Appraisals in 2024

[Cob]

Landlords are doing quite well especially the ones who have been at it a while.

Not in Austin where I live.......

 

[DTB]

Not in Austin where I live.......

Why?

 

[J Grant]

Landlords are owners and not part of the professionals who are paid per transaction or a salary - such as RE agents, loan officers, appraisers, inspectors, etc.

RE is cyclical and always has been, but the res appraisal end is highly affected by regulations and GSE policies.

 

[George Hatch]

Mortgage volumes are down primarily due to economic policies, including the inevitable consequences of flooding the economy with "free" money which is "unburdened" with productivity.

All the other players in the real estate and mortgage businesses are starving for lack of business, too. But not because their businesses are affected in any way by waivers and hybrids. There's simply less business being done. There's your control group for how much we can quantify the effects of waivers and hybrids on appraisal volumes.

Waivers and hybrids are also cutting into the market for appraisal services, but like JGrant said, appraisers were still plenty busy right up until the mortgage rates increased to 6+% in mid-2022.

It ain't that deep. If/when the rates drop down to 5% the appraisal activity will probably take off again.

 

[djd09]

when you let the clowns lead...expect a circus

 

[DTB]

Landlords are owners and not part of the professionals who are paid per transaction or a salary - such as RE agents, loan officers, appraisers, inspectors, etc.

RE is cyclical and always has been, but the res appraisal end is highly affected by regulations and GSE policies.

I know that everyone is different but I always felt that being able to buy properties with superior knowledge was the best part of being an appraiser?

 

[J Grant]

I know that everyone is different but I always felt that being able to buy properties with superior knowledge was the best part of being an appraiser?

Theoretically, yes, but most appraisers don't make enough $ to buy additional properties- even if they can afford it, many appraisers, IMO, including myself, tend to be more like worker drones in mindset than risk takers/investors, though some have purchased properties to flip or rent. Wish I had done it ( other than owning my own home )

 

[Terrel L. Shields]

Gee, the first two years of Biden were the busiest ever for appraisals, and I made more than in any other time- did his "bidenomics " do that, too?

It is not his economic policies that are killing the business; it is Fannie and Freddie's decision to use Waivers

The boom in 2021-22 was a double-edged sword. Mortgage volume increased, but locked many borrowers into over-priced homes that they don't dare leave because they have interest rates half or less that of current rates and that means unless downsizing, your mortgage payments skyrocket. So, the end result was inflation big time. And that inflation started on Day One of the Biden administration and never let up until last year when interest rates increased. And so, many people would like to sell and move up or over to newer housing but cannot afford to. And may never be able to strictly due to home prices inflating so fast.

In 2022, NE Okla went flat for over a year, and now home prices are back to inflating at 4% annually. In NW Ark, growth is so rapid with Wal-Mart and Tyson's that they never knew home price inflation of less than 5% annually. Since 2021 we have some homes selling for 50% more than they were in 2020. Land prices have more than doubled in rural areas. We're talking 80-acre parcels selling for $1.5 million and bought by speculators and developers. Nothing was selling for more than $5,000 an acre for 40 or more acres until 2021. But as properties were scarce, developers feared having no land to develop.

If I read correctly, Waivers from FNMA and Freddy have varied between 24% to as high as 45% month to month. That's a lot.

They need software, E and O insurance, MLS dues etc.

Software and all the attendant programs used by residential appraisers to shave a few minutes off the appraisal time, have been offset by the cost thereof. That is, you are paying dearly for the savings.

During the 2008-11 "Great Recession", I and a number of appraisers on this site recommended appraisers expand their business to non-lender work. And I for one, was an advocate for using a narrative report rather than some generic form. To me, the reports simply look better. We get a number of posts about folks asking about IRS rules, etc. and this shows that some people are trying to expand business opportunities outside of lending. Keep at it. The less lender work you have, the steadier your income is, and the more you can refuse the lowball assignments. The more appraisers who refuse to work for $299 less fees, the more likely the AMCs will have to raise their ante.

What matters is how much money you bank.

Yep, exactly.

Not in Austin where I live.......

Austin is one of the 5 cities where home prices have fell the most. It was also a city where prices rose the fastest previously.

But not because their businesses are affected in any way by waivers and hybrids.

When 1 in 4 up to nearly 1 in 2 finances by F/F are waivers, I would argue that waivers (more so than hybrids) are a huge factor in reducing volume.

 

[George Hatch]

The low rates effectively scavenged a lot of future demand.

 

[J Grant]

Mortgage volumes are down primarily due to economic policies, including the inevitable consequences of flooding the economy with "free" money which is "unburdened" with productivity.

All the other players in the real estate and mortgage businesses are starving for lack of business, too. But not because their businesses are affected in any way by waivers and hybrids. There's simply less business being done. There's your control group for how much we can quantify the effects of waivers and hybrids on appraisal volumes.

Waivers and hybrids are also cutting into the market for appraisal services, but like JGrant said, appraisers were still plenty busy right up until the mortgage rates increased to 6+% in mid-2022.

It ain't that deep. If/when the rates drop down to 5% the appraisal activity will probably take off again.

Good observations.

I will add that even if other players are starving too for lack of volume however when volume picks up, they will not have a portion replaced by Waivers/hybrids ( which were not in significant use prior to recently) The other players tend to work on commission, a percent of the sale price of a property or mortgage loan amount - thus as prices have risen dramatically, their commissions an fees have risen sharply. In contrast, appraisal fees have been flat or small increases. The other players are not subject to a large volume of third-party/AMC content of work, which includes free splitting of an already lean fee. This combination means that appraisers are hit especially hard wrt policies and regulations - which is why only a trickle of folks completed PAREA - unless they are brain dead all they need do is check out a few internet and Facebook forums and they can get up to speed on what is really happening vs the spin put out to lure people in - seems they did not find many surckers

I believe our business will pick up with a rate drop, but of course, a volume lost to waivers/hybrids/CDC inspection will cut into that as well. The question will be how much....