• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Declining Markets

Status
Not open for further replies.

Manhattan value

Thread Starter
Freshman Member
Joined
Mar 8, 2008
Professional Status
Certified Residential Appraiser
State
New York
Is there a website or FNMA letter or guidance that list what FNMA considrer a declining market?

Additionally, other than a year-to-year decline in median or average sales price, what other metrics are considered in measuring declining market?
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Download Fannie Mae 07-11- FAQ Sheet (33.8K)
Download Selling Guide - 07-11 (114.3K)


Determination of Market Conditions
[FONT=Garamond,Garamond][FONT=Garamond,Garamond]There is no standard industry definition of what constitutes a declining market. It is within the appraiser’s and lender’s discretion to determine if the appraisal accurately reflects the current market conditions. In general terms, a "declining market" is one in which home prices are currently declining. [/FONT]

[FONT=Garamond,Garamond]There are several services available that can be used by lenders and appraisers to assess the current market conditions, including: [/FONT]

[FONT=Garamond,Garamond]
S&P/Case-Schiller [/FONT]
[/FONT][FONT=Garamond,Garamond][FONT=Garamond,Garamond]Index[/FONT][/FONT][FONT=Garamond,Garamond][FONT=Garamond,Garamond]. This index relies on purchase price and related information obtained from county assessor and recorder offices. [/FONT][/FONT]

[FONT=Garamond,Garamond][FONT=Garamond,Garamond]Office of Federal Housing Enterprise Oversight (OFHEO) Index. This index uses data from conforming, conventional mortgages provided by Fannie Mae and Freddie Mac, and includes both purchase and refinance information. Lenders should use the index based on purchase loans only for indications of market decline. Purchase-only indexes at the state level can be found at www.ofheo.gov/download.asp.[/FONT][/FONT]
[FONT=Garamond,Garamond][FONT=Garamond,Garamond][/FONT][/FONT]
[FONT=Garamond,Garamond][FONT=Garamond,Garamond]National Association of REALTORS [/FONT][/FONT][FONT=Garamond,Garamond][FONT=Garamond,Garamond](NAR) statistics on changes in median prices[/FONT][/FONT][FONT=Garamond,Garamond][FONT=Garamond,Garamond]. NAR releases statistics on state-by-state existing-home sales and metropolitan area median home prices each quarter[/FONT][/FONT]
[FONT=Garamond,Garamond][FONT=Garamond,Garamond].[/FONT][/FONT]
[FONT=Garamond,Garamond][FONT=Garamond,Garamond]These third-party sources can be accessed via the Internet and may require subscriptions. In addition, several other entities provide reports that track current home prices on a subscription/fee basis. The lender and appraiser are ultimately responsible for leveraging industry tools and data to monitor the market conditions to ensure that the appraisal reflects an accurate indication of market value. Accordingly, the above listing is not all-inclusive. We encourage lenders to select and use market condition tracking services that they deem appropriate. [/FONT]
Appraiser Responsibilities​
[FONT=Garamond,Garamond][FONT=Garamond,Garamond]
The appraiser’s role is to provide the lender with an accurate and adequately supported opinion of value and an accurate description of the property. We expect the appraiser to accurately report on the primary indicators of market conditions in a given neighborhood whether increasing, stable, or declining.
At a minimum, the appraiser is expected to:​
  1. Use the most recent and similar comparable sales available as part of the sales comparison approach. Because excessive sales concessions can artificially inflate the sales price of a property, particular attention should be given to unusual sales or financing concessions in markets experiencing:
  1. Declining property values,
  2. An over-supply of properties, or
  3. Marketing times in excess of six months.
  1. Provide an objective assessment of the primary indicators of market conditions in a given neighborhood whether they are increasing, stable, or declining. For example, when indicators such as price changes, supply and demand, and market activity reflect a decline in property values, an over-supply of homes, and/or marketing times in excess of six months, Fannie Mae expects that the appraiser has considered
  1. [/FONT]
  1. [/FONT]these factors as part of his or her analysis, and accurately reflects this information in the appraisal report.
• Describe the reasons for these trends and indicate what, if any, impacts these trends have on the opinion of the market value for the subject property. It is unacceptable for the appraiser to ignore these issues and not report the factual property value trends and market conditions.
• Research and/or review available information regarding the home price trends of the market in question.
Fannie Mae has published a Frequently Asked Questions (FAQ) document to provide additional guidance and insight into the information presented in this Announcement. The FAQs are available to lenders on www.efanniemae.com
[/FONT]
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Mike,

Your posting should be used as a sticky.

Well done:clapping:
 

Manhattan value

Thread Starter
Freshman Member
Joined
Mar 8, 2008
Professional Status
Certified Residential Appraiser
State
New York
Yes, great reply thank you very much

Mike, great reply thank you very much.
 

Calvin the Airedale

Elite Member
Gold Supporting Member
Joined
Aug 17, 2004
Professional Status
Certified General Appraiser
State
Ohio

BC 2008

Freshman Member
Joined
Sep 8, 2008
Professional Status
Licensed Appraiser
State
California
Hi AM,

Using year-to-year median or average sales price, you are missing the trend within that year. The information between the year sometimes indicate a whole different situation about the market condition.

I found the Indexes information (OFHEO Index, S&P Index, etc...) too general. They are good for references, yet not very reliable when applying to a specific neighborhood.

IMO, the property values trend in the past 12 months, demand/supply status and D.O.M of comparable sales in the neighborhood where your subject is located are the most effective data to indicate the market condition of that neighborhood. Just pull these information from your local MLS and analyze them, you'll have a solid conclusion about your specific market condition.
 

Jason Barber

Junior Member
Joined
Feb 16, 2006
Professional Status
Certified Residential Appraiser
State
Michigan
IMO, the property values trend in the past 12 months, demand/supply status and D.O.M of comparable sales in the neighborhood where your subject is located are the most effective data to indicate the market condition of that neighborhood. Just pull these information from your local MLS and analyze them, you'll have a solid conclusion about your specific market condition.

How do you determine a true value trend with only 12 months of data? In order to remove seasonality I would think you would look at data from the past several years in order to determine a trend.

btw... real estate trends are defined as 3 to 6 years by "The Appraisal of Real Estate," from the Appraisal Institute and are also considered in "Essential of Real Estate Economics" - Fifth Edition.
 

Vegan702

Senior Member
Joined
Feb 24, 2005
Professional Status
Certified Residential Appraiser
State
Nevada
How do you determine a true value trend with only 12 months of data? In order to remove seasonality I would think you would look at data from the past several years in order to determine a trend.

btw... real estate trends are defined as 3 to 6 years by "The Appraisal of Real Estate," from the Appraisal Institute and are also considered in "Essential of Real Estate Economics" - Fifth Edition.

If over the last 12 months the values have declined the whole time I don't need to go back 3-6 years to determine the trend. It's a little easier where I am as we have either been increasing or declining the whole time I have been appraising with only a short period of in between those two being a stable market for the most part.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks