OFHEO or S&P Case Shiller.which one do you use?

[ctag1003]

Which Index is more commonly used and/or sited in an appraisal report to substantiate market trends? OFHEO or the S&P Case Shiller Index? I see that Fannie/Freddie rely upon OFHEO but doesn't that include refinance appraisal values too? Which should an appraiser rely upon.

 

[Randolph Kinney]

Which Index is more commonly used and/or sited in an appraisal report to substantiate market trends? OFHEO or the S&P Case Shiller Index? I see that Fannie/Freddie rely upon OFHEO but doesn't that include refinance appraisal values too? Which should an appraiser rely upon.

I use Case/Shiller for San Diego. OFHEO only uses conforming loans, $417,000 max mortgages. That hardly characterizes home value here where the median price had been over $500,000.

 

[Brad Ellis]

ctag,

Both have some problems. OFHEO does blend in refi appraisals and is limited to conforming loan levels. Case-Shiller is only for the MSA levels and leaves out large chunks of some markets- those outside the covered MSAs.

Much better to do your own work based upon data from your MLS and whatever you have.

It is easy to find increasing markets in some MSAs that are decling overall and vice versa. You will also find certain property types or price ranges acting differently from one another in some markets.

Good luck.

Brad

 

[ctag1003]

Thanks Brad, I rely on my MLS but I got a stip which asked me to do a negative time adjustment based on the Case-Shiller index. I told them no because the subject neighborhood was not declining despite the Case-Shiller index which shows a state wide decline in NY. I also told them that my MLS and County Board of Realtors show at .08 increase for the county in 4th qtr of 08. Still wating to hear back from them.

 

[Randolph Kinney]

I suspect that UWs are going to be very suspicious of any appraiser who has a "neighborhood" with increasing values when the major indexes are showing steep declines for that geographical area.

Of course, you as the appraiser have to convince the reader through your data and analysis what sort of meaningful trend exists in the neighborhood. If the data has few sales or is scattered showing large variances, it will be difficult to make any case. The next level up is the zip code, and then MSA.

As Brad points out, it is possible to have isolated pockets that are not declining in a massively declining MSA. I just read an article that claimed 76% of the zip codes across the U.S. are declining in value. Maybe you have a 1 in 4 chance of being in that lucky one that is not declining. :icon_mrgreen:

 

[Mike Kennedy]

Just as "spaghetti on the wall" non-specific generalizations spread by the media cause unnecessary ALARM...... and "generalized" av-hums, cmas, bpos, and appraisals citing GENERAL, overall, market conditions by zip code.......

Each appraisal report should cite general conditions placing MINIMAL weight on such "average" or "median" data which is all-inclusive - and place MAXIMUM weight on specific, targeted, data per LOCAL market nuances and comparative value factors. ....... specifically RELEVANT to a Subject Property.

Cite DETAILS in full support of market conditions conclusions impacting a SPECIFIC Subject Property i.e. location, schools, style, age, utility, quality, amenities, lot utility. etc..

Each local market is typically comprised of SUB-markets. Research, analyze, SPECIFICS, and report them.

 

[Tawfik Ahdab]

As Brad stated, it's best to develop one's own data. And as Mike asserted, it's best to be specific so as to enhance the relevance of the trends unearthed.

 

[Mike Boyd]

Thanks Brad, I rely on my MLS but I got a stip which asked me to do a negative time adjustment based on the Case-Shiller index. I told them no because the subject neighborhood was not declining despite the Case-Shiller index which shows a state wide decline in NY. I also told them that my MLS and County Board of Realtors show at .08 increase for the county in 4th qtr of 08. Still wating to hear back from them.

The 4th quarter of 2008 has yet to occur. I'm sure you meant 2007.

 

[Dennis J. Black ASA IFAS]

More Cr**

Another example of an UW hearing about something and not fully understanding what it does.

 

[ctag1003]

Yes, I meant 2007. I received a copy of policy guidedline from a lender and they are using the Chase-Siller index. The lender wants two new sales within 90 days OR GET THIS ...if I can't find similar sales within 90 days I was requested to unmark the stable box and mark the decline box and forget the two new comps in 90 days. I said I would do not comply with either. The market is clearly not declining in this very exclusive area and there were no sales similar within 90 days to use. The sales that do exist within 90 days are far far superior to the property I appraised and can't be deemed comparable. I'm wrote a very detailed explanation in the original report and its not enough. The funny thing is that this is a purchase transaction with a 50% down payment. I don't get it!