and value for all indexes is March 16, 1990=100.
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Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave. Suite 203 Alameda, CA 94501
Phone: 510-865-8041
Email: ann@appraisaltoday.com
Online: www.appraisaltoday.com
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