My New Blog

Assuming Congressional approval, those homeowners who are underwater (meaning they owe more on their home loan than the home is worth) will get some federal assistance in their mortgage.  Or at least pledges President Obama during his State of the Union address last night.

Considering how many folks bought homes during the period of 2005 to 2008, there's going to be a fair amount of people who are underwater.  This certainly comes as a welcome reprieve.    

With all of these pieces of good news, maybe we'll will the economy to get better.

What with all the recent positive news on the home-lending front, we should all be Optimists!  More good news from the industry telling us that mortgage rates are hitting all-time lows!

I was in a house this past week conducting an appraisal for a borrower trying to get a refinance.  He told me that he was working on getting a 15-year loan at the ridiculously low rate of 2.875!  My jaw about hit the floor!

You would almost be making money on a rate like that!

While I'm not a big proponent of government influence on people's lives, the Feds have called for "forceful action to aid the real estate market", which I approve. 

Often, however, government throws out common sense when they try to make corrections to national policy.  I'm hopeful that this isn't going to be one of those times.

In more good news, nationwide in 2011 saw the lowest number of foreclosures in 4 years.  Tempering that good news, is the suggestion that 2012 will pick up again, as lenders were working through bottlenecks in some local markets.

Yes!!  More reasons to be optimistic!

There are companies out there that believe that we may have hit bottom and will experience positive results in 2012.

http://www.dsnews.com/articles/home-prices-down-in-2011-but-market-stability-forecast-for-2012-2012-01-08?utm_source=twitterfeed&utm_medium=twitter

This article mentions that while home prices have dropped to 2001 levels, that we should start seeing some positive movement in pricing during this year. While it may take longer to pricing to hit positive numbers in many regions, one of the hardest hit in recent years (Florida) has started to see increased demand in some segments.

Isn't this reason enough to keep our heads up and to think positively?

Yes.  Yes it is.

Perhaps, overdue.

Anyway, per my research, market values throughout most of the Treasure Valley are continuing to slide, as of the end of the 4th quarter of 2011.  The good news is that in most areas, the trend has flattened--meaning, instead of the double-digit declines we've been seeing for the past couple of years, the declines are now just in the single-digits.  While this means it's not yet time to rejoice, it is cause for feelings of hope.

Giving us more feelings of hope is the feds' decision to keep interest rates low for the next few months, encourage more lending and buying for residential homes.

I'm ready to have some hope.

Aaah!  Spring has arrived in SW Idaho!

The snow's have melted from the valleys, and the rains come and go.  The May flowers are proving that we had enough April showers.  Grass is all green again, and kids are getting out of school.

This is a great time for real estate professionals in SW Idaho.  This is the time that normally houses really begin to sell, and properties are getting listed.

The economic news is getting better too.  The Idaho Statesman reported that the Idaho jobless rate dropped for the first time in 4 years and is hoping that we've seen the worst of the economy. 

I'm keeping a positive attitude that we'll see things get better all over.

Like everywhere (it seems) in the US, the single-family residential (SFR) market in southwestern Idaho (particularly in Canyon and Ada counties) has been suffering for some time.  However, we have reason to hope right now.

But first, let's look at our recent history.  While the rest of the nation's housing began to suffer in 2004 and 2005, southwestern Idaho actually grew at unprecedented rates.  Some parts of Meridian, Eagle, and Boise (Ada County) and in Nampa, Middleton, and Caldwell (Canyon County) saw annualized average and median sales prices increase from 2005 to 2006 by more than 20%--in some cases actually increasing by as much as 2.5% per month!

Of course, the piper had to be paid.  Starting in 2007, prices started to fall, with the worst hit in the SFR market in SW Idaho in 2009.  In most parts of Canyon and Ada counties, the annualized decline in prices from 2008 to 2009 were in double digits, hitting 20% in some places.

But this is where the hope is.  Since the end of 2009, while prices are continuing to slide, they are no longer in double-digit freefall.  My research shows that throughout most of Canyon and Ada counties, the annualized decline in 2010 was in single digits, and in some cases only 6%.  The early returns for 2011 still show falling prices, though.

I'm hopeful that we're near the bottom of pricing for SFR properties.  There is still quite an inventory of distressed (short sales and foreclosures) properties to go through, as reported by local news articles.  Unfortunately still, other counties in SW Idaho still have more pain to experience in their housing.

Nevertheless, hope spring eternal. Right?!  Anyway, I've got my fingers crossed.

The appraisal business in southwest Idaho is still confounding.  Typically, the summertime is an excellent time to buy and sell single-family residential (SFR) properties.  With the inventory levels we have experienced over the past several years, with historically low interest rates, and with some of the lowest sales prices we've seen in years, one would expect the SFR market to be skyrocketing.  Well, it's healthy and moving in a positive direction, but it's nothing like I expected it to be this summer.

Perhaps the pipeline is just filling.  During the months of June and July (thus far), refinancing has been the bigger driver in the appraisal assignments that I've seen come my way.  I haven't compared notes with my colleague/competitor appraisers for a couple of weeks so I'm not sure what they're experiencing, so perhaps I'm on an island.

I would be surprised, however, if we don't see a large volume of sales/refinancing activity before the summer is over.  That's what I'm counting on anyway.

It is plain to see that the American economy isn't what it was in 2009.  It is remarkable the changes we've seen in the US business culture during the last decade.  The changes we've experienced have affected our local economy, here in southwest Idaho too.

These changes have dramatically affected the lending/banking industries, and more interestingly to me, at least, how the residential appraising industry has changed in the years that I've been appraising properties.

New in the past year was the Home Valuation Code of Conduct (HVCC), which has changed the appraising industry more than even the proponents have imagined.  Common sense has been lost in the development of clients and borrowers because of the HVCC.  I could blather on about HVCC has done more damage to the lending industry more than it has cured, and how the HVCC is a poorly-crafted regulation that should be abolished sooner rather than later.  But we can save that for a nice face-to-face sometime.  You and I can sit down over a pint (of ice cream?) to go over my thoughts.  Contact me and I can recommend a nice parlor where we can go and visit.

Right now the economy is hurting.  The lending/mortgage industry seems to be hurting as much as anyone.  I estimate that 50% of my bank/mortgage lender contacts from a year ago have moved on to competing lenders or have left the industry entirely.  I guess that 80% of my contacts from 3 years ago are no longer valid.  I got word last week that one of my favorite local branches is being virtually shut down, due to corporate fiscal policies negatively affecting the local branches.

Specifically for the appraisers, the costs to operate are going up (not including the cost of gasoline), and the amount of work is increasing.  Meanwhile, the work that the typical appraiser is receiving is coming with lower fees, greater client demands, and less time to deliver the finished product.

I keep hearing that 10% of all appraisers are not renewing their licenses this year.  I also have been hearing that the average age for residential appraisers nationwide is 58 years, and that half of the licensed appraisers today will be retiring in the next 5-10 years. 

I heard through some appraiser colleagues of mine, when chatting with members of our state board, found out that even the state board is concerned with the numbers of appraisers leaving the industry, and they are not seeing new appraisers being trained.  The national standards board have recently mandated higher entrance requirements for trainee appraisers.  Coupled with lower fees and a weaker market, there is little incentive for people to train to become a licensed appraiser.

I've heard a few appraiser colleagues bandy about the phrase "let's form a union".  Unionizing appraisers could mean even greater changes are coming down the pike.  I've never been a advocate of labor unions, but the time might be ripe for appraisers to form a collective to provide support to a shrinking class of laborers.  The threat of striking appraisers could artificially increase fees to the appraiser, while lengthening the time a product could be delivered to the client, all the while giving the appraiser a political voice.  Hmmm, giving the appraiser a political voice might have been the fix for the HVCC in the first place.

It's a scary prospect for the appraiser, but a unionized appraiser workforce may be a scarier prospect for lenders and future borrowers.

It's been a couple of weeks since I last made an entry.  Plenty of things have happened to the real estate and stock markets in that time.  A lot of people are scared.  It certainly can be a scary time, but only if you allow fear to control your life.

Last week, while appraising a property in Elmore County, I had the opportunity to visit with a gentleman visiting from the Chicago area.  His job was to prosecute mortgage fraud.  He named off 4 or 5 well-known bankers and lenders who he is persuing for their involvement in what is now known as the US mortgage crisis.  Among other things, he told me that this $700 billion bailout/rescue of the lending industry is only a small ripple in the large pond of fiscal improprieties.  He said that it's going to take 6-8 years for the US economy to get over this crisis.  He recommended that anyone truly interested in learning more about the truth behind the crisis go here.

Wow!  Sounds scary enough to me!  But, I hope to be able to see the good news--the silver lining, if you will permit me.  Interest rates aren't great right now (this is all relative--25 years ago, they would say that our rates are fantastic!), but the economy appears to be slowing yet more.  I would imagine that the Feds would want to spark the economy to keep it moving along, before too long.  One of the more common ways to do this is to lower the interest rates to encourage borrowing and lending.  Should they lower the rates, rates will likely come close to all-time lows.  While this may not happen until precautions against predatory lending are in place, I have a confidence that they will happen.

This will encourage mortgage lending for both purchases and refinances.  For obvious reasons, this means more business for all of us.  Even better, is that now, many of our competitors have left the industry, so there should be less competition for both the lending side and for the appraising side.

Leave me a comment about what you think will happen.  Am I approaching this economy with rose-colored glasses, or do you see the silver lining that I think I see?