Systemic Practices in our Profession

[NC Appraising]

What kind of sales prices are we talking about ? If you look at your graph the parabolic move upward began in 2020 , and interest rates falling to historic low. Also if you market is like mine there is very little inventory , so you 20 buyers chasing 5 or 6 properties within that development. This is what happens when buyer are no longer purchasing real estate but a monthly payment. BUT as the reviewer, my job is to be a referee, and as long as the appraisers OMV is adequately supported , I do not get my personal opinions about the market involved. Imagine if this time next year we are at a 1% 30 year mortgage, your green line will go up another 10% to 20% : ) LOL

Yes, it began in early 2020. My market is different than your in some ways. NC has a rapid population growth from the North states and the interest rates only made problems worse in terms of the low supply. Most are transfers, with some being tired of the New York politics. COVID made the already low supply even worse. These people have their home already sold up North, and need a place ASAP. It's not like they are going to stay in a hotel until they find their perfect house, they need to buy a home ASAP and the interest rates is just another benefit. When COVID broke out, no one wanted to put their homes on the market, but the Yankees still needed a home to buy. So to these people, they are just settling on what they can get. If rates went up a point, it really does not matter, as they need a place to live. I also here this all of the time from the North home buyers "I would of paid $600K up North for this home and buying this at $400K is a deal!". Shaking head......

The lowering of the interest rates are mostly benefitting current owners that are looking to move up or first time owners. We are also seeing the investors coming back heavy in the new construction market....not good.

As for supporting the value, maybe you have to enlighten me as a Cali appraiser and a former Fannie guy......

This is what we are dealing with:

Comp 1 sold 04/2020 $180k
Comp 2 sold 05/2020 $183k
Comp 3 sold 07/2020 $185k

Subject is pending with multiple offers for $215k.

1. Use superior sales to make value and not make adjustments?
2. Use crazy large market appreciation adjustments? That high sale has to start somewhere.
3. Use 1-60 day closed sales from outside of the subjects PUD? This will get you accused of number hitting.
4. Come in low and let the borrowers work it out. Must of been appraised by a review appraiser. LOL.

This is what I am seeing in my market. I have no idea how appraisers are hitting the contract price, unless they are using the fourth approach to value: "the multiple offer approach to value".