The real estate band wagon is playing loudly and the media continues to trumpet the good news about a recovery. Under the hood and on the street, the jubilation is tempered; appraisers seem to beÂ unconvinced that this is a legitimate recovery.Â When asked, "What is your current level of confidence in the housing market?" 49.6% of respondents answered mild or moderately strong.Â 14.5% answered mild or moderately weak in the survey.Â The survey was completed by United States Appraisals' nationwide panel of residential appraisers. The 49.6% level is down from the end of the first quarter '13, when nearly 55% reported feeling positive.
"Appraisers tend to focus on the local markets in which they work and are not typically concerned with national numbers or reporting," explainedÂ Aaron Fowler, President ofÂ United States Appraisals. "By polling our nationwide panel of local appraisers, we believe that in the aggregate we receive a solid interpretation of the national marketplace. Overall, it is good to see continued optimism in our appraiser community."
Opinions were slightly higher regarding home values with 70.7% of respondents reporting an increase in values in their area vs. 65.4% at the end of the first quarter. Only 6.6% of respondents reported value depreciation in their areas.
It's important to note that appraisers consider "historical" data when appraising homes, while pending homes are considered, underwriting requires the focus be on closed sales. They also are heavily regulated in their ability to "interpret" data; they are essentially writing appraisals for underwriters and in most cases appraisers are expected to take a "long look" at trends. Tracking data over a selling cycle and through several quarters is prudent; spikes in activity and value are common in micromarkets during certain periods. Of course, the appraisers have to expect competent underwriting and reviews - something suspect when it was discovered thatÂ BOA is sending appraisals to be reviewed in India.
Several comments regarding the housing market showed concerns, particularly for low inventory and low rates:
"Looks due for a hit if interest rates rise."
"Low inventory. Homes priced correctly are moving."
"Maybe increasing a little too fast due to low inventories."
"Overall, indicators are positive. I worry about the remaining stock of foreclosures and short sales."
"The market is trending upward with outside influence from the US government and foreign influence."
"Worried about artificial interest rates. They will have to go up."
Appraisal issues appear to be easing but are still experienced in some transactions, especially in areas that are experiencing significant price increases and limited sales activity. UnderstandingÂ the role of an appraiserÂ and how they work is the best advice for agents and homeowners.
Associate Broker & Certified Appraiser
Atlanta Communities Real Estate