Waivers are not the whole problem for appraisal demand.

[TerryRohrer]

It is hard to find numbers pertaining to the market for appraisal services. I recall seeing a fair estimate following the recession and don't recall exactly, but the number of lending assignments was down by something like one third to one half. It likely didn't recover to the previous high until the pandemic, when low interest rates prompted an abnormal rise in demand. The following chart, from the linked article, shows part of the problem, just in the new construction sector. Long term, that is further compounded by declining birth rates and an aging population. Even without the GSEs, our market is shrinking.

""If your population growth is getting cut in half over the decade, your household growth is going to be negatively impacted," Zelman said."

"Older populations tend to move less frequently, Zelman noted, which may translate to fewer home transactions going forward. And if there aren't as many young people raising families, demand for single-family homes should soften. The result may be a quieter housing market."

Famed analyst Ivy Zelman called the housing market bubble in 2006. She says there's an underrated long-term risk hanging over the real estate market today — but home prices can still rise in 2024

After warning about the US housing bubble in 2006, top analyst Ivy Zelman shares her 2024 outlook — and an underrated risk in the real estate market.

www.businessinsider.com

 

[djd09]

Low Appraisals Stall 23% of Home Sales​

October 10, 2021

Home buyers are bidding up home prices as they compete for homes. But appraisals don’t always agree with the offer the seller finally accepts. Some homes are appraised below the agreed-upon sales price, which could upend a deal.

Twenty-three percent of contracts were delayed due to appraisal issues, according to the latest REALTORS® Confidence Index Survey, based on a survey of real estate professionals’ transactions. About 12% of transactions were then terminated due to appraisal issues.

“I don’t remember any time where the frequency of buyers being willing to pay so much more than the market data was this high,” Shawn Telford, chief appraiser at CoreLogic, told The Wall Street Journal.

Low Appraisals Stall 23% of Home Sales

Buyers continue bidding up prices, but their final offer isn’t always reflected in the appraiser’s opinion of property value.

www.nar.realtor

they got a solution...waive them all...except for marin city and east cleveland

 

[George Hatch]

Fewer marriages and fewer family formations mean less demand for SFRs than when compared to before. I've already seen a couple articles about adults opting into shared housing because it's cheaper than trying to carry the whole expense as individuals. That's removing some of the demand, too.

We've also been adding a lot of units in the urban areas and most of them seem to be built as rentals, not as condos. Deporting some illegals will free up more units. All these factors could possibly add up.

 

[Essexfenwick]

Rates drifted lower over 25 years… then stopped at zero for 12 years

The ratcheted up to 8 percent

Screeching halt…attempted economic reset time with corresponding pain. But don’t worry there is no chance they won’t give in to inflation and start printing money again. Discipline will be so painful that they will be blamed and called Hitler. Better to give in to stagflation and blame capitalism and point fingers in all directions for the malaise.

 

[TerryRohrer]

The following suggests at least two more trends that are reducing current demand: cash sales and purchases for multiple generations.

"A record high 26% of buyers paid cash for their homes."

"Seventeen percent of home buyers purchased a multigenerational home, the highest share ever recorded."

First-Time Home Buyers Shrink to Historic Low of 24% as Buyer Age Hits Record High

First-time ($97,000), repeat ($114,300) and typical ($108,800) buyer incomes hit all-time highs.

www.nar.realtor

 

[Terrel L. Shields]

As Lenin once supposedly said about the quality of his Russian Army, "Quantity has a quality of its own." And truthfully, there ain't no quantity out there. Sales are a trickle what they were. As any rural appraiser can tell you sales are scarce in the best of times. In slow times, they are even worse. And in urban-suburban areas there are enough sales but too many appraisers chasing the same jobs.

 

[djd09]

Inventory of Existing Homes in Texas Balloons to Highest in Many Years, Prices Drift Lower but Are Still Way Too High​

by Wolf Richter •​

Inventories are piling up because prices are too high. But they’re coming down.​

By​

The housing market in Texas just hit another multi-year record of sorts: Active listings reached a new high in October in the data of Realtor.com going back to 2016. New listings are showing up at about the normal rate for this time of the year, but sales are lethargic despite dropping asking prices – prices clearly haven’t dropped enough – and so the inventory keeps piling up and going stale.

Active listings rose to 115,739 homes, up by 28% year-over-year, up by 42% from two years ago, and up by about 13% from 2018 and 2019 (data via Realtor.com).

Inventory of Existing Homes in Texas Balloons to Highest in Many Years, Prices Drift Lower but Are Still Way Too High | Wolf Street

the mortgage brokers with the blessings of gse's borg have ballooned prices to a point where it is not affordable...

 

[TerryRohrer]

Here, the inventory is increasing, but no one local can afford them. After a century of largely natural growth, the pandemic era and "Yellowstone" brought an outsized influx of well heeled outsiders with no knowledge of, or ties to, local economic conditions (and, oddly, a large contingent without a dime or a clue or a plan or an abode). Sales are few and increasingly variable even in the cookie cutter new construction.

 

[djd09]

dont worry...beginning in 2025 they will start waiving appraisals with 100% LTV....

 

[CGinMN]

The best info available on the market for appraisal services comes from Fredo. Obviously, this is GSE-only pipeline.

https://sf.freddiemac.com/docs/pdf/report/appraiser_capacity.pdf

I agree with Zelman that housing is in for quiet decade. I think the new forms are coming at a terrible time. The learning curve is going to be a big challenge, software costs will increase, and fees won't have recovered, so I think we will see more retirements and attrition. Within 3-5 years I wouldn't be surprised if the number of licensees completing GSE work dips to 25,000. Might even see one of the software providers go bankrupt. Then, whatever subsequent refi boom happens, appraisers won't be equipped to handle it, and consumers will be paying for $1,000 appraisals again, with pressure to increase waivers. The redesign focuses on more data collection to improve AVM quality. I think they will wish they had developed a more streamlined GSE form in addition to or instead of.