My New Blog

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  I guess that 80% of my contacts from 3 years ago are no longer valid.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?

Appraising homes as a profession certainly has its benefits.  One of those benefits is not having to be chained behind a desk.  The appraiser can wonder around in ways that most typically-employed people cannot.  Having a camera with me for appraisal purposes allows me to tap into that artistic part of my personality.  I truly enjoy photography and in my spare time I sometimes find myself just wandering around trying to find something visually interesting.  While my typical appraisal subject doesn't necessarily inspire artistic expression, it is fun to have a digital camera with me in case I happen across something that does inspire me.  I'm no expert, but I have fun and enjoy the opportunity to get outside.

In Meridian, after a long day of appraising, I was returning home and found a fabulous summer sunset.  I just happened to drive past a new commercial development.  The reflection of the sunset on the commercial sign and the new high school football field's lights in the background triggered my photographic eye.

Near Marsing while out appraising in the spring, I saw this field laborer moving irrigation pipe.  Behind him is a fruit orchard, and then Lizard Butte behind it.

This old barn is south of Nampa.  I drove past it one cold winter day and saw a cat sitting in the window soaking up the sun.  As I stopped my car and approached the barn, the cat saw me and took off. 

Again, near Marsing, this is a vineyard in early Spring.  The field worker is on his tractor down one of the rows.

Downtown Boise at Fort St and 8th St.  This is St. Joseph's Catholic School's facade in the foreground with the spire from the St. Michael's Cathedral in the background.  I really liked the juxtaposition of these features.

In a subdivision in snowy Kuna, this lonely fire hydrant called to me as I drove past.  I'm sure that I got some interesting glances from residents of this subdivision as I walked and walked and photographed around this hydrant.

This is downtown Boise from the foothills.  This photo was taken in the late afternoon in the winter with a slight haze.

While not particularly artistic, this photo proves that the appraiser's life can be very interesting.  I appraised a residential house in Star that had bobcats in the backyard.  This particular male was approachable, but his mother peered at me behind some rocks.  The house owner told me that he had to stay next to me while I did my outside work in the backyard to ensure that the mother cat didn't pounce on me!  Yikes!

Additionally, the appraiser deals with property photos done by people either in a hurry, or...well, let's just stick with being in a hurry.  This photo from the Ada County Assessor's Office makes me laugh.

Could that be the hand of God?  Really?!

The Boise area is known throughout the various consumer goods industries as a unique island.  Consumer products are market tested in the Boise area as the city is relatively isolated and has no spill-over from other municipalities.  Salt Lake City, the next closest city, is located more than 5 hours away by automobile.  Portland is more than 6 hours and Seattle is about 8 hours away.  Boise's isolation, in many ways, is a blessing.

Unfortunately, Boise's isolation hasn't entirely protected the region from the weak housing industry.  The residential real estate market is soft in Boise also.  The entire region in which Boise resides, known as the Treasure Valley, has experienced a slowdown in the housing market, from both the number of units sold, and in the rate of market appreciation.

The region's isolation did delay the market downturn somewhat, however.  During 2006, when some of the nation was already experiencing sluggishness in housing, nearly the entire Treasure Valley witnessed a growth in market valuation that had never been seen.  Generally, values were increasing 2.5% a month, with some neighborhoods and communities approaching 5% monthly. 

As we have all heard, what goes up, must come down.  Market values in early 2007 leveled off generally in Treasure Valley, and have started to dip.  While there are some neighborhoods that have started to experience a true negative growth in market valuation, most of Treasure Valley has just started to slip.  As of early August 2008, none of southwestern Idaho has been listed as a "declining market".

That is not to say that things are rosy.  The number of units sold is still weak, and foreclosures are going up.  But compared to the markets outside the Treasure Valley, in other national regions, the housing market in southwest Idaho is hanging on. 

However, it is my opinion, that the worst is behind us.  The Feds are playing with the interest rates to re-energize the economy.  President Bush is pushing some bills to rescue homeowners.  Fuel prices appear to be slipping.  Local housing inventory rates look like they aren't climbing like they have been during the past 12 months.

Keep your chin up.