NEWZ://Supporting adjustments/How many AMCs?/$1Billion homes?

- July 2, 2015

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America's most expensive states to live in 2015

1 - Hawaii

2 - Connecticut

3 - New York

4 - Alaska

5 - California

All of them are in the northeast, except for CA and Oregon. CA is on the list but is very diversified throughout the state on cost of living. But, homes under $100,000 are rare.

What does this mean for appraisers? Not much, except maybe selling an expensive home and moving to a lower cost state. Too bad our fees aren't based on a percent of value. Darn!!!

See how the states rank (and why) at: http://www.cnbc.com/id/102749628/page/1

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Economists Assign Blame For Housing Shortage

Excerpt: The national supply of homes for sale is getting squeezed by the small amount of equity millions of would-be sellers have in their properties and relatively weak output from home builders, according to economists speaking Friday at a real-estate conference in Miami.

Tight inventory has been a cause of slow sales volume in the housing market this year, experts say. Homes listed for resale in May amounted to a 5.1-month supply. That means it would take that long at the current sales pace to exhaust the available inventory. A balanced market typically has a supply of six to seven months.

The pace of home construction gained momentum this year. But it still amounted in May to just 75% of the annual average from 2000 to 2014.

My comment: in my high cost area, the main reasons for lack of sellers are capital gains on sale ($500,000 exclusion for couples), don't want to lose low interest rate on current mortgage, and increase in property taxes on sale. First time home buyers, who drive the market, lack down payments, have high credit scores, have too much debt (particularly college loans), etc. Also, the market is very strong and all cash sales are preferred, so many first time buyers don't have the cash. I can't imagine giving up my 3.5% mortgage!!

What does this mean for appraisers? Fewer purchase appraisals when rates go up and refis go down. And... fewer comps ;> The Federal Reserve is meeting in September. No one really knows when interest rates will go up, but they will go up... sometime.

http://blogs.wsj.com/developments/2015/06/26/economists-assign-blame-for-housing-shortage/

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One-Third of Home Sales Still All Cash

Excerpt: Despite over two years of declines cash sales continue to constitute more than one-third of total home sales. CoreLogic reported today that the share of those sales diminished on a year-over-year basis for the 27th consecutive month in March, accounting for 34.6 percent of total home sales compared to 39 percent in March 2014. Cash sales were down 2.8 percentage points from February 2015.

My comment: What does this mean for appraisers? Most all cash deals don't get appraisals.... My sister's husband is a contractor and has been "flipping" fixer uppers (low $200,000 prices). They pay all cash and get the homes. Investors use all cash for the homes and then refi quickly to get the cash to do another purchase. Appraisers I know who retired successfully invested in real estate.

http://www.mortgagenewsdaily.com/06112015_corelogic_cash_sales.asp

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SUPPORTING ADJUSTMENTS

NO SOFTWARE, EXCEL SPREADSHEETS, OR OTHER METHOD WILL CALCULATE AND SUPPORT ALL YOUR ADJUSTMENTS!!!

An appraiser called me yesterday who said one of his clients wants support for an adjustment. He had never been asked to provide adjustment support. It happens to almost all appraisers who work for AMCs today. Even more important, state boards want to see support for all your adjustments.

He did not subscribe to my paid newsletter and did not have access to the articles below, so I suggested that he describe the methods he is using now. Of course "XX years of experience" doesn't work any more....

I have been writing about making and supporting adjustments in my paid newsletter since March, 2015. I have learned that you need to use multiple methods for determining and supporting all your adjustments.

Below is a list of adjustment articles available to all paid subscribers - webinars, book, software

- 7/15 - Appraisaltool adjustment software-easy to use, data is from comps in your appraisal

- 6/15 - Redstone regression software - will it work for your appraisals? Samples to test for free, $10 for 10 reports to try it with your data, then $5 per report if it works for you.

- 5/15 - Regression software programs - what's the best one for you? 16 pages of info on 7 products - Redstone, Statwing, Regression Plus (David Braun), Appraisertool, PAIRS, Appraiser Genie and Savvi.

- 4/14- Fannie and State regulators want adjustment support!! How to do adjustments - a review of 3 webinars

- 3/15 - Valuation By Comparison Review - how to make and support adjustments. Buy This Book!!

Reviews of other software programs and adjustment methods will be in future issues.

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How Long Before a Home Lists for $1 Billion?

Another good one from Jonathon Miller!!

Excerpt:

When a Los Angeles hilltop home that's under construction was recently priced at a record half-billion dollars, it looked like a one-off in excess. The same thought occurred to me late last year when real estate investor Jeff Greene, who won big betting against the housing market before the financial crisis, priced his renovated Beverly Hills, California, home at $195 million. When I dug a little deeper, though, I found that the nine-figure home is becoming almost, well, commonplace: there are no less than three homes with asking prices of more than $300 million -- on the French Riviera, in London and in Monaco.

My comment: Yes, I am hearing that some AMCs are sending out requests for $250 appraisals on very high end homes. I wonder what appraisers do who accept every bid...

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The 20 Hottest U.S. Real Estate Markets in June 2015

Excerpt:

Here's the full list of the top cities in our analysis:

1 San Francisco, CA

2 Vallejo, CA

3 Denver, CO

4 Santa Rosa, CA

5 Dallas, TX

6 San Jose, CA

7 Ann Arbor, MI

8 Boston, MA

9 Detroit, MI

10 Santa Cruz, CA

11 Sacramento, CA

12 San Diego, CA

13 Fargo, ND

14 Billings, MT

15 Columbus, OH

16 Stockton, CA

17 Midland, TX

18 Austin, TX

19 San Antonio, TX

20Fort Wayne, IN

http://www.realtor.com/news/trends/hottest-housing-markets-june-2015/

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How many AMCs are there?

Joan Trice says " 529 as of last count but I believe there are closer to 600."

Check with your state regulator to see which AMCs are registered in your state.

My comment: business is very strong now. Time to get some non-AMC clients while everyone else is too busy to market to them!! The August issue of the paid Appraisal Today will have an article on where and how to look for non-AMC work.

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go

Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to http://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

Mortgage applications decreased 4.7 percent from one week earlier

according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending June 26, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week to its lowest level since December 2014. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 14 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 48.9 percent of total applications from 49.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.0 percent of total applications.

The FHA share of total applications increased to 14.0 percent from 13.9 percent the week prior. The VA share of total applications decreased to 10.8 percent from 10.9 percent the week prior. The USDA share of total applications increased to 1.0 percent from 0.9 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.26 percent, its highest level since October 2014, from 4.19 percent, with points decreasing to 0.33 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.21 percent, its highest level since October 2014, from 4.14 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.04 percent, its highest level since September 2014, from 3.96 percent, with points increasing to 0.18 from 0.14 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.44 percent, its highest level since October 2014, from 3.38 percent, with points decreasing to 0.31 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.09 percent from 3.04 percent, with points decreasing to 0.45 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100

Ann O'Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today
2033 Clement Ave. Suite 105
Alameda, CA 94501 Phone 510-865-8041
Fax 510-523-1138
Email ann@appraisaltoday.com