Order Volume

[J Grant]

It’s the end of an era. fund rates from 0 to 5.5 and going up slowly to save the currency. By the next boom the clients/people/system will be different. This re-set of the monetary environment is the lowest volume I’ve had in 38 years (forever). It’s not just us. The entire economy has been supported by low rates and all investments were influenced by low rates. The dollar itself is incrementally losing its reserve power which allows the USA to be a cubicle working Starbucks drinking population and not a hard working pollution breathing, dying younger population. A 5.5 percent (normal) Fed funds rate will break the economy and the federal solvency so what’s going to happen? Many directions possible .. none good. Hyper inflation if they start up QE 6 and force rates down… depression if they allow the market to set rates.. decades long malaise stagflation …Global war to obfuscate and blur cause identity.

In the last 4 months 1.5 trillion in debt and during an economy the MSM keeps repeating is “strong”. Where is the tax revenue?

RE sells and re-finances happen in all economies, and often we see volume increase in a "bad" economy. It is mainly interest-rate-driven

It will pick up, whenever rates come down. However, long-term and short-term appraisal volumes will be lower. A major factor is during the last low interest rate cycle a massive amount of folks refinanced and they are not going to refinance, perhaps ever. And having such a low rate makes these folks not want to sell , which lowers inventory and reduces our volume. Add in whatever % of waivers replace appraisals and more cash sales to investors and you have what we are witnessing,

Any younger appraisers who are worried ( younger means still young enough to change course regardless of actual age) may want to consider what they are doing or whether appraising is more feasible for them part-time rather than full-time as an income source. County assessor jobs might be an option.

 

[Zoe]

I see people now refinancing that have the lower rate. They have equity in their home and they want to use the equity.

My point is the higher interest rates don't bother them.

 

[Zoe]

Many people who have tons of cash in deposits love the higher interest rates.

 

[Zoe]

That applies also to like corporate deposit accounts and bank deposit accounts (literally the bank's deposit accounts). They are earning more on their deposits.

 

[Tom D]

last year 50% drop, this year another 50% drop. but at my age i can survive. looking to get back to some rehabing, don't like being bored. not seeing any more record breaking sale prices and the ones i get are not near the previous record highs.

 

[Alsie35]

last year 50% drop, this year another 50% drop. but at my age i can survive. looking to get back to some rehabing, don't like being bored. not seeing any more record breaking sale prices and the ones i get are not near the previous record highs.

In our case it was a 30% drop last year, and about a 40% drop this year (so far). The key question of course is not the % of the drop so much as what is the 2021 baseline that you are measuring from? If it was significantly above your best previous year (as it should have been if you wanted to work and had a system to support you, since work was beyond plentiful in 2020-21), and you added more clients during that time, you might still be doing alright and have some more "slack" built into your system.

OTOH, if your work (and client base) increased only incrementally in 2020-21 ... well ...

 

[Elliott]

Refinance index went from about 4000 to less than 400, or about a 90% decline in refis as interest rates have risen since February 2021.

Mortgage Applications - Charts and Data

The Weekly Mortgage Applications Survey contains 15 indices covering home loan application activity for fixed rate, adjustable rate, conventional and government loans for home purchases and refinances.

www.mortgagenewsdaily.com

 

[Mark K]

Today, in my market, new const accounts for about 50% of the sales with the builders buying down interest rates to about 5%, costing them about $10,000- $15,000 per loan. Existing is very slow due to the 7%+ rates and the current owners refusing to give up a 3% loan. Local bank rates for investor 1-4 family is near 8%; hard to cash flow if you're borrowing. One local bank just closed their entire mtg. loan dept., 10 people out the door.

Another issue is that people with cash can get 5% or more in a CD and some of the small investors are keeping the cash instead of buying rental properties. Not sure what's happening on the institutional buying market. A local broker told me that one national rental chain bought out an entire subdivision prior to construction. 200+/- home neighborhood, all rentals.

Very strange times. I've seen a lot of ups and downs in the real estate market over my 40 yr. real estate/appraisal career but nothing like today. Way too many factors in the current equation. For the appraisal business, I'd suggest hanging on tight; its going to be a rough few years.

 

[Overimprovement]

I have to wonder how much work are we REALLY losing to hybrids, desktops, waivers and AVMs with property inspections for Conventional orders? In my area, the big AMCs (the GSE picked) are controlling most of the market for non-traditional orders. This means most are staff or are the same small pool of appraisers doing most of the non-traditional work.

I did a deep dive for my clients on this very question 6-9 months ago. What I found was that while refi volume was obviously down, normal sales volume was only down in my market around 15%...BUT my quote/order volume was down (just on purchases) about 60%. That tells me that a majority of MY decline was due to alternative products. Yes, my fees are not the lowest, but I am factoring in QUOTE requests as well. There is no reason an AMC will remove an appraiser from a bid list just because they typically bid higher than others. They want as many on those quote/bid lists as possible. So the marked decline in even bidding opps tells me what I need to know. I have also spoken to specific lenders and AMCs who have told me essentially the same--that more and more orders are going the waiver/hybrid/in house appraiser route than ever before. Part of that is since refi volume is down, fewer total orders are available, so the in house folks can better handle the volume, and there is no longer any overflow.

Pent up demand will lead to more activity, and there will be a normalization of people's acceptance of current rates, so refis will slowly come back, but how many of these will even make it to a 1004 (or similar bill-paying level of income orders)?

Again, best wishes to those staying in the biz.

 

[Zoe]

I remember people loving certificate of deposit rates on like 5 year certificate of deposit at like 10%. Most of you are too young to remember that.

Remember the bank always operates on the spread. Locally, there is still a shortage in most areas on supply and demand on single family housing. People don't mind paying the higher interest rates for a house if they are having a hard time finding a house to buy.