Appraisal Podcasts

Subprime Mortgages Will Return, But With Some Changes

From the post:

Although “subprime” has become a four-letter word in the country’s collective lexicon and no one is sure when the credit crisis that was spawned by a meltdown in the risky lending sector will ease, mortgage bankers say you can count on this: Subprime shall return.

The article continues by outlining how the new subprime will look, noting the rebound is way off and that it will take some time for investor to regain their confidence in the product.

Calculated Risk: Housing: Looking Ahead

In this interesting blog, the author makes an argument that we may be seeing signs of a bottom in housing . The post goes on to explain that we’ve still got to work through a lot of pain before housing markets really recover. However, in a turn of schizophrenia, the blogger also notes that in previous housing bubbles, we experienced 5-7 years of falling housing prices before they there was a significant uptick.

It was bound to happen. A former commodities trader combining his knowledge of supply and demand with the conventional wisdom that crowds are smarter that the sum of their parts and voila’ a new web site called www.my-currency.com. Aimed at bettering www.zillow.com and other on-line valuation sites, My-Currency is suggesting that it will be better at predicting the true market value of properties than sites that rely on public records, comparable sales and other factors. As a professional appraiser with years of education, demonstrated experience and testing, I usually get a big kick out of these types of sites.  In this day and age of Internet valuations I usually suggest that you get what you pay for. Sure Turbo Tax and other on-line tax sites are great for simple 1040’s and 1040 EZ’s, but are you willing to trust your complex tax returns to anyone other than a trained professional?  Are you willing to risk one of the biggest purchases, if not the biggest, you make to a crowd of people you don’t know and aren’t working on your behalf? In this day and age of various types of mortgage and real estate fraud, I hope that people still see value in using trained professionals.

It is an interesting concept though. My-Currency just launched and is in Alpha mode with only the San Francisco Bay Area active. A Beta site to launch by the end of February with more functionality. The site is launching with a great deal of fanfare.

“My-Currency.com will harness the wisdom of the crowd not only to achieve valuations, but to determine “who is the expert — the wisest of the crowd,” Tahawi said. “The value to real estate professionals is in the age of the Internet, 80 percent of people are starting their search online,” Tahawi said. “At the end of the day, when they need a human being, we’re providing depth and meaning to the names and faces.” My-Currency.com is expected to provide agents and brokers better visibility on the Internet because the site, once it has a larger user base, will show up high in search-engine results, according to Tahawi. As envisioned by Tahawi, My-Currency.com would be something like Zillow, the ActiveRain Real Estate Network, and the Chicago Commodities Exchange rolled into one. Visitors will be able to ask for valuations of a property by entering an address and basic information, or submitting a link to a listing. Other users will submit their valuation estimates (which the site treats as trades). The closer those estimates are to the market consensus that emerges over time — and ultimately, to the price of the house if it sells — the more reputation currency is earned.”

 

Has housing market bottomed out?

The final housing numbers for 2006 are in, and they confirm what anyone who bought or sold a home last year has suspected: It was the worst housing slump in nearly two decades. The freshest numbers also provided tea leaves for the more pressing question: has the housing market bottomed out yet — or will prices slide further before the market recovers? (more)

RealEstateJournal | Builders Look for Housing To Recover in 2007
Homebuyers have been backing out of sales contracts and forfeiting their down payments during the housing slowdown, but cancellation rates should steady in the first quarter and taper off later in 2007, said the chief executive of one of the nation’s largest home builders Thursday. (more)

RealEstateJournal | Trade Group Launches Pitch To Boost Home Sales

The National Association of Realtors is launching a $40 million advertising campaign to encourage Americans to buy houses amid the ongoing housing slump. The Realtors’ campaign includes $26 million in television advertising, about double what the group spent in 2006. Television ads will begin running Jan. 15, while new radio ads will begin to air Jan. 29. (more)

RealEstateJournal | What Home Buyers Want in 2007 And Housing Hot Spots

What home buyers want in 2007

Looking to sell your house this year? You may want to check out the list of what home buyers want — and don’t want — in their next home. The list was compiled by real-estate author Mark Nash and published by the Cincinnati Post.

WHAT’S IN: Upscale garages; Man caves; Two home offices; Rejuvenation rooms; Heated patios; Snoring rooms; Modular housing; Sustainable design; Structured wiring; Different finishes; Glass tiles; Drawer-style; Engineered-stone; Exotic and reclaimed; Luggage rooms; Bolder, deeper colors; A second laundry; A wrought-iron fence
WHAT’S OUT: “As is”; Buyer incentives; Endless open houses; Offers over full price; Small bedrooms; Loads of upper cabinet doors; Vessel sinks; Any shiny metal finish; Stainless-steel refrigerators; Spiral staircases; No trim..
Among the features on buyers’ must-have lists are garages with upscale storage systems, heating, air conditioning and flooring; not one, but two home offices; heated outdoor surfaces to melt snow and ice; and second laundry rooms in the master bedroom, the article says. Out of vogue is marketing a property “as is” — it scares away buyers; incentives like free cars — buyers prefer price cuts instead; vessel sinks — too hard to keep clean; and stainless-steel refrigerators that look, well, steely and cold, the article says. (more)

Reuters Business News: Fed’s Bernanke: inflation risks to the upside - MSN Money
The U.S. economy is poised to expand at a moderate rate and “uncomfortably high” core inflation should ease, but price risks are tilted mostly to the upside, Federal Reserve Chairman Ben Bernanke said on Tuesday. “Over the next year or so, the economy appears likely to expand at a moderate rate, close to or modestly below the economy’s long-run sustainable pace,” he said at a luncheon sponsored by the National Italian American Foundation. 

“Core inflation is expected to slow gradually from its recent level,” Bernanke said. Still, he added, “the risks to the (inflation) forecast seem primarily to the upside. Given the current level of inflation, a failure of inflation to moderate as expected would be especially troublesome,” Bernanke said.

U.S. Treasury debt prices fell and stocks trimmed gains as financial markets took the speech as a sign the Fed is not close to cutting interest rates as it remains focused on ensuring inflation pressures abate. “There is no daylight within his statement to indicate any hint of a rate cut,” said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co in New York. “It seems the Fed is taking no chances with respect to the gains it has made in fighting inflation and is making tough talk in the face of a decline of inflation expectations and slower growth.”

The U.S. central bank chief warned that “substantial uncertainties” surround the outlooks for growth and inflation. “Whether any further policy action against inflation will be required depends on the incoming data and in particular on how these data affect the (Fed’s policy-setting Federal Open Market Committee’s) medium-term forecasts of both inflation and output growth,” Bernanke said. The effects of the housing market slowdown are likely to persist into next year but there is little evidence that weakness in housing markets is spilling over into consumer spending or broad measures of employment, he said.

Home Values Are Up. Repeat: Up

Would you believe that home values are up? According to a BusinessWeek Online article they are.

Here’s a snippet:

“According to Zillow.com, home values rose 4.8% in the third quarter in the 36 major metropolitan areas covered by its Zindex. That may come as a surprise if you’ve been reading about falling sales prices, but there’s a good explanation for the discrepancy. I think that while Zillow’s number may make things look a little better than they really are, the median sales price numbers from the Census Bureau and the National Assn. of Realtors probably make things look a little worse than they really are.

Obviously one difference is that the Zindex covers just 36 metro areas, not the whole country. But the more interesting difference is that Zillow’s index includes updated estimates of the values of all homes in an area, not just the ones that were sold. That’s important because the sales price indexes can be skewed by changes in the mix of homes sold in a period. If for some reason there are relatively few high-priced homes sold during a quarter, that will skew a sales price median downward.”

Something to consider with all the doom and gloom and bubble bursters out there

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential construction statistics for October 2006:

BUILDING PERMITS

Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,535,000. This is 6.3 percent (±1.2%) below the revised September rate of 1,638,000 and is 28.0 percent (±1.2%) below the October 2005 estimate of 2,131,000. Single-family authorizations in October were at a rate of 1,173,000; this is 3.8 percent (±1.3%) below the September figure of 1,219,000. Authorizations of units in buildings with five units or more were at a rate of 294,000 in October.

HOUSING STARTS

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,486,000. This is 14.6 percent (±7.6%) below the revised September estimate of 1,740,000 and is 27.4 percent (±5.3%) below the October 2005 rate of 2,046,000. Single-family housing starts in October were at a rate of 1,177,000; this is 15.9 percent (±7.4%) below the September figure of 1,400,000. The October rate for units in buildings with five units or more was 266,000.

HOUSING COMPLETIONS

Privately-owned housing completions in October were at a seasonally adjusted annual rate of 1,953,000. This is 3.8 percent (±7.9%)below the revised September estimate of 2,031,000 and is 0.7 percent (±7.5%)below the October 2005 rate of 1,967,000. Single-family housing completions in October were at a rate of 1,561,000; this is 8.3 percent (±7.6%) below the September figure of 1,702,000. The October rate for units in buildings with five units or more was 348,000.

The full report can be found here