Information provided by the CEO of Van Eaton & Romero extracted from recorded MLS sales only.
The number of sales in March 2010 was 310, which is a 16.1% increase compared to March 2009.
The Average Days on the Market from January to March 2010 is 108, which is a decrease of 4% from Jan-Mar 2009.
The Average Sales Price for Jan-Mar 2010 is $163,350, which is a 5.64% decrease compared to Jan-Mar 2009.
The list to sold price ratio is 97.31%, a .52% increase compared to 2009.
For a complete market analysis, please email me at Kisha@KishaKana.com
Sunday, April 18, 2010
Wednesday, March 10, 2010
Febraury Market Analysis
February 2010 Market Analysis created by CEO of Van Eaton & Romero, Bill Bacque.
In short, home sales reported to MLS in all areas of Acadiana Jan-Feb.2010 have decreased in comparison to 2009 by 3.63%
The average days on the market has increased by one day.
The average sales price has decreased by .77%.
The average list to sold price ratio has increased by .13%.
Any additional questions or for a copy of the full report, please email Kisha@KishaKana.com
In short, home sales reported to MLS in all areas of Acadiana Jan-Feb.2010 have decreased in comparison to 2009 by 3.63%
The average days on the market has increased by one day.
The average sales price has decreased by .77%.
The average list to sold price ratio has increased by .13%.
Any additional questions or for a copy of the full report, please email Kisha@KishaKana.com
Saturday, December 12, 2009
November 2009 Lafayette Market Report
The following report was extracted from sold homes reported to MLS in Lafayette Parish only, courtesy of Van Eaton & Romero.
There was a 22.75% increase in closed sales reported in November 2009 compared to November 2008. Overall comparing the year to date in 2009 to Jan-Nov 2008, there was a .94% decrease. Respectively the days on the market have increased by seven days.
The average sales price decreased 1.69%. The median sales price increased .18%. The list to sold price ratio decrease by .15%.
I believe this to be uplifting news. When you speak of the real estate market, it is always good to have the facts.
There was a 22.75% increase in closed sales reported in November 2009 compared to November 2008. Overall comparing the year to date in 2009 to Jan-Nov 2008, there was a .94% decrease. Respectively the days on the market have increased by seven days.
The average sales price decreased 1.69%. The median sales price increased .18%. The list to sold price ratio decrease by .15%.
I believe this to be uplifting news. When you speak of the real estate market, it is always good to have the facts.
Monday, November 16, 2009
Extended Tax Credit Information.
Senate Approves Tax Credit Extension, Expansion
The Senate yesterday passed legislation to extend the $8,000 home buyer tax credit to May 1, 2010, for first-time buyers and add a $6,500 tax credit for repeat buyers if they've lived in their home for five of the past eight years. Home prices are capped at $800,000.
The legislation was included in a bill to extend unemployment benefits and is expected to be passed by the House today or tomorrow. President Obama is expected to sign the legislation when it's sent to his desk.
Under the bill, income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.
Households who have binding contracts in place by April 30 will be allowed an additional 60 days to complete their transaction. The deadline for members of the military serving out the U.S. for at least 90 days between Jan. 1, 2009, and May 1, 2010, has been extended one year.
Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a check. Taxpayers will be able to claim the credit on their 2009 income tax return for purchases made in 2
Q&A
1. Existing homeowner credit: Must the new house cost more than the old house?
A. No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.
2. I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
A. Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
3. I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
A. Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).
4. I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
A. No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
5. I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
A. Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.
6. I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
A. You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.
Information provided by Bill Bacque' CEO of Van Eaton & Romero
The Senate yesterday passed legislation to extend the $8,000 home buyer tax credit to May 1, 2010, for first-time buyers and add a $6,500 tax credit for repeat buyers if they've lived in their home for five of the past eight years. Home prices are capped at $800,000.
The legislation was included in a bill to extend unemployment benefits and is expected to be passed by the House today or tomorrow. President Obama is expected to sign the legislation when it's sent to his desk.
Under the bill, income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.
Households who have binding contracts in place by April 30 will be allowed an additional 60 days to complete their transaction. The deadline for members of the military serving out the U.S. for at least 90 days between Jan. 1, 2009, and May 1, 2010, has been extended one year.
Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a check. Taxpayers will be able to claim the credit on their 2009 income tax return for purchases made in 2
Q&A
1. Existing homeowner credit: Must the new house cost more than the old house?
A. No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.
2. I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
A. Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
3. I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
A. Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).
4. I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
A. No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
5. I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
A. Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.
6. I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
A. You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.
Information provided by Bill Bacque' CEO of Van Eaton & Romero
Thursday, November 12, 2009
Market Stats January to October 2009
Lafayette Parish residential sales reported to the REALTOR Association of Acadiana’s Multiple Listing Service for September and October 2009 significantly outperformed the corresponding monthly sales reported in 2008. Typically, fourth quarter residential sales are the slowest for sales. The exception to that in our market was 2005 due to hurricanes Katrina and Rita which caused a enormous increase in sales for the end of that year. Also, last year with the national financial meltdown which began in July-August of 2008, closed sales for the fourth quarter were understandably slower beyond the normal seasonal dip. The sales numbers for September and October of 2009 for Lafayette Parish clearly indicates that stability has returned compared to last year. With Lafayette Parish cumulative sales reported through October 2009 just 2.89% below 2008 and the pace of the past two month’s sales well ahead of last year, we are becoming more confident that year end 2009 Lafayette sales will exceed those of 2008.
While Lafayette Parish residential sales have been surprisingly strong, those sales reported outside of Lafayette Parish (Acadia, Evangeline, Iberia, Jeff Davis, St. Landry, St. Martin, St. Mary and Vermillion parishes) continue to experience significant drops in sales when compared to 2008 levels. The cumulative January – October combined sales for those parishes declined by nearly 24% versus the same period in 2008.
Lafayette Parish new construction home sales reported through October 2009 are actually up by 1.25% over 2008 while re-sales are 4.5% below their corresponding 2008 level.
In comparing Lafayette Parish home sales to past years, 2009 sales are ahead of 2004 (pre-Katrina year) by 9.4%, but lag behind the post-Katrina boom years of 2005, 2006 and 2007 by 10.75%, 14.3% and 17.2% respectively.
Based on January – October 2009 sales reported, the average sale price for a home in Lafayette Parish was $195,777. The average sale price for the same period in 2008 was $199,420. That represents a 1.8% overall decline in average sales price of 1.8%. The median sale price for 2009 versus 2008 remained essentially the same with 2009 being $171,250 versus $171,500 for 2008.
The average sale price for Lafayette Parish new construction sales declined from $228,153 in 2008 to $207,062 in 2009. That is a 9.24% decline. The new construction median sale price also declined to $177,500 from $187,200; a drop of 5.2%. Caution should be taken not to interpret these figures as indicative of actual value loss for newly constructed homes, rather it indicative of the change in the product type that most builders have moved to over the past two years and what the consumer is purchasing – lower priced, entry-level homes. That conclusion is further evidenced in the data provided on page 16 which indicates that sales of new construction in the under $150,000 price range has increased over 2008 by 25%. Just two years ago it would have been difficult to find any new homes in Lafayette Parish available at all.
The number of months supply analysis for Lafayette Parish home sales, indicate that the demand/supply ratio remains quite positive in all price ranges except those above $300,000. That is consistent for both re-sales and new construction indicating that this segment of our residential marketplace remains significantly challenging.
Our overall forecast for the Acadiana residential marketplace remains positive. Certainly, Lafayette Parish appears more stable than our adjacent parishes. With interest rates remaining near or at historic lows and with the renewal and expansion of the housing tax credit, we remain confident in the value of home ownership in our area.
Provided & Written By: Bill Bacque', CEO of Van Eaton & Romero, INC
While Lafayette Parish residential sales have been surprisingly strong, those sales reported outside of Lafayette Parish (Acadia, Evangeline, Iberia, Jeff Davis, St. Landry, St. Martin, St. Mary and Vermillion parishes) continue to experience significant drops in sales when compared to 2008 levels. The cumulative January – October combined sales for those parishes declined by nearly 24% versus the same period in 2008.
Lafayette Parish new construction home sales reported through October 2009 are actually up by 1.25% over 2008 while re-sales are 4.5% below their corresponding 2008 level.
In comparing Lafayette Parish home sales to past years, 2009 sales are ahead of 2004 (pre-Katrina year) by 9.4%, but lag behind the post-Katrina boom years of 2005, 2006 and 2007 by 10.75%, 14.3% and 17.2% respectively.
Based on January – October 2009 sales reported, the average sale price for a home in Lafayette Parish was $195,777. The average sale price for the same period in 2008 was $199,420. That represents a 1.8% overall decline in average sales price of 1.8%. The median sale price for 2009 versus 2008 remained essentially the same with 2009 being $171,250 versus $171,500 for 2008.
The average sale price for Lafayette Parish new construction sales declined from $228,153 in 2008 to $207,062 in 2009. That is a 9.24% decline. The new construction median sale price also declined to $177,500 from $187,200; a drop of 5.2%. Caution should be taken not to interpret these figures as indicative of actual value loss for newly constructed homes, rather it indicative of the change in the product type that most builders have moved to over the past two years and what the consumer is purchasing – lower priced, entry-level homes. That conclusion is further evidenced in the data provided on page 16 which indicates that sales of new construction in the under $150,000 price range has increased over 2008 by 25%. Just two years ago it would have been difficult to find any new homes in Lafayette Parish available at all.
The number of months supply analysis for Lafayette Parish home sales, indicate that the demand/supply ratio remains quite positive in all price ranges except those above $300,000. That is consistent for both re-sales and new construction indicating that this segment of our residential marketplace remains significantly challenging.
Our overall forecast for the Acadiana residential marketplace remains positive. Certainly, Lafayette Parish appears more stable than our adjacent parishes. With interest rates remaining near or at historic lows and with the renewal and expansion of the housing tax credit, we remain confident in the value of home ownership in our area.
Provided & Written By: Bill Bacque', CEO of Van Eaton & Romero, INC
Sunday, September 20, 2009
Techinal Connection=Social Disconnection
We have each other at our fingertips. Now, more than ever, we are able to connect with friends and family within seconds. The internet and I phones have given us the ability to tell the world what we’re doing and find out what’s up with everything else. But has being technology connected somehow made us socially disconnected?
I have a twitter, myspace and facebook account. I’m connected to people from my past and new incredible people I wouldn’t have met in normal circumstances. I absolutely love it! But at the same time feel that it shouldn’t replace your social life. It should enhance.
I’ll give a few examples of what I’m talking about. Ever met someone online (or connected with an old friend) and clicked so well only to meet up in person and face awkward conversation? What happened here? We seemed to have so much in common chatting online? Is this online social networking affecting our ability to interact well with others in person?
Ever been out with friends and everyone was on their cell phone text messaging or on a social networking site and not talking? Very awkward feeling. You don’t want to speak because it seems as though you are bothering them. I see this a lot with a group of teenagers too. Everyone is sitting in silence consumed with the applications on their cell phones.
Ever had your children and spouse vying for your attention while you obsessively update your status? Ever looked around your house and saw everyone on technology devices, not interacting with each other?
I’m guilty of all of the above. I am aware of it. I still think that being technology connected has a lot of advantages. But I also strongly feel that the human touch is much more rewarding that the feel of a keyboard.
I do not want to be socially disconnected. When I have to wait during the day, (doctor’s office, in line at the grocery store) I do connect to the internet if I don’t have a book handy. But I also take time to acknowledge that there are other people in the room. I smile at them. I say hi if I feel compelled to do so. If they start talking to me, I talk to them, even if I don’t feel like it. They may need human compassion. They may be lonely. What is 5 minutes of my day? 5 minutes of my time may make that person’s whole day.
When I’m with friends, I’m not on social networking sites. I’m engaging with my friends. I don’t answer calls that I know will take longer than a minute. Otherwise doing so is just rude. You’re sending the message that they don’t deserve your attention. I will text but not excessively. That too is also rude.
I don’t stay on social networking sites while I’m at work so what makes me think it’s okay to do so while I’m while I’m with family? I update my status throughout the day but I don’t linger on. At night, I’m no longer staying online when I should be spending time with my husband and son. When my son looks back at his childhood, I don’t want him to remember his mom as a permanent fixture at the computer.
I think that staying connected via social networks is great because it exposes us to a lot of different types of people and opens our world to different opinions and inspirations. But if we become socially disconnected, we have a greater impact on the people around us whom we love. And not a positive impact.
My best suggestion is to be in the moment. Wherever you are, be there. If you’re sitting in class, be in class. If you are with friends, be with friends. If you are at work, be at work. Focus and savor each experience without being somewhere else mentally. When it’s time for technical time, then be there.
I have a twitter, myspace and facebook account. I’m connected to people from my past and new incredible people I wouldn’t have met in normal circumstances. I absolutely love it! But at the same time feel that it shouldn’t replace your social life. It should enhance.
I’ll give a few examples of what I’m talking about. Ever met someone online (or connected with an old friend) and clicked so well only to meet up in person and face awkward conversation? What happened here? We seemed to have so much in common chatting online? Is this online social networking affecting our ability to interact well with others in person?
Ever been out with friends and everyone was on their cell phone text messaging or on a social networking site and not talking? Very awkward feeling. You don’t want to speak because it seems as though you are bothering them. I see this a lot with a group of teenagers too. Everyone is sitting in silence consumed with the applications on their cell phones.
Ever had your children and spouse vying for your attention while you obsessively update your status? Ever looked around your house and saw everyone on technology devices, not interacting with each other?
I’m guilty of all of the above. I am aware of it. I still think that being technology connected has a lot of advantages. But I also strongly feel that the human touch is much more rewarding that the feel of a keyboard.
I do not want to be socially disconnected. When I have to wait during the day, (doctor’s office, in line at the grocery store) I do connect to the internet if I don’t have a book handy. But I also take time to acknowledge that there are other people in the room. I smile at them. I say hi if I feel compelled to do so. If they start talking to me, I talk to them, even if I don’t feel like it. They may need human compassion. They may be lonely. What is 5 minutes of my day? 5 minutes of my time may make that person’s whole day.
When I’m with friends, I’m not on social networking sites. I’m engaging with my friends. I don’t answer calls that I know will take longer than a minute. Otherwise doing so is just rude. You’re sending the message that they don’t deserve your attention. I will text but not excessively. That too is also rude.
I don’t stay on social networking sites while I’m at work so what makes me think it’s okay to do so while I’m while I’m with family? I update my status throughout the day but I don’t linger on. At night, I’m no longer staying online when I should be spending time with my husband and son. When my son looks back at his childhood, I don’t want him to remember his mom as a permanent fixture at the computer.
I think that staying connected via social networks is great because it exposes us to a lot of different types of people and opens our world to different opinions and inspirations. But if we become socially disconnected, we have a greater impact on the people around us whom we love. And not a positive impact.
My best suggestion is to be in the moment. Wherever you are, be there. If you’re sitting in class, be in class. If you are with friends, be with friends. If you are at work, be at work. Focus and savor each experience without being somewhere else mentally. When it’s time for technical time, then be there.
Tuesday, August 11, 2009
July 2009 Residential Market Report
This report consists of residential home sales reported to MLS in all areas of Acadiana.
In comparison with June 2009, July 2009 has seen a decrease of 3.61% of new homes on the market. Comparing Jan-July 2009 to Jan-July 2008, there has been a decrease of 10.74%.
The dollar volume of July 2009’s closed sales increased 12.79% in comparison to June 2009 but decreased 12.68% overall comparing Jan-July 2009 to Jan-July 2008.
The following is comparing Jan-July 2009 to Jan-June 2008”
Average Sales Price increased .71%
Median Sales Price increased 2.56%
List to Sold Price Ratio increased 2.65%
Compared to June 2009, the number of sales for July 2009 increased by 13.88% but decreased 13.30% overall comparing Jan-July 2009 to Jan-July 2008.
There is a 12 day increase on the average days on the market for Jan-July 2009 in comparison with Jan-July 2008.
For a complete report or questions, please email Kisha@KishaKana.com
In comparison with June 2009, July 2009 has seen a decrease of 3.61% of new homes on the market. Comparing Jan-July 2009 to Jan-July 2008, there has been a decrease of 10.74%.
The dollar volume of July 2009’s closed sales increased 12.79% in comparison to June 2009 but decreased 12.68% overall comparing Jan-July 2009 to Jan-July 2008.
The following is comparing Jan-July 2009 to Jan-June 2008”
Average Sales Price increased .71%
Median Sales Price increased 2.56%
List to Sold Price Ratio increased 2.65%
Compared to June 2009, the number of sales for July 2009 increased by 13.88% but decreased 13.30% overall comparing Jan-July 2009 to Jan-July 2008.
There is a 12 day increase on the average days on the market for Jan-July 2009 in comparison with Jan-July 2008.
For a complete report or questions, please email Kisha@KishaKana.com
Wednesday, July 29, 2009
In the news....regarding appraising
Appraisal rules backfire in down market
By Jack_Guttentag
Created 2009-07-27 00:00
Enacting rules to curb abuses arising during a housing bubble, which don't take effect until the succeeding financial crisis, can easily do more harm than good. This is the case with new rules requiring that property appraisals be insulated from pressures exerted by any of the parties with a financial interest in an appraised value: primarily lenders, mortgage brokers and Realtors.
Appraisals are informed judgments regarding the value of specific properties. They are not perfect because appraisers must work with incomplete information. Further, appraisers are subject to bias, and more so if less complete information is available to them.
During periods of rising house prices, such as 2000-06, many appraisers erred on the upside because they were part of a community that expected further price increases. This tendency was sometimes reinforced by pressures exerted by lenders, Realtors and mortgage brokers. None of them wanted to see deals torpedoed by appraisals below the prices buyers had agreed to pay.
In late 2007, New York Attorney General Andrew Cuomo sued the appraisal subsidiary of title insurer First American for allegedly conspiring with WaMu, a major mortgage lender at the time, to inflate appraisals. Because WaMu sold a large portion of its mortgages to Fannie Mae and Freddie Mac, Cuomo embarrassed the agencies into issuing a Home Valuation Code of Conduct (HVCC). The code declared that the agencies would then purchase only those mortgages supported by an "independent" appraisal.
The objective of HVCC was to insulate the appraisal process from influence by any of the parties with an interest in the outcome. Mortgage brokers and Realtors could no longer have any contact with appraisers, and lenders had to obtain appraisals in some manner that prevented them from exercising any control.
The problem with this well-intentioned rule is that it was issued in December 2008 to become effective May 1 of this year, or squarely in the middle of the worst housing market since the 1930s.
With house prices declining, the upward bias in appraisals that had prevailed during the bubble had morphed into a downward bias. Many deals are not getting done because appraisals are coming in too low, and HVCC is seriously aggravating the problem.
To protect themselves from liability, most lenders are ordering appraisals from appraisal management companies (AMCs), which intermediate between the lender and the appraiser. The AMC selects and pays the appraiser, receives and evaluates the appraisal, and passes it to the lender, which has no direct contact with the appraiser.
Because AMCs operate nationally but do not have appraisers everywhere, more appraisals are being done by appraisers who are not familiar with the local market. Appraisers working for AMCs are also paid less per appraisal than independents, which may induce them to invest less time.
Less knowledge by appraisers means more scope for bias, and in a declining-price market, the prevailing bias is toward lower values.
Intermediation by AMCs also lengthens the period required to complete purchase transactions. People involved in the process tell me that it can add an extra week. In an increasing number of cases, the paperwork doesn't get done by the contracted due date or the expiration date of the buyer's mortgage lock, either of which can derail the transaction.
The objective of HVCC was to prevent pressures being imposed on appraisers to raise values. But HVCC also prevents the loan officers, mortgage brokers and Realtors who work with borrowers from pressuring appraisers to get a deal done in time to meet a deadline. Further, they can no longer keep their clients informed about the status of an appraisal because they are no longer in the loop.
In addition, the loan officers, brokers and Realtors who fashion deals for consumers used to have access to informal value opinions from the appraisers with whom they worked. Such opinions allowed them to abort house purchases and refinances that clearly would not fly because of inadequate property value. This source of information is now closed to them, with the result that deals that previously would have been screened out are now going through the system to be rejected, imposing needless costs on everyone involved.
HVCC has also pretty much eliminated the ability of a borrower to use the same appraisal with multiple loan providers. Before HVCC, mortgage brokers could use one appraisal with any of the wholesale lenders with which they dealt, and lenders sometimes accepted appraisals ordered by others. Today, brokers are out of it and lenders using AMCs will not accept appraisals ordered by other lenders because they cannot be sure that the other lenders are following the HVCC rules. The upshot is that borrowers often have to pay for more than one appraisal.
In sum, the HVCC "cure" for the appraisal problem of overvaluation has been implemented in a market where the problem has become undervaluation, and HVCC is making that problem much worse. It should be scrapped. When normal markets reemerge will be time enough to reconsider how appraisals can be made independent without disrupting business relationships that have served borrowers well.
NOTE: I am grateful to Kevin Iverson for his insightful comments.
The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com [2].
By Jack_Guttentag
Created 2009-07-27 00:00
Enacting rules to curb abuses arising during a housing bubble, which don't take effect until the succeeding financial crisis, can easily do more harm than good. This is the case with new rules requiring that property appraisals be insulated from pressures exerted by any of the parties with a financial interest in an appraised value: primarily lenders, mortgage brokers and Realtors.
Appraisals are informed judgments regarding the value of specific properties. They are not perfect because appraisers must work with incomplete information. Further, appraisers are subject to bias, and more so if less complete information is available to them.
During periods of rising house prices, such as 2000-06, many appraisers erred on the upside because they were part of a community that expected further price increases. This tendency was sometimes reinforced by pressures exerted by lenders, Realtors and mortgage brokers. None of them wanted to see deals torpedoed by appraisals below the prices buyers had agreed to pay.
In late 2007, New York Attorney General Andrew Cuomo sued the appraisal subsidiary of title insurer First American for allegedly conspiring with WaMu, a major mortgage lender at the time, to inflate appraisals. Because WaMu sold a large portion of its mortgages to Fannie Mae and Freddie Mac, Cuomo embarrassed the agencies into issuing a Home Valuation Code of Conduct (HVCC). The code declared that the agencies would then purchase only those mortgages supported by an "independent" appraisal.
The objective of HVCC was to insulate the appraisal process from influence by any of the parties with an interest in the outcome. Mortgage brokers and Realtors could no longer have any contact with appraisers, and lenders had to obtain appraisals in some manner that prevented them from exercising any control.
The problem with this well-intentioned rule is that it was issued in December 2008 to become effective May 1 of this year, or squarely in the middle of the worst housing market since the 1930s.
With house prices declining, the upward bias in appraisals that had prevailed during the bubble had morphed into a downward bias. Many deals are not getting done because appraisals are coming in too low, and HVCC is seriously aggravating the problem.
To protect themselves from liability, most lenders are ordering appraisals from appraisal management companies (AMCs), which intermediate between the lender and the appraiser. The AMC selects and pays the appraiser, receives and evaluates the appraisal, and passes it to the lender, which has no direct contact with the appraiser.
Because AMCs operate nationally but do not have appraisers everywhere, more appraisals are being done by appraisers who are not familiar with the local market. Appraisers working for AMCs are also paid less per appraisal than independents, which may induce them to invest less time.
Less knowledge by appraisers means more scope for bias, and in a declining-price market, the prevailing bias is toward lower values.
Intermediation by AMCs also lengthens the period required to complete purchase transactions. People involved in the process tell me that it can add an extra week. In an increasing number of cases, the paperwork doesn't get done by the contracted due date or the expiration date of the buyer's mortgage lock, either of which can derail the transaction.
The objective of HVCC was to prevent pressures being imposed on appraisers to raise values. But HVCC also prevents the loan officers, mortgage brokers and Realtors who work with borrowers from pressuring appraisers to get a deal done in time to meet a deadline. Further, they can no longer keep their clients informed about the status of an appraisal because they are no longer in the loop.
In addition, the loan officers, brokers and Realtors who fashion deals for consumers used to have access to informal value opinions from the appraisers with whom they worked. Such opinions allowed them to abort house purchases and refinances that clearly would not fly because of inadequate property value. This source of information is now closed to them, with the result that deals that previously would have been screened out are now going through the system to be rejected, imposing needless costs on everyone involved.
HVCC has also pretty much eliminated the ability of a borrower to use the same appraisal with multiple loan providers. Before HVCC, mortgage brokers could use one appraisal with any of the wholesale lenders with which they dealt, and lenders sometimes accepted appraisals ordered by others. Today, brokers are out of it and lenders using AMCs will not accept appraisals ordered by other lenders because they cannot be sure that the other lenders are following the HVCC rules. The upshot is that borrowers often have to pay for more than one appraisal.
In sum, the HVCC "cure" for the appraisal problem of overvaluation has been implemented in a market where the problem has become undervaluation, and HVCC is making that problem much worse. It should be scrapped. When normal markets reemerge will be time enough to reconsider how appraisals can be made independent without disrupting business relationships that have served borrowers well.
NOTE: I am grateful to Kevin Iverson for his insightful comments.
The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com [2].
In the news....regarding real estate
Home sales show third month of gains
By Inman_News
Created 2009-07-23 09:10
Existing-home sales rose for a third month in a row in June, and prices may stabilize in many areas by the end of the year if inventories continue to decline, the National Association of Realtors said today [1].
Sales of resale homes, including single-family homes, townhomes, condominiums and co-ops, rose 3.6 percent from May to June, to a seasonally adjusted annual rate of 4.89 million units -- virtually the same as a year ago, NAR said.
At that rate of sales, the 3.82 million homes on the market represented a 9.4-month supply, down from 9.8 months in May.
A six-month supply of homes is generally considered a healthier balance of supply and demand, but the "raw inventory" total, or number of homes on the market, is down 14.9 percent from a year ago.
A Wall Street Journal analysis of housing fundamentals [2] in 28 major real estate markets during the second quarter showed considerable variation in inventory, ranging from a high of 18.1 months in Chicago to just 2.7 months in Sacramento, Calif.
"If we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” said NAR Chief Economist Lawrence Yun in a press release.
Distressed properties accounted for 31 percent of sales in June, a factor in the 15.4 percent decline in median home price from a year ago, to $181,800, the group said.
Appraisal issues
Yun repeated past claims by NAR that new rules for appraisals on loans slated for purchase by Fannie Mae and Freddie Mac that took effect May 1 continue to dent sales.
In a survey of the group's members in June, 37 percent of Realtors claimed to have lost at least one sale because of the new rules, and 70 percent said consumers were paying higher fees, Yun said.
The Home Valuation Code of Conduct [3] was intended to protect appraisers from coercion by lenders to "hit the numbers" and produce appraisals that support a contractual sales price.
But critics say the new rules have shifted work to appraisal management companies, some of which are allegedly relying on inexperienced appraisers who are unfamiliar with the markets they are assigned to work in.
Some appraisers say market forces that continue to push home prices down in many markets are often to blame when appraisals don't support an agreed-upon sale price, and not the new rules (see story [4]).
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, issued an update [5] Wednesday defending implementation of the code, saying it has not led to lower appraisals or encouraged the use of appraisal management companies.
But NAR, which has called for an 18-month suspension of the code, continues to push for change, saying inexperienced appraisers too often use distressed properties as comparable sales when valuing nondistressed properties without making appropriate adjustments.
"Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations and access to local data, who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales,” Yun said.
Freddie Mac issued a bulletin to lenders [6] July 10 stating that appraisers "must be familiar with the local market" where they are valuing properties, choose "appropriate comparable sales," and certify them as the homes "most similar" to the property being appraised.
But the bulletin said appraisers must consider using distressed properties -- including short sales, foreclosures or real estate-owned properties -- as comparable sales if they are "representative of the properties available to typical purchasers for the market in which the property is located" (see story [7]).
This week, Fannie Mae updated a 10-page "frequently asked questions" (FAQ) on the Home Valuation Code of Conduct [8], making similar points.
The code "does not speak to foreclosure data," Fannie Mae said in a new section of the FAQ. "It is up to the appraiser to determine if the data is applicable and appropriate or not."
When appraisers sign Fannie Mae's residential appraisal report form, the FAQ noted in another new section, they are certifying that they "have knowledge and experience in appraising this type of property in this market area."
Freddie Mac also updated its Home Valuation Code of Conduct FAQ [9] this week, noting among other things that the new rules address "the relationship between the lender and the appraiser, not appraisal standards."
Housing breakdown
NAR said single-family home sales rose 2.4 percent from may to June, to a seasonally adjusted annual rate of 4.32 million -- about the same pace as a year ago. Median price was down 15 percent from a year ago at $181,600.
Existing condominium and co-op sales grew 14 percent from May to June, to a seasonally adjusted annual rate of 570,000 units, down 3.1 percent from a year ago. The median existing condo price fell 18.9 percent from a year ago, to $183,300.
Regionally, existing-home sales in the Northeast rose 2.5 percent from May to June, to an annual pace of 820,000 in June, down 4.7 percent from a year ago. The median price in the Northeast was $249,400, down 5.9 percent from a year ago.
Existing-home sales in the Midwest increased 0.9 percent from May to June, to 1.1 million a year, down 1.8 percent from a year ago. The median price in the Midwest was down 9.1 percent from a year ago, to $157,000.
In the South, existing-home sales rose 4 percent from May to June, to an annual pace of 1.81 million, down 3.7 percent from a year ago. The median price in the South was $163,200, down 11.9 percent from June 2008.
Existing-home sales in the West were up 6.4 percent from May to June, to an annual rate of 1.16 million, an 11.5 percent increase from a year ago. The median price in the West was $214,800, down 24.9 percent from a year ago.
By Inman_News
Created 2009-07-23 09:10
Existing-home sales rose for a third month in a row in June, and prices may stabilize in many areas by the end of the year if inventories continue to decline, the National Association of Realtors said today [1].
Sales of resale homes, including single-family homes, townhomes, condominiums and co-ops, rose 3.6 percent from May to June, to a seasonally adjusted annual rate of 4.89 million units -- virtually the same as a year ago, NAR said.
At that rate of sales, the 3.82 million homes on the market represented a 9.4-month supply, down from 9.8 months in May.
A six-month supply of homes is generally considered a healthier balance of supply and demand, but the "raw inventory" total, or number of homes on the market, is down 14.9 percent from a year ago.
A Wall Street Journal analysis of housing fundamentals [2] in 28 major real estate markets during the second quarter showed considerable variation in inventory, ranging from a high of 18.1 months in Chicago to just 2.7 months in Sacramento, Calif.
"If we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” said NAR Chief Economist Lawrence Yun in a press release.
Distressed properties accounted for 31 percent of sales in June, a factor in the 15.4 percent decline in median home price from a year ago, to $181,800, the group said.
Appraisal issues
Yun repeated past claims by NAR that new rules for appraisals on loans slated for purchase by Fannie Mae and Freddie Mac that took effect May 1 continue to dent sales.
In a survey of the group's members in June, 37 percent of Realtors claimed to have lost at least one sale because of the new rules, and 70 percent said consumers were paying higher fees, Yun said.
The Home Valuation Code of Conduct [3] was intended to protect appraisers from coercion by lenders to "hit the numbers" and produce appraisals that support a contractual sales price.
But critics say the new rules have shifted work to appraisal management companies, some of which are allegedly relying on inexperienced appraisers who are unfamiliar with the markets they are assigned to work in.
Some appraisers say market forces that continue to push home prices down in many markets are often to blame when appraisals don't support an agreed-upon sale price, and not the new rules (see story [4]).
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, issued an update [5] Wednesday defending implementation of the code, saying it has not led to lower appraisals or encouraged the use of appraisal management companies.
But NAR, which has called for an 18-month suspension of the code, continues to push for change, saying inexperienced appraisers too often use distressed properties as comparable sales when valuing nondistressed properties without making appropriate adjustments.
"Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations and access to local data, who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales,” Yun said.
Freddie Mac issued a bulletin to lenders [6] July 10 stating that appraisers "must be familiar with the local market" where they are valuing properties, choose "appropriate comparable sales," and certify them as the homes "most similar" to the property being appraised.
But the bulletin said appraisers must consider using distressed properties -- including short sales, foreclosures or real estate-owned properties -- as comparable sales if they are "representative of the properties available to typical purchasers for the market in which the property is located" (see story [7]).
This week, Fannie Mae updated a 10-page "frequently asked questions" (FAQ) on the Home Valuation Code of Conduct [8], making similar points.
The code "does not speak to foreclosure data," Fannie Mae said in a new section of the FAQ. "It is up to the appraiser to determine if the data is applicable and appropriate or not."
When appraisers sign Fannie Mae's residential appraisal report form, the FAQ noted in another new section, they are certifying that they "have knowledge and experience in appraising this type of property in this market area."
Freddie Mac also updated its Home Valuation Code of Conduct FAQ [9] this week, noting among other things that the new rules address "the relationship between the lender and the appraiser, not appraisal standards."
Housing breakdown
NAR said single-family home sales rose 2.4 percent from may to June, to a seasonally adjusted annual rate of 4.32 million -- about the same pace as a year ago. Median price was down 15 percent from a year ago at $181,600.
Existing condominium and co-op sales grew 14 percent from May to June, to a seasonally adjusted annual rate of 570,000 units, down 3.1 percent from a year ago. The median existing condo price fell 18.9 percent from a year ago, to $183,300.
Regionally, existing-home sales in the Northeast rose 2.5 percent from May to June, to an annual pace of 820,000 in June, down 4.7 percent from a year ago. The median price in the Northeast was $249,400, down 5.9 percent from a year ago.
Existing-home sales in the Midwest increased 0.9 percent from May to June, to 1.1 million a year, down 1.8 percent from a year ago. The median price in the Midwest was down 9.1 percent from a year ago, to $157,000.
In the South, existing-home sales rose 4 percent from May to June, to an annual pace of 1.81 million, down 3.7 percent from a year ago. The median price in the South was $163,200, down 11.9 percent from June 2008.
Existing-home sales in the West were up 6.4 percent from May to June, to an annual rate of 1.16 million, an 11.5 percent increase from a year ago. The median price in the West was $214,800, down 24.9 percent from a year ago.
Saturday, July 18, 2009
Anti-pity party
I think that losing someone as a young child really puts things in perspective and sets the precedent for one’s ability to deal with issues. At least, it did for me.
I decided right then and there that nothing could hurt as much as having death capture someone you love. Everything else seems so insignificant in comparison. Consequently it has made me fearless. Knowing that I’ve been through the greatest thing that could ever hurt me, more than once, I know I can handle anything.
I used to think that grieving is the worst possible thing anyone can go through. Now that I’m older, I realize that everyone is different. Whatever anyone has been through, regardless of the tragedy, that is their most emotional experience. I’ve learned not to compare my definition of pain to someone else’s. We’re all on this journey together and have all experienced pain.
When I find myself feeling stressed, tired, lonely, angry, sad, confused, disappointed and broken….I remember that it could always be worse. I am healthy. I have loved ones who are healthy. I love everything about life. Even the bad stuff. I’m grateful to say that I have “inconveniences”. That means that I’m comfortable enough to recognize the aggravation.
I am appreciative that I have the opportunity to take what I don’t like and change it. As an American, there is no excuse not to succeed in what you set your mind to. All too often we feel sorry for ourselves for our shortcomings. Truth is, it’s probably your fault. Where you are in life now is a result of choices you’ve made. If you don’t like it, change it. We cannot control what happens to us but we can control how we react to it.
Whatever pains you bear, whatever you’re struggling with…know you have the power to overcome it. I don’t buy into excuses and I feel sorry for no one. No American at least. We have every opportunity at our fingertips and we take it for granted. People in this world don’t have what we have and we shouldn’t turn a blind eye to that fact. Even the poorest of the poor in America still have it better than third world countries. Most of my generation and the ones after have no idea what struggle is. Even in this recession, we are still blessed.
Happiness is not a result of the events surrounding your life. Happiness comes from within. Don’t wait to be happy. A common misconception is that one will be happy once they are financial secure. The sooner you deal with the fact that money will always be a constant worry in your life, the better. More money, bigger bills. If you cannot find joy in your current life, winning the lottery will not help you. You will be the same person with the same problems, only with more money.
I don’t really know where I’m going with this blog or what’s the purpose. But that’s what is in my heart at the moment.
I decided right then and there that nothing could hurt as much as having death capture someone you love. Everything else seems so insignificant in comparison. Consequently it has made me fearless. Knowing that I’ve been through the greatest thing that could ever hurt me, more than once, I know I can handle anything.
I used to think that grieving is the worst possible thing anyone can go through. Now that I’m older, I realize that everyone is different. Whatever anyone has been through, regardless of the tragedy, that is their most emotional experience. I’ve learned not to compare my definition of pain to someone else’s. We’re all on this journey together and have all experienced pain.
When I find myself feeling stressed, tired, lonely, angry, sad, confused, disappointed and broken….I remember that it could always be worse. I am healthy. I have loved ones who are healthy. I love everything about life. Even the bad stuff. I’m grateful to say that I have “inconveniences”. That means that I’m comfortable enough to recognize the aggravation.
I am appreciative that I have the opportunity to take what I don’t like and change it. As an American, there is no excuse not to succeed in what you set your mind to. All too often we feel sorry for ourselves for our shortcomings. Truth is, it’s probably your fault. Where you are in life now is a result of choices you’ve made. If you don’t like it, change it. We cannot control what happens to us but we can control how we react to it.
Whatever pains you bear, whatever you’re struggling with…know you have the power to overcome it. I don’t buy into excuses and I feel sorry for no one. No American at least. We have every opportunity at our fingertips and we take it for granted. People in this world don’t have what we have and we shouldn’t turn a blind eye to that fact. Even the poorest of the poor in America still have it better than third world countries. Most of my generation and the ones after have no idea what struggle is. Even in this recession, we are still blessed.
Happiness is not a result of the events surrounding your life. Happiness comes from within. Don’t wait to be happy. A common misconception is that one will be happy once they are financial secure. The sooner you deal with the fact that money will always be a constant worry in your life, the better. More money, bigger bills. If you cannot find joy in your current life, winning the lottery will not help you. You will be the same person with the same problems, only with more money.
I don’t really know where I’m going with this blog or what’s the purpose. But that’s what is in my heart at the moment.
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