"growth" Checkboxes On Gse Forms

[residentialguy]

You CANNOT on page 2 of the URAR say, these prices vary because of these things, FAVORIABLE FINANCING, age/condition/quality/GLA/basement/garage/pool,yada, yada, and then on the 1004MC say these prices vary only because of the time frame they sold in.

Why would you need to say that? Pg 2 is just stating a range of prices of the comparables in the neighborhood. The Market conditions section is where you explain that.

 

[Meandering]

Why would you need to say that? Pg 2 is just stating a range of prices of the comparables in the neighborhood. The Market conditions section is where you explain that.

Page 2 on the sales grid

where you adjust the sale prices for differences between the subject and the comparables, and hopefully, extract adjustments by comparison between comparables,

Then on the 1004MC say that the raw sale prices are only impacted by time.

That was the comparison I was making, not a reference to the range of prices at the top of the page, but a reference to why raw sale prices differ.

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[residentialguy]

That was the comparison I was making, not a reference to the range of prices at the top of the page, but a reference to why raw sale prices differ.

Ok...that's what I was saying, too. 300k, 305k, 310k doesn't mean squat in regards to 1004MC overall trends. You're better off establishing the trends by your adjusted prices of the comps on the SCA.

 

[Meandering]

You're better off discussing if there is any reason for a change in trend to start with.

What good is saying prices dropped or increased 10% over the year, without saying or showing why that is?
What good is it to show that 6 months ago 20 comps sold and only 5 were listed, and in the current 3 months 2 comps were sold and none were listed?
AND,
If we don't know why prices and volume have changed over the year, how will we be able to understand if prices will continue on this trend, or if it's a seasonal normality for the market, or if something new is on the horizon which is only being reflected in the active listings???

WHY, WHY, WHY.

The oldest reporting period for the 1004MC for 6 months hides normal seasonality fluctuations in areas like ours that have 4 definite seasons that impact supply and demand, not just summer vacation for school aged kids.

The form is smoke and mirrors. In my supreme opinion, it does not fit the USPAP requirement for a discussion of market condition. As nothing about the market condition is portrayed. It is merely a nonsensical spread sheet of prices and volume over time with no meaningful reasoning for why prices and volume are different over the three reporting periods.


that's my opinion, and I'm sticking to it.


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[residentialguy]

I'm sticking with you on that

 

[Meandering]

One last thing on this.

If anyone has not recognized the artificially low interest rate policy of the Feds as being part of the "market conditions" that impact price and volume of property sales and listings.............

Woe to you and the profession when the rates increase and that re-fi boom suddenly finds it's self underwater and stuck in place, with you to thank for it.

1004 MC Market Conditions Addenda, won't save you, or this profession.


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[residentialguy]

I have always stated a warning in my reports that the sale trends may be affected by artificial Government stimulus, etc
Here's an old example of a warning in my Market Conditions. I suggest every do something similar.

WARNING TO LENDER
Some industry observers have warned that the country might be witnessing the creation of a new housing bubble, others have said this is not the case. The future effects are unknown. This is not an attempt to predict the future, rather a disclosure of market warning signs for the lender to consider.

For some time virtually all markers have pointed to an improving US real estate picture. Rising prices and fewer foreclosures are great news but can such trends continue? While the market may indicate a sense of rebound, the market is volatile and the appraiser suggests to approach this optimistic appearance with caution as there remains an undercurrent of unease.

So are we out of the financial woods? Pricing and interest rates are rising at the same time, put them together and you get higher monthly ownership costs, less affordability and a smaller pool of potential buyers. That smaller number of buyers means less demand and therefore a slowing of price increases. According to Steve Brown, president of the National Association of Realtors; “The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory,” But this doesn't line up with current events. Mortgage standards today are more liberal than just a year ago — note the Ellie Mae finding that credit scores for closed loans dropped 21% in 2013!

A contributing factor appears to be that income earning has stalled. Median household income was $51,939 in 2013, not statistically different from the 2012 median in real terms, 8.0 percent lower than the 2007 median, and 8.7 percent lower than the median household income in 1999. Less income means there are fewer dollars to buy goods and services and thus invigorate the economy. Less income creates another problem: consumer confidence. If a home buyer's income is stuck at $52,000 there's only so much house that buyer can buy. They can buy more if interest rates fall but interest rates today are lower today than the averages of the past 40 years. Financial institutions have been lowering their standards at a record pace. Dec 2014, Fannie Mae just announced the availability of 97% financing and would begin accepting applications immediately for borrowers with FICO credit scores as low as 620 as well as offering limited cash-out refinances. Sure, buyers can buy more when lenders lower their standards, but that's an idea which leads to no-doc loan applications and toxic mortgages of the last bubble. Could it be that we have not learned? Again, this is not an attempt to predict the future, rather a disclosure of market warning signs for the lender to consider.

 

[Meandering]

From that HUD report.


Improving market
NOT!

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[DWiley]

And yet none of these drivers of price changes are included in the 1004MC.

As I said before, the purpose of the 1004MC form is simply to provide a common format. Unfortunately, many "form fillers" let the layout of the 1004MC drive their analysis rather than doing the analysis and then reporting it in the 1004MC format. There is absolutely nothing preventing an appraiser from considering any of the forces that you have indicated in your posts, and good appraisers do just that. They don't let the raw number in the grid drive their conclusions. They don't blindly mark trends based solely on the numbers in that grid. Instead, they actually analyze those numbers and report that analysis in the narrative section.

The raw data may indicate, for example, that the median sale prices over the three time periods was $150,000, $145,000, and $140,000. Does that mean prices are declining? Without further analysis, one cannot know. How many observations were there in each period? What was the size/age/condition etc. of the homes that sold in each period (especially critical if the data set is small)? Is there seasonality at play? Was there some major event during the applicable time periods? etc. etc.

Just recently I read a report where the appraiser explained that even though the median sale prices appeared to show a decline, analysis of the data indicated that the median sale prices in the most recent period were lower because the homes that sold during that period were smaller and in average condition, while the homes in the earlier period were larger and updated. See, the form did not stop that appraiser from actually doing analysis

 

[Meandering]

-you miss the point that all of that,
has nothing to do with the CONDITION of the MARKET.

A badly failed attempt to portray movement in volume and sale prices with arbitrary labeling of the movement direction, is not a discussion of the condition of the market, which, is a USPAP requirement.

The only benefit of stating the smallest houses sold in the most recent quarter, as we all know, is too slide this stupid accumulation of data past a QC know nothing, with all the "trend" boxes marked as stable, while the numbers on the paper are not the same.

It's market noise and NOT the condition of the market.

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