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Declining or not? That is the question.

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xmmaierei

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Oct 23, 2005
I know this has probably been covered, but how do you tell if the market is decling? For example, 109 sale in the past 12 months ranging from $147K to $390K with a predominant of $245K and 133 days on market. There are 129 listings ranging from $115K to $519K and the predominant of $250K and 131 DOM.
Any help would be great :)
 

toddmallard

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Joined
Oct 4, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
Just curious, do licenced appraiser work under a supervisor in Arizona? or are they like state cert's ?

Anyway to try and answer your question. There are numerous ways to determine if the market is declining. Do a median selling price "after seller concessions" from comps that closed in the past 0-3 months, past 4-6 months past 7-9 months and past 10-12 months. this will give you an idea of what the market is doing..

Look at the results. This should give you a good idea of what the market is doing.
 

Carnivore

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Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Declining from what point of reference?

All the houses in a new S/D sold last year for $150,000 as a result of inflated appraisals. We know this because a review of a representative sample revealed the retrospective value to be $130,000 on all sales.

18 months later they all are selling for $130,000. Is this a declining market?
 

Mike Garrett RAA

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Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
That's what we get paid the big bucks to determine.

You might ask yourself....

1. What is the value of a typical house IN THE SAME MARKETING AREA today as opposed to the same time last year?

2. Has the inventory expanded sufficiently to force prices downward?

3. Key indicators include: expanding inventories, increased days on the market, a reduction in number of sales, and an increase in foreclosed properties.

4. Does MY MARKET has a seasonal aspect, ie, slower sales in the winter months, as an example.

5. Consider using data from 3rd party sources such as MLS, Public Records, or title companies as support for your opinion.

6. Avoid using "general over-all market data" without research on your part. It just could be property values in the subject neighborhood might not be declining when the over-all market is or visa versa.
 

leelansford

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Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I know this has probably been covered, but how do you tell if the market is decling? For example, 109 sale in the past 12 months ranging from $147K to $390K with a predominant of $245K and 133 days on market. There are 129 listings ranging from $115K to $519K and the predominant of $250K and 131 DOM.
Any help would be great :)

Paired sales analysis?
 

Tom Woolford

Elite Member
Gold Supporting Member
Joined
Nov 20, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I look at average sales price, median sales price, price per sq ft, and days on market over the last 24 months. It becoms pretty obvious when things are going south. I've attached an old analysis.
 

Mike Kennedy

Elite Member
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Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
6. Avoid using "general over-all market data" without research on your part. It just could be property values in the subject neighborhood might not be declining when the over-all market is or visa versa.

Absolutely!
 

Tom Woolford

Elite Member
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Nov 20, 2005
Professional Status
Certified Residential Appraiser
State
Florida
6. Avoid using "general over-all market data" without research on your part. It just could be property values in the subject neighborhood might not be declining when the over-all market is or visa versa.

Absolutely!

I agree. Each distinct market should also be evaluated, along with the wider market as support / verification.
 

Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
At the average rate of sales per month, you have over a 13 month supply of homes on the market in this area. In most areas that I work, that would be a strong indication of a declining market.

To be sure it is declining, I would check the sale prices from 6 months ago against the list prices of similar homes today. If the active listings are generally priced lower than the sale prices from 6 months ago, you are definitely in a declining market if you combine that with an oversupply of active listings.
 

hglenbetts

Senior Member
Joined
Dec 3, 2007
Professional Status
Certified Residential Appraiser
State
Michigan
Declining from what point of reference?

All the houses in a new S/D sold last year for $150,000 as a result of inflated appraisals.

I'm just a rooky here, but don't we analyze and report value, not create it. If "all the houses" sold for $XXXX, unless this was done with a gun at the buyer's head, don't ready, willing and able buyers, in an arms length transaction create the value? Lacking concessions or some type of builder concession if they sold for $150k isn't that the value???:shrug:

My other thought... We should not be looking at average sales, period to period, throughout the market to measure growth/decline. Apples to apples. Search the same neighborhood, similar size age etc, what's the difference now? May be growth. May be decline, may be HUGE decline. I've gotten into the practice of commenting on regional, community and neighborhood trends, plus value changes of the similar properties within the neighborhood. Going two years back in three month increments. Haven't had an LO or UW complain yet.
 
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