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Old 12-24-2004, 08:35 AM
Steve Owen's Avatar
Steve Owen Steve Owen is offline
Join Date: Jan 2002
Location: Joplin, Missouri
State: Missouri
Professional Status: Certified General Appraiser
Posts: 5,409

Just like the FEDs to release bad news and then take a holiday. :lol:

Most of you probably already saw this: the largest decrease in new homes sold in ten years. But, many may not have seen the other info concerning the "steady" but "unspectacular" expansion of the economy.

Actually, some parts of the report were pretty promising, but for residential appraisers, it doesn't look too good. If consumer confidence and manufacturing employment improve while at the same time interest rates increase and housing starts decline, that is kind of the "perfect storm" for decreased need for appraisals. It could lead the way to fewer orders for new housing and fewer orders for REO's at the same time. Of course, the ERC market might improve some and this doesn't say anything about existing housing sales. Note that mortgage applications were still strong, but don't count on that to last if rates start going up on a steady incline.

My favorite quote:

I would not view this report as the beginning of a significant downturn, David Berson, chief economist for mortgage financing giant Fannie Mae in Washington.
Of course... with all the bad press they've been dealing with lately, the last thing they need is a "significant downturn."
__________________ useless man is a shame, two is a law firm and three or more is a congress. - John Adams
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Old 12-24-2004, 09:15 AM
Richard Carlsen's Avatar
Richard Carlsen Richard Carlsen is offline
Join Date: Jan 2002
Location: Tip of the Mitt: Northern Michigan
State: Michigan
Professional Status: Licensed Appraiser
Posts: 8,372

You have to read these reports carefully before you jump to any conclusions.

Sales of new homes plunged 12 percent last month, the biggest drop since a 23.8 percent fall in January 1994, to a seasonally adjusted annual rate of 1.125 million units.
They are talking about "new houses" - not lived in, existing houses. These numbers do not take into account the sales of existing homes at all. And the month, November, was an interesting month for the American public. We had an election remember? A lot of businesses waited to see what was going to be the outcome of that. My guess is that the general buying public did much the same thing. Don't be surprised to see these numbers bounce right back up within the next 2-3 months.

And we have to remember that these are only one month's numbers. One robin does not make a spring; one sale does not make a market and on month statistics does not make a trend.

But take a look at the numbers involved: 1.125 million units. That is an annualized rate of one new housing unit built and sold for each 237 Americans. Combine that with the numbers of existing home sales and you have a fairly heady housing market. In fact, if your run a Google search on existing house sales, you get almost nothing but news that the sales of existing homes are up in nearly every part of the country. NAR reported in late November that existing house sales were at an annualized rate of 6.75 million units. In the big scheme of things, new housing sales represents only about 15% of the housing sales. So if it is down 12% then that amounts to only a 1.7% decline assuming existing house sales remain constant.

But then, I've been accused of being the eternal optimist because I see the glass half full, not half empty. Fewer appraisals? Maybe. Fewer appraisers? Maybe. Whatever happens, I intend to be one that will have my share of the market.
Now it's time to go fishing and ride the bike........

Last edited by Richard Carlsen : 02-15-2006 at 07:06 AM.
Old 12-24-2004, 09:59 AM
Mike Garrett, RAA's Avatar
Mike Garrett, RAA Mike Garrett, RAA is offline
Join Date: Jan 2002
Location: Colorado Springs, CO
State: Colorado
Professional Status: Certified Residential Appraiser
Posts: 21,056

As far as the eye can ocean of new construction starts IN MY MARKET. One month does not a market make.
A Former AQB Certified USPAP Instructor
Old 12-24-2004, 10:04 AM
Ray Miller's Avatar
Ray Miller Ray Miller is offline
Join Date: Feb 2002
Location: Southwest Wisconsin
State: Wisconsin
Professional Status: Licensed Appraiser
Posts: 12,000

They are talking about "new houses" - not lived in, existing houses. These numbers do not take into account the sales of existing homes at all.

I think there is developing a shortage of inventory of "lived in, existing houses" in the area I work.

Have started noticing advertisement by real estate agents asking people to list their homes for sale. These ads are appearing in all the little shopper stopper free papers.

I think a lot of the homes have now been sold that were going to be, the other others have been refinance at such low interest rates. The current owners don't want to sell with rates going up now and buy something at a higher rate.
Old 12-24-2004, 10:29 AM
Elliott's Avatar
Elliott Elliott is offline
Join Date: Apr 2002
Location: Pumpland
State: Oregon
Professional Status: Certified General Appraiser
Posts: 11,308

I don't think the media is capable of looking at economic
statistics during a republican administration and
saying something good about them.

The only figure I put any stock in is GDP....which was
revised from 3.3 to 4% for the 3rd quarter. I
have a hard time finding that growth rate anything
short of even Goldielocks would be
happy with.

Old 12-24-2004, 03:48 PM
Linda M Lynch Linda M Lynch is offline
Join Date: Dec 2002
Location: Madison, Wisconsin
State: Wisconsin
Professional Status: Licensed Appraiser
Posts: 317

Boy they sure aren't looking at Madison, Wisconsin. New houses are going up in this area so fast that it seems as though you drive by a large farm one day and a month later there is an entire subdivision there.
Old 12-24-2004, 04:53 PM
Otis Key's Avatar
Otis Key Otis Key is offline
Join Date: May 2004
Location: Mile High
State: New Mexico
Professional Status: Certified Residential Appraiser
Posts: 15,970

Steve - you know as well as the rest of us, it's not what you say but how you say it.
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