Time Adjustments

[Ariba]

Remember that the 1004MC is designed to report "competing" properties, which must correspond with the top of Page 2, although the Page 1 market trends pertain to the overall neighborhood rather than competing sales only. [Took me about 10 years and dozens of hours on the AF to figure that out.]

Correct

Incorrect. The 'One Unit Housing Trends' section of P1 should reflect only those properties the appraiser deems comparable to the subject - IOW it should match the 1004MC and the top of P2. Per the Selling Guide:
"When completing the One-Unit Housing Trends portion of the Neighborhood section of the appraisal report forms, the trends must be reflective of those properties deemed to be competitive to the property being appraised." Bold and italics added by me.

Wrong. Do you use the same rationale when completing the One-Unit Housing (Price/Age) boxes do you only use the comparables? How about the present land use? Seems it to me you are misleading the reader by mixing market and comparables statistics in the neighborhood section. The "Neighborhood" is about the market and not about the comparables.

 

[shrubberyvaluation]

Correct

Wrong. Do you use the same rationale when completing the One-Unit Housing (Price/Age) boxes do you only use the comparables? How about the present land use? Seems it to me you are misleading the reader by mixing market and comparables statistics in the neighborhood section. The "Neighborhood" is about the market and not about the comparables.

It may be misleading, but it is what Fannie Mae wants.

 

[shrubberyvaluation]

Incorrect. The 'One Unit Housing Trends' section of P1 should reflect only those properties the appraiser deems comparable to the subject - IOW it should match the 1004MC and the top of P2. Per the Selling Guide:
"When completing the One-Unit Housing Trends portion of the Neighborhood section of the appraisal report forms, the trends must be reflective of those properties deemed to be competitive to the property being appraised." Bold and italics added by me.

Correct. The form is misleading but this is what the selling guide says.

 

[alebrewer]

Correct

Wrong. Do you use the same rationale when completing the One-Unit Housing (Price/Age) boxes do you only use the comparables? How about the present land use? Seems it to me you are misleading the reader by mixing market and comparables statistics in the neighborhood section. The "Neighborhood" is about the market and not about the comparables.

I agree that the form is confusing, and am more than a bit surprised that there wasn't more change to the forms before promulgating the 1004Desktop and 1004Hybrid. That said, the selling guide is pretty clear. The 'Neighborhood Characteristics', 'One-Unit Housing', and 'Present Land Use' apply to the neighborhood, while the 'One-Unit Housing Trends' applies to the subject's competing market.

Caveat: I could care less how someone else chooses to report their appraisals - it's not my business. I'm just sharing what the guide says, and how it was explained to me - by folks at Fannie - shortly after the forms were released.

 

[Tom D]

in my big city, value going up the 1st 9 months, then a slowdown. i adjusted mine from .5% to .37% per month. i go with a straight line. statistically the amount of data, or lack of, can skew the results. overall our MLS says the city went over 11% for the year. and then some neighborhoods are different from others. so it can be hard to use each quarter separately, then together for an adjustment. we only need to show how we got it, and was that approach reasonable. big city covid nonsense also affected our year.

 

[Carnivore]

The Buyer can use statistics to make a thoughtful offer, help to justify the offer, and decide the final offer number on a property. Statistics are also important to both the Buyer and Seller when looking at overall real estate trends within their neighborhood, city, region, or even state.

Where did they get the idea that ALL property values are going up? The News, idle chit chat with neighbors and friends, Zillow etc OK fair enough, but are all property values going up at the same rate? Not likely.

I think I said below earlier in this thread.

I would not look at the state or the region at all. It's obvious why you should not do that for your specific assignment. Having said that it still is useful for general statistical trends. My county, Gaston, is way different than neighboring Mecklenburg. The similarity is the trend lines are very similar.

So we go from Macro to Micro with the 1004mc. The 1004mc is the median indicator for your specific S/D. The sample from that s/d may be too small to be meaningful. Hence you look for other Competing s/d's. A suburban neighborhood usually has enough data in the 1004mc to demonstrate the trend and the demand for that Subject. It will indicate either be stable; increasing, decreasing. The competing 'hoods' should or likely will demonstrate a similar trend. The rate of increase may differ, but it will be close. As a matter of consistent reporting, I use supplemental statistics in graph form along with the 1004mc. It is very powerful because of the visual graph line to the reader as opposed to just numbers in the 1004mc. The two together set up the reader/user expectation to see a Time/market adjustment in the grid.

 

[Carnivore]

in my big city, value going up the 1st 9 months, then a slowdown. i adjusted mine from .5% to .37% per month. i go with a straight line. statistically the amount of data, or lack of, can skew the results. overall our MLS says the city went over 11% for the year. and then some neighborhoods are different from others. so it can be hard to use each quarter separately, then together for an adjustment. we only need to show how we got it, and was that approach reasonable. big city covid nonsense also affected our year.

I see a lot of PA plates in the Charlotte area. Even when they change their plate to NC , I know its a strong likelihood they are from PA or upstate NY. Ya'll have a rust problem with your auto's. That sand, grit and salt ya'll use on your roads tears up the lower panels behind the tires. LOL FTR Ex-Up State New Yorker. I escaped from the area a long time ago before it became popular to do so.

 

[sputnam]

Many appraisers seem to want to make 'rules' that apply in every assignment. They want to settle on one method of extracting an adjustment and always use it. The problem with that it doesn't always work. Properties and markets are unique. The available data varies from assignment to assignment. There are many peer accepted methods for extracting adjustments. The best one to use in any particular situation depends on the type, quantity, and quality of the data that's available. The solution for those appraisers is to learn more.

 

[RCA]

I have no problem at all - just use MARS. You can tell it to do simple linear or non-linear for each variable, including time. I can feed in 20 years of data and it will come back with "about" the most accurate regression possible. It is just handled with all other variables.

In fact, I can get regression not just on time but on how it influences different variables, such as GLA, LotSize (large lots can become more /or less in demand over a period of 10-20 years in specific areas), bath count and so on. This is important when there are underlying trends impacting the value of bathrooms, bedrooms, garage size and so on.

You might as well learn R/earth if you want to stay in appraisal. It is just a question of time before it is required.

 

[alebrewer]

I have no problem at all - just use MARS. You can tell it to do simple linear or non-linear for each variable, including time. I can feed in 20 years of data and it will come back with "about" the most accurate regression possible. It is just handled with all other variables.

I am admittedly not as well versed as you with respect to statistical analysis, but wouldn't using a data set of 20 years potentially produce a time adjustment regressor that is 'smoothed' over that 20 year period, thus resulting in a regressor that might, or might not, reflect current trends?