Moreover, and this is my speculation, I believe the banks (lenders) are also tight w/ values, as they were burned from our recent housing collapse. Can't blame them though, as it's understandable. I think all of us would be overly conservative in lending considering what occurred. The underwriting guidelines for buyers are a bit more grueling / demanding than 5-7 years ago. As I represented banks with their REOs in conjunction w/ in-house lending, banks control how they loan their money, ie. appraisal values. At the moment, we are experiencing the transition period between appreciating home values and the banks response (with their financial restraints) to the improving housing recovery. The appraisal is one of those banking restraints. Does it need to be loosened? We as Realtors, Mortgage Originators, Buyers, and Sellers think yes. The banks & Fed are probably still researching & haven't fully adapted yet - thus we are seeing a small handful of conservative appraisals.
So ultimately, yes, there are some appraisals coming in lower than fair market value (in our eyes). In my opinion, this issue must be addressed by the banks, Feds, & DORA- all of which are major components behind aligning revamped procedures for the improving housing market. Though I caution, the increased values of homes in the Denver market is strongly influenced by a low inventory, and may not be a true indicator of a re-built or robust housing recovery.