Market Conditions Analysis and Time Adjustments Dilemma

[alebrewer]

My point is that there are indicators. If your DOM is less than week and a shortage of supply, bidding wars etc, I'd double check if your data is showing declining. It's possible but I'd try to figure out the main reason why...

Yep. If my DOM and concessions are increasing, and my LtoS ratios are declining, yet my price trend is stable or trending up - my first thought is to look for outliers that may be skewing that regression line.

 

[Sadie]

Yep. If my DOM and concessions are increasing, and my LtoS ratios are declining, yet my price trend is stable or trending up - my first thought is to look for outliers that may be skewing that regression line.

There is always some lag time between the current market and data from closed sales. When the market is turning one way or another, there will always be some discrepancies. Sometimes it is outliers and sometimes its just the market.

 

[alebrewer]

There is always some lag time between the current market and data from closed sales. When the market is turning one way or another, there will always be some discrepancies. Sometimes it is outliers and sometimes its just the market.

Yep. That's why the concept of lagging and leading indicators exists.

 

[Surf Cat]

• • I find this chart inconclusive
• I based my analysis mainly on Year 2024
  • Price decreased from $485,000 to $480,000
  • $5000 decrease is around 1%
  • This is too small a decrease so I considered it Stable

I get the following Revision Request
There is a conflict, Chart shows 'Market is Declining' whereas appraiser has marked it Stable

Well.....the client has a point as you imported your analysis, graph in the report....which shows a declining market.

Apply the 1% to the appropriate time of sale periods of the comps and be done with it. This is what the whole complaint from Fannie/ Freddie is about..... appraisers are just indicating stable when there's some market movement or unlike you, not doing any analysis at all....

I apply what Mr. Roher explains below...emphasis on "competitive" data, then neighborhood if competitive data is lacking....3 miles of data (unless that is your market area) sounds as if it would include outliers.

The trend in the neighborhood is to be based on data from the past 12 months from the subject neighborhood. Preferrably relying on data comparable to the subject, and if that is insufficient, relying on all data from the subject neighborhood.

 

[Tumbuktu]

Fannie Mae has provided an illustration but no information is given on:

• Quantity of data or statistical sample
• Area (subdivision, city, 1 mile radius etc.) it was taken from
• Quality of data (did it only consist of properties comparable to the subject)

In reference to my original illustration, comparable properties in half mile radius of the subject sold in 12 months were less than 10. Any inference from this statistical sample would be useless.

 

[alebrewer]

Fannie Mae has provided an illustration but no information is given on:

• Quantity of data or statistical sample
• Area (subdivision, city, 1 mile radius etc.) it was taken from
• Quality of data (did it only consist of properties comparable to the subject)

In reference to my original illustration, comparable properties in half mile radius of the subject sold in 12 months were less than 10. Any inference from this statistical sample would be useless.
View attachment 98983

That announcement, along with the accompanying graph, was one of the more buffoonish moves they've made in a while. Any attempt to make things more clear by the GSE's shall be obfuscated by made up data presented in an outlandish chart.

 

[TerryRohrer]

Fannie Mae has provided an illustration but no information is given on:

• Quantity of data or statistical sample
• Area (subdivision, city, 1 mile radius etc.) it was taken from
• Quality of data (did it only consist of properties comparable to the subject)

In reference to my original illustration, comparable properties in half mile radius of the subject sold in 12 months were less than 10. Any inference from this statistical sample would be useless.
View attachment 98983

You would be well served to ignore that )((&$*&( and read only the current Selling Guide section about Adjustments To Comparable Sales. They are not the same and somewhere there is a bit of fine print that suggests the Selling Guide is the controlling document.

"This summary is intended for reference only. All criteria are subject to the formal terms and conditions of the Fannie Mae Selling Guide. In the event of any conflict with this document, the Selling Guide will govern."

 

[Sadie]

That announcement, along with the accompanying graph, was one of the more buffoonish moves they've made in a while. Any attempt to make things more clear by the GSE's shall be obfuscated by made up data presented in an outlandish chart.

My favorite was the fannie video that came out when they implemented the 1004MC. At that point I realized they had no idea what was actually going on in the real estate world.

 

[J Grant]

Your own comps are too small a sample to be statistically significant.


How do you write in crayon to an Underwriter?
View attachment 98981

Statistics are one tool, and like any tool, they can be used well or poorly.

Appraisal is not asking for a statistical solution -we can use it as an option but should be aware that a larger set of statistics can contradict or be not relevant to the smaller but more meaningful data of competing properties for our subject.

 

[alebrewer]

Statistics isn't 'one' tool. Its what we do.

Statistics is the science concerned with developing and studying methods for collecting, analyzing, interpreting and presenting empirical data.

A lot of folks think statistics is performing regression or developing confidence intervals. Statistics means nothing more than collecting, analyzing, interpreting and presenting data.