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Declining or Stable

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nmeknat

Thread Starter
Freshman Member
Joined
Mar 3, 2008
Professional Status
Licensed Appraiser
State
California
Any of you who Appraise in California, Specially Southern cali, do you check Declining market or Stable?
 

Mike Siegfried

Junior Member
Joined
Nov 6, 2005
Professional Status
Certified General Appraiser
State
California
I check the "Stable" box with a long explanation which basically says that prices HAVE declined from their lofty levels and that those declines are naturally reflected in the current sales and adjusted listings (I knock off 10% minimum on the listings for negotiation). I further explain the fallacy of "median home prices" as listed in DQNews.com since the median home price has more to do with the availability of financing for a particular price range, ie cheap homes are selling more, median price goes down and vice versa. I further explain that there are varying sources that will indicate an area-wide decline, but that there are niches and neighborhoods which are bucking this trend. Basically, I cite the fact that the data is not sufficient to declare that values are still declinING. I try to let the data do the talking and I also reconcile the adjusted data very conservatively with emphasis on the month-old comps and listings. I actually did a home in Beverlywood last week that sold in July, 2007 for $ 1,235,000 and even using the most conservative (lowest) comps, I couldn't keep it under $ 1,275,000 . So where's the declining market there?

Mike
 

Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
I check the "Stable" box with a long explanation which basically says that prices HAVE declined from their lofty levels and that those declines are naturally reflected in the current sales and adjusted listings

Basically, I cite the fact that the data is not sufficient to declare that values are still declining.


Mike - you must not be working in San Diego County. I've got plenty of data to prove that prices are declining.

So when prices were declining, you still didn't check the declining box?

We have areas that are exceptions, but I would say that in the last several months, I have checked the declining and / or the oversupply boxes on 80% of the reports I have completed, and made market-supported negative time of sale adjustments ranging from 0.5% to 2% per month, with some areas now seeming to be stabilizing a little, and other areas still going down the toilet.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Fannie Mae Annoumcement

If this is for conventional financing, I suggest you read Fannie Mae's comments on the subject.

http://www.allregs.com/efnma/index....w=0&tv=0&tq=0&tx=/&tp=FNMA/annoc/n2007/n07-22

But, in any market I suggest you give reliable and actual condition information. In my market we are still seeing an annual increase in value by 3-6% annually. I choose, since I do residential work only, to use the data specific to the subject neighborhood or market.

I just completed an appraisal on a 1,000+- sq ft condo. It is in a condo with 2 additional almost identical condos on either side that are only different in the amenities offered and the monthly condo fees.

This is the data for the subjects market:

• 1073 : Neighborhood - Market Conditions
THERE IS 1 ACTIVE MLS LISTING IN SUBJECT AREA AT $135,000. THERE ARE 28 CLOSED MLS SALES AT AN AVERAGE OF $145,061. =107% LIST TO SALES PRICE RATIO. THERE IS 1 PENDING SALE AT $142,500. THERE ARE 12 EXPIRED MLS LISTINGS AT AN AVERAGE OF $145,833. AVERAGE DAYS ON MARKET FOR CLOSED SALES IS 56 DAYS. VA/FHA AND CONVENTIONAL FINANCING ARE AVAILABLE AS WELL AS OTHER FORMS OF FINANCING.

Now, clearly this market is not declining. In fact, values are increasing, and there is a shortage of available properties. This is the type of analysis I believe we owe our clients.

Just for the record, in some neighborhoods and markets locally, I can show just the opposite. Such data is market specific, not for an entire county, city or state.
 
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