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What has history shown the career appraisers

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xm2841

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For the career appraisers who visit this forum, my question is whats next? We all know real estate moves in cycles and history has tends to repeat itself. That said, who has seen this before and what has happened? Where do you see this economy pointing us appraisers and our appraisal businesses. There are up and down years in business, understood, where are the positive business people who have had a winning record and what can you attribute it to?

-JW
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
In my 32 years working in some area of residential real estate (Realtor; employee of a large national employee relocation company; appraiser), the past 25 years as an appraiser, I have never experienced worse market conditions (and, that includes the early 1980s when we had mortgage interest rates of approximately 18%) than we have today.

What's to come? Take your best guess.
 

Kevin Mc

Elite Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
New York
Ditto what Lee stated. I have been doing this since 1983. I have seen some bad cycles but this is the worst. Lending work is about 30% of my business. It has come to a standstill like I have never seen. What is in the future, who knows?
 

Calvin the Airedale

Elite Member
Gold Supporting Member
Joined
Aug 17, 2004
Professional Status
Certified General Appraiser
State
Ohio
Dear Justin,

I came to this business in 1974 during the recovery from a recession. The first half of the 1980's saw a steep recession with high interest rates as a result of runaway inflation. A change in tax laws, regulatory priorities, and a commercial real estate bust fostered another recession in the early 1990s (S&L crisis). Another downturn took place after the tech market bubble went bust.

Though my age, professional activities, and thus perspective was slightly different during each period, I think what we are seeing in the current down cycle is fundamentally different than anything this country has seen since the great depression.

My best reference to current conditions comes from conversations I sat in on during the start of my career. I was fortunate to have worked in the office of a gentleman that, as a young man in the 1930s, sold real estate. He was a retired SREA (but still working) when I met him in 1974.

His descriptions of the market during the first half of the 1930s best approximates what I am seeing now. I was reminded of this when, last year, I read the book "The Forgotten Man" by Amity Shlaes, a history of the Great Depression.

We should bear in mind that although the valuation profession precedes the GD (arguably by 3,000 years), its acceptance and growth by public policy mandate was a direct result of this event.

I only hope our current crisis is more akin to what the Japanese experienced in the 1990s when their property bubble burst. It took them over ten years to recover.

When the stock market crashed in 1929, it was toward the simultaneous end of a six year run up in real estate prices. RE prices peaked in 1929 and hit their nadir in 1934. In greater Cleveland, that meant that some homes that had sold for $85k (upscale, excellent quality) in 1929 were found trading on a cash basis in 1934 for $15k.

The 1930s was marked by the kind of credit freeze that the Treasury and Fed are now trying to avoid. Banks hoarded capital and didn't want to lend it. The economy, and housing, became cash markets.

Prices did not recover from this low point to their pre-depression price levels in terms of inflation adjusted dollars until the 1960s. From 1930 to 1939, only a handful of homes were built in greater Cleveland.

I'm not saying we’re in a second depression. However, these two experiences suggest that the slope out of the trough is much more gradual and extended than the steep decline to the bottom. But recover we will!

Our current economy should have a similar result. I just hope I remain solvent long enough to enjoy the benefit of any new found respect the appraisal profession will garner when collateral lenders go back to mortgage 101.

Forgive my recycled prose.
 
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AnonApprsr

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Jan 21, 2008
Professional Status
Certified Residential Appraiser
State
Massachusetts
As I was reading your post I got a sense of DeJaVu lol. Than I read the recycled line, made me feel like I wasn't insane.
 

Kevin Mc

Elite Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
New York
Our current economy should have a similar result. I just hope I remain solvent long enough to enjoy the benefit of any new found respect the appraisal profession will garner when collateral lenders go back to mortgage 101.

Ditto. I also hope the "new found respect" comes as well.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
For the career appraisers who visit this forum, my question is whats next? We all know real estate moves in cycles and history has tends to repeat itself. That said, who has seen this before and what has happened? Where do you see this economy pointing us appraisers and our appraisal businesses. There are up and down years in business, understood, where are the positive business people who have had a winning record and what can you attribute it to?

-JW


My experience has been ....

From Poverty to Wealth and headed back to Poverty again. Life goes full circle .... and it only has taken 26 years.
 

realbiz

Junior Member
Joined
Mar 14, 2008
Professional Status
Certified General Appraiser
State
California
30 plus years of appraising here, and I have never seen a market like this in Southern California. In addition, appraisers now have to fight AMC's for fee's, the HVCC will also have a big impact on the future for appraisers. There are too many variables for me to predict. Been though a lot, but for the first time I am seriously thinking about going in a totally different direction.
 

Calvin the Airedale

Elite Member
Gold Supporting Member
Joined
Aug 17, 2004
Professional Status
Certified General Appraiser
State
Ohio
IMO the last few months were tough because the only deals getting done were FHA and VA loans. Conventional lenders that don’t wish to portfolio product must now send everything to FNMA or FHLMC. They, in turn, couldn’t sell any more paper on Wall Street so the pipeline became frozen.

The slowdown in residential lending started July. No telling when it will abate. The current bailout might help or not.

Anyone that can recite multiple SF numbers per man per week are actually doing good compared to many I’ve spoken with. I expect conditions to remain like this until 1Q09 or 2Q09. If the slow down lasts longer, only half of the 132k appraisers nationwide will remain in business.

High interest rates in the 1980s drove a third of appraisers out of business.

The bailout may eventually generate the work needed to value the underlying assets of about $3 trillion in CDOs. If that happens, work will pick up. Don’t expect it till next year, if at all.

After reading my paper this morning, I see that Paulson has already started signing deals for asset management services.

Unfortunately, these are some of the same Wall Street firms and brainiacs that "perfected" AVMs, BPOs, and the AMC model of doing business. Apparently, the more things change, the more they stay the same.
 

Greg Bell

Senior Member
Joined
Jul 7, 2006
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Louisiana
Read the last one first.....yikes...

"For the immediate future, at least, the outlook (stocks) is bright."
- Irving Fisher, Ph.D. in Economics, in early 1930

"...there are indications that the severest phase of the recession is over..."
- Harvard Economic Society (HES) Jan 18, 1930

"There is nothing in the situation to be disturbed about."
- Secretary of the Treasury Andrew Mellon, Feb 1930

"The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
- Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930
"... the outlook continues favorable..."
- HES Mar 29, 1930


"... the outlook is favorable..."
- HES Apr 19, 1930

"While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
- Herbert Hoover, President of the United States, May 1, 1930
"...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
- HES May 17, 1930

"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930


"... irregular and conflicting movements of business should soon give way to a sustained recovery..."
- HES June 28, 1930

"... the present depression has about spent its force..."
- HES, Aug 30, 1930

"We are now near the end of the declining phase of the depression."
- HES Nov 15, 1930

"Stabilization at [present] levels is clearly possible."
- HES Oct 31, 1931

"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
- President F.D. Roosevelt, 1933
 
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