Business Student Preparing A Report

[John F. King (Pittsburgh)]

I am a student of Ohio University currently studying at The Pennsylvania State University. I have been asked to prepare a report regaurding the status of a current business market. For my topic I have chosen the interest rates and how it has been effecting both mortgage and loan and the real estate market. Having only interned at Nicklas King McConahy Real Estate Appraisers (north of Pittsburgh) for a realativly short time, I only have a general knowledge of how the business has been affected. Any help or guidance you could supply would be invaliable. Also any comparisons to the market of the early 90's would be considerably helpful.

- Do you find that you are busier now then in 89-92?
- Do you see this boom slowing in the near future?
- Are rates being this low a good thing for the market or are they just a short period of bliss that will end poorly?

Thank You,

John King

 

[Restrain]

If you have an in at a larger real estate appraisal firm, you should have the data available for a comparison. What you can do is to take a subdivision that was existant prior to 89, then check the records for the number of refinances that took place in the 89-92 time frame vs. 2001-2003. That should give you a snapshot.

However, you have to factor in the effect of layoffs and fear of layoffs. You refinance, you reduce the payment making it easier to remain in the home. Also, a cash-out refi can provide a buffer to pay off credit cards, etc, reducing the actual amount of income necessary to get by. These are more difficult to consider in. You may want to do a survey of people who have refinanced to find out what the particular factors were. It may affect your analyses.

As to effect and volume on an appraisal firm, that's very dependent on the particular market and the particular appraiser's marketing and business plan. An appraiser may be raising the fees to reduce the volume to manageable levels, while other appraisers are working on a volume basis, the more the merrier.

As to your question, do we see it continuing? Historically, higher rates will reduce volume and sales, as it makes mortgages more expensive and harder to qualify for.

Roger