Overall Market Trend (Min 12 months)

[J Grant]

From DW:

Just to be clear, the 12 month analysis should be the basis for the response on page 1 of the URAR indicating the price trend (stable, increasing or declining). So, if prices have risen over the past 12 months, then the trend would be indicated as "increasing."

As you noted, this clarification was made because research with appraisers found that no consistent methodology was being applied.

Also, just because the trend is increasing, that does not necessarily mean market condition (time) adjustments must be applied to every comp. Consider a market where over the past 12 months prices increased for the first 6 months and then were stable over the next 6 months. The report would state that prices were increasing, because that is the year-over-year trend. But, for comps that sold during the the most recent six months (the period when prices were stable), no market conditions (time) adjustment would be applied.

wt, the analysis for the first sentence above page one only, might be the sum total - if the first four months prices rose and then were stable the last 8 months, factor in teh total start of year to end of a year price change or lack of change and make the best conclusion,

Whatever you decide, comment on it, because any person or entity can challenge us, at least if our conclusions are supported in the narrative it makes it harder to prove us "wrong"

Page one asks are prices INCREASING - ING meaning occurring now and one assumes into the very near future - it does not ask if prices INCREASED ( past tense ) over the year-

 

[J Grant]

They should have specifically said year over year but whatever. 13 months is YOY if looking at the data on a monthly basis. If looking at it quarterly then it would be 15 months.

But anyway, overall trend is not 3 month trend, 4 month trend or 9 month trend, or the trend from your oldest comp. It is the trend from a year ago. And if a comp needs an adjustment and what the adjustment is are separate questions from what is the overall trend.

Exactly the way it should be.

A year is 12 months, they clearly said that is what they are asking for,

Over the past 12 months, various segments of X months changes might have occurred.,

 

[Dublin ohio]

Since there are so few, did you try adjusting for elements of comparison before modeling price and date?

The graph is based on the overall market since I only had 4 sales similar to subject. I filtered out older farmhouses, properties with unique features such as equestrian facilities and multi parcel sales where the additional parcels were excess and buildable and marketed that way. Also eliminated large acreage sales that were not really residential properties.

 

[The Bob]

The response on page one is a generic overall trend, while the trend lines or scatter graphs wrt to support making (or not making ) market conditions/time adjustments are more detailed and as you note apply to individual comps -

That said, IMO, it would be misleading to report the trend on page one as increasing if, 4 months ago, the market froze as stable or started declining . However, it is reported might need an explanation and the larger more genric data trend on page one might not match the smaller market area and particular to subject property type market conditions and trend,,

I think Fannie and Freddie just want something that is easily defined. In this case the OVERALL trend for the prior 12 months. At least they have defined "trend" as they see fit. Of course we all know markets don't go straight up/down. In my area prices adjust very sharply in the early Spring and then tend to level out through the Summer market. The stupid stips you will likely get for saying the market is "increasing" (overall trend) and then not making an adjustment because things are currently stable is worth at least another $25.

 

[alebrewer]

if Jan-Feb is 1% increase and Feb-December is stable you check increasing. No doubt in lawsuits this will be fought over for being misleading.

Of course your scenario is hyperbolic, but I get it. Even more concerning: increasing for 8 months - declining for the most recent 4 months. Overall trend is still 'increasing', but the 'current' market is declining...

 

[J Grant]

Of course your scenario is hyperbolic, but I get it. Even more concerning: increasing for 8 months - declining for the most recent 4 months. Overall trend is still 'increasing', but the 'current' market is declining...

the two contradict each other - how can the overall trend still be increasing when the current market is declining?

The better way to describe it would be prices increased for the first 8 months of the past year, then began declining 4 months ago, and per current listings and spending is still declining. Therefore, the price trend is marked declining - see sales comparison page for additional comment ( that is where we can explain that because the prices were increasing the first 8 months, then began declining, how do we adjust for that? Do we adjust sales whose contracts were negotiated after 8 months down and sales contacts negotiated within the first 8 months up?

 

[alebrewer]

the two contradict each other - how can the overall trend still be increasing when the current market is declining?

There is no contradiction at all. If I'm describing a '12 month trend', then by definition - the trend is increasing. If I'm describing a 4 month trend - then it is decreasing. This is what, I think, the handlers want us to understand/apply. It's just gonna take more commentary/support now that they've provided some color around what they expect.

 

[J Grant]

There is no contradiction at all. If I'm describing a '12 month trend', then by definition - the trend is increasing. If I'm describing a 4 month trend - then it is decreasing. This is what, I think, the handlers want us to understand/apply. So that, even if the 12 month trend is noted on P1 as 'increasing', its theoretically possible to have downward market adjustments in the grid. It's just gonna take more commentary/support now that they've provided some color around what they expect.

It is the latest trend, a last quarter trend, for example, that indicates where the market is and going for the very near future -despite what it did past tense the first 8-9 months- all of it should be commented on, of course.

 

[alebrewer]

Here's an example of that exact scenario. And I was wrong about making negative adjustments in an increasing market. So long as the 'starting observation is lower than the final observation (and all points between), then no negative adjustments would be applicable.

 

[J Grant]

Here's an example of that exact scenario. And I was wrong about making negative adjustments in an increasing market. So long as the 'starting observation is lower than the final observation (and all points between), then no negative adjustments would be applicable.

View attachment 96097

I agree, and it makes the most sense - but on a case-by-case basis, who knows?

Some esp those using the scatter chart heat map from True Function/spark ( I saw a video on it and disliked it ) - might adjust up and then down again - however we decide to do it we should explain because the way the entities are functioning now, they can challenge us no matter which way we do it.