Overall Market Trend (Min 12 months)

[Terrel L. Shields]

Understanding that this is the cause for the shape of the curve and the change in median price data over the year is very important.

You cannot really expect the average appraiser seeking to meet fast turn times and low pay to think thru this do you? I mean they'll just do whatever and even if it causes the range to expand rather than contract, forge ahead and send the report into the ether.

 

[J Grant]

Ok so do it the way you want to do it.

It's not about how I want to do it, the GSEs are asking for a PRICE trend
They are not asking for price per SF trend-

Price per SF is like basing the worth of a person on how many lbs they weigh- which might be a metric for some studies but does not address education, morals, income, or anything else about a person.

 

[Joe Flacco]

You cannot really expect the average appraiser seeking to meet fast turn times and low pay to think thru this do you? I mean they'll just do whatever and even if it causes the range to expand rather than contract, forge ahead and send the report into the ether.

I don't have expectations for anybody other than myself. But you don't really have to think through it if you understand the real estate market and seasonal factors.

It is crazy that seasonality and it's impact on real estate data is not common knowledge with appraisers. Even like media when reporting real estate data is year over year and if reporting month to month it is seasonal adjusted.

 

[Terrel L. Shields]

It's not about how I want to do it, the GSEs are asking for a PRICE trend

But they don't tell you WHAT "price trend". The price of all properties in a given market? Only those you have chosen from a list of comparable sales in age, size, etc.? Only sales of the same size? The same age? There is little specificity given with the mere term "price" or "price trend". Again a rising tide tends to float all boats unless you forgot to install the drain plug.

So, while the rate (slope of the trend line) may be different from more expensive to less expensive, so is the buying pool. The wealthy are not looking to downsize, and the poor cannot afford the million plus dollar properties. Therefore, you are dealing with a wasting decline of buyers as prices increase. But they both are usually going in the same direction according to the market conditions - they all rise in good markets and fall in bad ones. And since real estate is an imprecise market, it is a given that there is always going to be a margin of error (variation) and when the data points become so sparse as to be less consistent than the margin of error, then misinterpretation is a given.

 

[Joe Flacco]

It's not about how I want to do it, the GSEs are asking for a PRICE trend
They are not asking for price per SF trend-

Price per SF is like basing the worth of a person on how many lbs they weigh- which might be a metric for some studies but does not address education, morals, income, or anything else about a person.

If median sale price is going up, then median price per SF should be going up. I don't know what is so confusing about it.

 

[shrubberyvaluation]

But they don't tell you WHAT "price trend". The price of all properties in a given market? Only those you have chosen from a list of comparable sales in age, size, etc.? Only sales of the same size? The same age? There is little specificity given with the mere term "price" or "price trend". Again a rising tide tends to float all boats unless you forgot to install the drain plug.

So, while the rate (slope of the trend line) may be different from more expensive to less expensive, so is the buying pool. The wealthy are not looking to downsize, and the poor cannot afford the million plus dollar properties. Therefore, you are dealing with a wasting decline of buyers as prices increase. But they both are usually going in the same direction according to the market conditions - they all rise in good markets and fall in bad ones. And since real estate is an imprecise market, it is a given that there is always going to be a margin of error (variation) and when the data points become so sparse as to be less consistent than the margin of error, then misinterpretation is a given.

I wish they would provide their data. There are times where different properties within the same neighborhood have different trends. A multi million dollar waterfront might trend differently than a townhouse in a community that isn't waterfront. Of course if your data shows stable but the overall trend in the census tract is increasing, you are at risk of getting hit for racial discrimination or something.

 

[J Grant]

But they don't tell you WHAT "price trend". The price of all properties in a given market? Only those you have chosen from a list of comparable sales in age, size, etc.? Only sales of the same size? The same age? There is little specificity given with the mere term "price" or "price trend". Again a rising tide tends to float all boats unless you forgot to install the drain plug.

So, while the rate (slope of the trend line) may be different from more expensive to less expensive, so is the buying pool. The wealthy are not looking to downsize, and the poor cannot afford the million plus dollar properties. Therefore, you are dealing with a wasting decline of buyers as prices increase. But they both are usually going in the same direction according to the market conditions - they all rise in good markets and fall in bad ones. And since real estate is an imprecise market, it is a given that there is always going to be a margin of error (variation) and when the data points become so sparse as to be less consistent than the margin of error, then misinterpretation is a given.

Idk. Is an appraiser competent if they do not understand, regardless of what the GSE' says, that the most relevant trend and adjustment affect the subject and its competing properties in its own market and market area?

The GSEs speak of comps, not just sales, and they address the appraiser should identify and apply market conditions pertaining to the subject and its areas and similar property sales rather than broad market general trends, though both can be shown and discussed.

 

[Terrel L. Shields]

but the overall trend in the census tract is increasing, you are at risk of getting hit for racial discrimination or something.

We don't even know if FNMA is basing their "market area" on census tracts, zip codes, MSAs, addresses, or even counties. We might not even on the same runway, let alone the same plane. My county has the same census tracts as when I started in 1991. WTF? We have towns that are now 20,000 that were 800 then. We have huge changes in the rural demographic as "greenfield" subdivisions are chopping old farmland up into estates. The first dairy farm appraisal I was on was less than 3 miles from WallyWorld Hdq. and it is now a subdivision. In fact, I have valued dozens of dairies and at this time, I don't think there is a single surviving dairy in the county. The first poultry farm I did disappeared 20 years ago. It is all houses now. City limits have expanded on every town in the county, some extending miles and one berg that was not incorporated, incorporated and took in the regional airport and by area is possibly the largest "town" in the county. And it doesn't even have a school nor post office. And yet the census tract is supposed to be so important? Nonsense.

 

[J Grant]

We don't even know if FNMA is basing their "market area" on census tracts, zip codes, MSAs, addresses, or even counties. We might not even on the same runway, let alone the same plane. My county has the same census tracts as when I started in 1991. WTF? We have towns that are now 20,000 that were 800 then. We have huge changes in the rural demographic as "greenfield" subdivisions are chopping old farmland up into estates. The first dairy farm appraisal I was on was less than 3 miles from WallyWorld Hdq. and it is now a subdivision. In fact, I have valued dozens of dairies and at this time, I don't think there is a single surviving dairy in the county. The first poultry farm I did disappeared 20 years ago. It is all houses now. City limits have expanded on every town in the county, some extending miles and one berg that was not incorporated, incorporated and took in the regional airport and by area is possibly the largest "town" in the county. And it doesn't even have a school nor post office. And yet the census tract is supposed to be so important? Nonsense.

There is no a doubt about the THEIR market area, which we have no control over; what do we base OUR market area on?

 

[Terrel L. Shields]

what do we base OUR market area on?

But are they not vetting "our" market area against "their" opinion of market area?