Appraisal Podcasts

RealEstateJournal | Where Houses Are Selling And Where They Are Not
Boom days over in Southern California

Last month, the median home price in Southern California ($485,000) posted its smallest year-over-year price gain, 6.4%, since July 2000, according to the Los Angeles Times. It’s taking longer to sell a house, thanks to increasing mortgage rates, fewer speculators, and homeowners trying to sell before prices fall further, the article says. The areas that saw the smallest price appreciation in May were the first ones to see skyrocketing price tags during the boom, the Los Angeles Times says. For instance, last month, San Diego County’s median home price went up a mere 0.4% to $490,000 from $488,000, and Ventura County’s median price rose 3% to $586,000, the article says. However, the paper says, three counties reached record-breaking median prices in May: Los Angeles (which rose 10.9% from the year before to $509,000), Riverside County (which had a rise of 9.4% to $417,000) and Orange County (which saw an increase of 7.6% to $635,000).

Flipping houses in New Orleans

House flipping — buying a home and reselling shortly thereafter for a sizeable profit — was a popular activity of real-estate speculators during the heyday of the housing boom. Those days appear to be over in many parts of the U.S., but in hurricane-ravaged New Orleans, it is a growing occupation, says Bloomberg.com. About 100,000 single-family homes were damaged by last year’s storm season, and now, renovations have begun on 34,000 houses, the Web site says. One local flipper, who plans to make a living renovating and reselling New Orleans-area homes, says he can make a gain of 80% for three or four months of work on each residence, the article says. “If you’re a regular person who knows how to swing a hammer, opportunity is jumping up and down in New Orleans,” the Web site quotes one local real-estate broker as saying. Small-time handymen and speculators aren’t the only ones getting into the act — Home Depot Inc. has opened a few area stores in response to demand for construction materials, and home-builder KB Home is building houses in the region.

Buyers and sellers lock horns in Orlando

The scale is tipping toward buyers in Orlando, but sellers are refusing to lower asking prices, the Orlando Sentinel says. The inventory of existing homes for sale is five times greater than it was last year and homes are taking longer to sell, the article says. Convincing homeowners that they have to accept less than their neighbor did last year is tough, the paper quotes ones local real-estate agent as saying. Some real-estate professionals are putting in extra hours as buyers become choosier and negotiations take longer to complete, the article says. Local developers are wooing buyers with “sweeteners” like price discounts and closing costs, the Orlando Sentinel says.

Foreclosures in South Bend, Ind.

South Bend, Ind., home to Notre Dame University, saw year-over-year home prices drop 10.2% to a median of $81,800 in the first quarter of this year, the Chicago Tribune says. Contributing to this decrease was an outbreak of home foreclosures in the city, the paper says. Area homeowners are being forced to sell as local industrial jobs dwindle and monthly payments on adjustable-rate mortgages become harder to meet, the article says. Investors who renovate homes and resell them are profiting from the high number of foreclosures, the article says. Unlike residential areas closer to Chicago, South Bend isn’t a popular second-home locale, in part because of its two-hour drive to downtown Chicago, the paper says.

Anything but cool in Austin

Home sales and prices may be cooling as a whole in the U.S., but not in Austin, the Austin American-Statesman says. There, the year-over-year median home price increased 8% in May to $174,000 the article says, and houses tend to sell in less than two months. Boosting sales are a strong local economy and buyers who see the Austin market as a relative bargain, the paper says. “Somebody living in California in a 1,400-square-foot home could sell it anywhere from $700,000 to $1.2 million, take the profit and buy a mansion in Austin,” the article quotes the chairman of the Austin Board of Realtors as saying. Outlying areas such as Round Rock and Oak Hill are seeing an increase in buyer interest as home prices within the city rise, the paper says.

Land Swings Home Prices
The cost of land is an increasingly important factor in the prices of homes. Not just in a few markets with well-known shortages of open space like San Francisco. Even in Minneapolis, land accounted for almost 46% of the value of homes in 2004, up from just 12.5% in 1984.

That’s according to a fascinating new study published by the Federal Reserve. It’s by Morris Davis of the University of Wisconsin (top) and Michael Palumbo, a Fed economist, and it was published last month.
This study has important implications for the future of home prices. In a nutshell, it means home prices are likely to be more volatile in the future. They’ll rise more abruptly and fall more abruptly as well in reaction to changes in demand.

Here’s why: Since land looms so large now as a factor in home prices, fluctuations in the price of land matter more now than ever. And what affects the price of land? Well, since the supply of land is pretty much fixed, the only thing that can affect the price of land is changes in demand for it. That goes back to things like job growth, demographics, and speculation. If demand drops, the price has to drop, too.

Do land prices ever really fall? Sure they do. According to the authors’ estimates, the average price of land in Houston fell 50%, adjusted for inflation, from 1985 to 1989. It took until 1999 for land prices to get back to their early-’85 level, the authors say.

The numbers below are pasted from the Fed paper. For example, the first number for Buffalo, 0.050, means that in 1984, the price of land accounted for 5% of the value of homes in Buffalo. By 1998 it was up to 20.2%, and by 2004 it was up to 28.7%

NAHB: Builder Confidence Declines In June

June 19, 2006 - Rising mortgage rates, deepening affordability issues and the retreat of investors/speculators from the marketplace have prompted single-family home builders to further adjust their perspectives on the new-home market, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for June, released today. The HMI declined four points from an upwardly revised reading in the previous month to hit 42 for the latest report, its lowest mark since April 1995.

“Based on historical experience, particularly the 1994-95 episode, the pronounced pattern of movement in the HMI is not inconsistent with the reasonably orderly cooling-down process we’re projecting for home sales and single-family housing starts in 2006,” said NAHB Chief Economist David Seiders. “We now expect new-home sales to be off by 13 percent from the record posted in 2005. Single-family starts, supported by large builder backlogs of unfilled orders and some continuing reconstruction in the wake of last year’s hurricanes, should be down by about 9 percent from the 2005 record.”

“These forecasts naturally are subject to a considerable degree of risk,” added Seiders. “The downside risks include the potential for large numbers of sales cancellations and re-sales by the investor/speculator group as well as more aggressive tightening of monetary policy than we’re assuming in our baseline forecast.”

“Looking at today’s numbers, it’s important to keep one thing in perspective,” added NAHB President David Pressly, a home builder from Statesville, N.C. “The HMI is a measure of builder sentiment – and attitudes may vary by a greater degree than actual market activity.”

Derived from a monthly survey that NAHB has been conducting for close to 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as either “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

All three component indexes declined in June, falling to their lowest levels since early 1995. The index gauging current sales was down three points to 47, while the index gauging sales expectations for the next six months fell five points to 50 and the index gauging traffic of prospective buyers declined four points, to 29.

The decline in builder confidence was broad-based and registered in every region this month. The HMI fell seven points to 40 in the Northeast, four points to 25 in the Midwest, two points to 49 in the South and one point to 61 in the West. These regional indexes are all down by similar amounts from their 1995 highs, and the relatively low levels for the Midwest and Northeast reflect relatively weak economic conditions in those parts of the country.

From the Wall Street Journal

Some apartment landlords are taking advantage of the booming rental market by utilizing technology that allows them to raise rents at a faster pace. Richard Campo, chief executive of Camden Property Trust, calls the technology using real-time pricing information “a huge, positive step” that helped improve the first-quarter performance of the multifamily real-estate investment trust, which is based in Houston. “It allows you to move up your rents faster than a competitor in an up market and in a down market, you can adjust your prices down faster.”

For now, it is an up market for most apartment REITs as interest rates rise and once-booming home sales slow, allowing landlords to increase rents at the fastest pace in years. Average effective rents — or what tenants pay after taking concessions into account — are expected to rise 3% this year after edging up a mere 0.4% as recently as 2003, according to Reis Inc., a real-estate research firm.

But with the so-called M/PF YieldStar Price Optimizer, Camden Property and other companies using the technology are able to raise rents higher than that. For example, in Charlotte, N.C., where condo conversions have reduced the downtown apartment supply, the technology suggested that Camden Property raise the rent on a two-bedroom apartment in one of its midrise buildings 25% to $1,350 per month, according to Mr. Campo. Ordinarily, he adds, a manager would only have felt comfortable raising that rent about 3% to 4%. (Coincidentally, effective rent growth in the Charlotte market was among the weakest in the U.S. during the first quarter, but the potential to raise rent can vary depending on the quality of the building and on what block it is located.)

The automated system works like constantly updated pricing systems used by airlines and car-rental companies. Typically, an on-site apartment manager would raise rents after looking at such factors as current apartment availability and the number of renewals signed.

But the YieldStar technology makes this decision for the manager, with a system that uses data such as the number of vacancies and forecasted market conditions — instead of human intuition — to find the optimal rent for an individual apartment.

So a new resident, or one renewing a lease, could be quoted a certain rent price at one time during a day and a different one hours later if market fundamentals change.

For Camden’s first quarter, Mr. Campo says about 25% of its rent growth was directly related to its implementation of YieldStar about seven months ago.

RealPage Inc., a Carrollton, Texas, provider of property-management products and services, has been developing and marketing YieldStar for several years. About 500 apartment sites currently use the technology with 2,000 more in the process of deploying it, according to the company. “It’s now the holy grail, because before pricing had been so inefficient,” says RealPage Chief Executive Steve Winn.

Tenants also can take advantage of the technology, says Mr. Winn of RealPage. Renters can choose when they sign a lease and for how long, based on when YieldStar technology says rent pricing will work most in their favor. The residents can get this information from leasing personnel or an online site.

In Charlotte, some residents renewing their leases balked at the higher rents, but Mr. Campo of Camden Property says their outrage was short-lived. “We have had existing residents tell us that they are not renewing their leases and then after they checked the market out decided to stay at the higher rent,” he says.Mr. Campo hopes the technology becomes more widespread. It’s better for a competitor to charge the same for an apartment, he says, “because you don’t want someone across the street trying to undercut you.”

The 2006 Revisions to Uniform Standards of Professional Appraisal Practice [USPAP] - June 22, 2006 - OCC 2006-27

Purpose : The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), and National Credit Union Administration (NCUA) (collectively, the agencies) are issuing this statement to notify regulated institutions that the Appraisal Standards Board (ASB) has issued the 2006 version of the Uniform Standards of Professional Appraisal Practice (USPAP) and the attached 2006 USPAP and Scope of Work document.1

The 2006 USPAP, effective on July 1, 2006, replaces the 2005 USPAP and incorporates extensive revisions to appraisal standards. A regulated institution must ensure that appraisals supporting federally related transactions adhere to USPAP as well as the other minimum appraisal standards contained in the agencies’ appraisal regulations. Therefore, regulated institutions should be familiar with the 2006 USPAP and consider the ramifications of the revisions to their appraisal practices.

Revisions to USPAP : The 2006 USPAP incorporates certain prominent revisions. These revisions include a new Scope of Work Rule and the deletion of the Departure Rule and associated terminology, such as “binding” and “specific” requirements and “complete” and “limited” appraisals. The Scope of Work Rule clarifies the standards for the type and extent of research and analysis performed by the appraiser in an appraisal assignment.

In adopting the 2006 revisions, the ASB has indicated that the appraisal process has not changed and that the concepts in the Scope of Work Rule are not new to USPAP. However, there is greater emphasis on the appraiser’s process of problem identification and development of an appropriate scope of work.

1 The 2006 USPAP and other ASB documents are available on the Appraisal Foundation Web site at : Appraisal Foundation

2 Under the agencies’ appraisal regulations, a federally related transaction includes any real estate-related financial transaction that an agency or any regulated institution engages in or contracts for and that requires the services of an appraiser. Refer to OCC: 12 CFR 34, C; FRB: 12 CFR 225.61-67; FDIC: 12 CFR 323; OTS: 12 CFR 564; and NCUA: 12 CFR 722.
Page 1 of 2 OCC 2006-27 Attachment Page 2 of 2

Consistent with the 2006 USPAP, an appraiser must determine an appropriate scope of work that should be performed to produce “credible assignment results.” According to the USPAP Advisory Opinion 29, credible assignment results depend on the scope of work meeting or exceeding both

1. the expectations of parties who are regularly intended users for similar assignments; and
2. what an appraiser’s peers’ actions would be in performing the same or a similar assignment.

Further, the appraisal report must contain sufficient disclosure to allow intended users to understand the scope of work performed. Since the 2006 USPAP reporting options remain unchanged, appraisers may continue to label appraisal reports as self-contained, summary, or restricted use.
Compliance with Appraisal Regulations : While an appraiser is responsible for establishing the scope of work under the 2006 USPAP, regulated institutions are responsible for complying with the agencies’ appraisal regulations. Besides conforming to USPAP, the agencies’ appraisal regulations require that appraisals supporting federally related transactions must:

• Be written and contain sufficient information and analysis to support the regulated institution’s decision to engage in the transaction.
• Analyze and report appropriate deductions and discounts for proposed construction or renovation, partially leased buildings, non-market lease terms, and tract developments with unsold units.
• Be based upon the definition of market value in the regulation.
• Be performed by a state licensed or certified appraiser in accordance with the regulatory requirements.

When ordering appraisals, a regulated institution should convey to an appraiser that these supplemental standards remain applicable. The agencies also continue to encourage regulated institutions to use an engagement letter in ordering an appraisal to facilitate communications with the appraiser and to document the expectations of each party to the appraisal assignment.

To determine an appraisal’s acceptability, a regulated institution should review the report to assess the adequacy of the appraiser’s scope of work given the intended use of the appraisal. In accepting an appraisal report, the regulated institution must determine that the appraisal report contains sufficient information and analysis to support the credit decision.

Regulated institutions are reminded to consider an appraiser’s competency for a given appraisal assignment. Further, regulated institutions should not allow lower cost or reduced delivery time to compromise the determination of an appropriate scope of work for appraisals supporting federally related transactions.

Attachment: 2006 USPAP and Scope of Work

Commercial Real Estate Market Bright Spot in National Economy

Commercial Real Estate Outlook (CREO) The Commercial Real Estate Outlook (CREO) is NAR’s flagship commercial research publication. It is produced quarterly and includes the latest market information on five major commercial real estate sectors — industrial, office, multi-family, retail and hospitality real estate. The publication includes national and metropolitan data from the respected research firms of Torto Wheaton and Real Capital Analytics, along with indepth analysis from NAR Research. The full report is available only to NAR members, and the summary report is open to all visitors.

“Healthy demand for space is driving commercial real estate markets with solid fundamentals and strong investment activity, according to the latest COMMERCIAL REAL ESTATE OUTLOOK of the National Association of Realtors®.

David Lereah, NAR’s chief economist, said fundamentals are improving with tightening vacancies. “Rent growth in commercial space is gaining traction, although there is some softness in part of the retail sector,” he said. “Commercial real estate remains a bright spot in the economy, but there are concerns over energy costs, rising interest rates and slower-than-expected job growth which could dampen future demand.”

Lereah said investment considerations remain positive. “With tightening vacancies and a slowdown in speculative construction, the office market will offer respectable returns for investors,” he said. “Strong international trade is supporting warehouse and distribution space, especially near port facilities. In addition, demand for rental apartments and hotel rooms is on the rise.”

Office Market

Rising oil prices and slower job growth have dampened expectations for the office market, but vacancy rates are still likely to drop to an average of 12.7 percent in the fourth quarter from 13.6 percent during the same period in 2005. Office rents are forecast to rise 4.4 percent this year.

Areas with the lowest office vacancies currently include Ventura County, Calif.; New York City; Orange County, Calif.; Fort Lauderdale, Fla.; Riverside, Calif.; and Washington, D.C., all with vacancy rates of 8.8 percent or less.

Net absorption of office space in 56 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, should be 64.1 million square feet in 2006, down from 89.5 million last year. High construction costs are putting a lid on speculative development.

Large institutional investors and pension funds returned to the office market during the first quarter, more than doubling what they spent on office buildings in all of 2005; total investment in the first quarter was $20.5 billion.

Over the last year, the top markets for office investment were Manhattan, Chicago, Los Angeles, San Francisco, Northern Virginia and Washington, D.C.

Industrial Market

Industrial vacancy rates are forecast to decline to an average of 9.5 percent during the second half of the year from 9.9 percent in the final quarter of 2005, with new construction increasing along with space absorption. Trade with China continues to fuel demand for warehouse and distribution space. Although market fundamentals appear to be healthy, industrial rents are likely to increase only 1.9 percent in 2006.

The areas with the lowest industrial vacancies are West Palm Beach, Fla.; Los Angeles; Fort Lauderdale; Las Vegas; Miami; and Orange County, Calif., all with vacancy rates of 5.4 percent or less.

Net absorption of industrial space in 54 markets tracked is expected to be 211.0 million square feet this year, down from 290.5 million in 2005. Most of the demand is coming from users and tenants involved with the distribution of goods, but rising industrial production could bolster demand for manufacturing space, which has been lagging in recent years.

Private investment also is occurring in the industrial sector, with transactions totaling $10.5 billion in the first quarter. The top industrial investment markets are Los Angeles; Chicago; Dallas; San Diego; San Jose, Calif.; and Northern New Jersey. Some older properties in urban areas are being converted to other commercial uses.

Retail Market

With absorption matching new supply, retail vacancy rates are projected to be fairly stable for the balance of the year, at an average of 7.6 percent in the fourth quarter, but higher than the 7.2 percent recorded in the fourth quarter of 2005.
Higher energy costs and slowing home price appreciation will hold back consumer spending, impacting the retail sector. Overbuilding and fallout from mergers and acquisitions have impacted certain markets, including regional shopping centers. Average rent is seen to grow 0.7 percent in 2006.

Retail markets with the lowest vacancies include Las Vegas; Miami; Orange County, Calif.; San Francisco; San Jose; and San Diego, all with vacancies of 3.9 percent or less.

Net absorption of retail space in 54 tracked markets should be 14.1 million square feet in 2006, down from 30.2 million last year.
Investment in retail space is cooling with just $7.4 billion spent in the first quarter, dominated by private investors; strip centers accounted for almost three-fourths of retail investment activity. The top markets for retail investment include Los Angeles, Chicago, Houston, Dallas, Phoenix, and Northern Virginia.

Multifamily Market

The apartment rental market – multifamily housing – is expecting vacancy rates in the fourth quarter to average 5.7 percent compared with 6.2 percent during the same period in 2005. Average rent is forecast to rise 4.1 percent this year compared with 2.9 percent in 2005.

Conversion of apartments into condos is waning, but a slight softening in the housing market is boosting rental demand. Concerns about sustainable job growth and job security are playing a role by keeping some people in the rental marketplace.
Total investment in multifamily property was $24.0 billion during the first quarter, up 30 percent from the first quarter of 2005; seven out of ten transactions were garden-style apartment complexes. Condo converters accounted for less than 15 percent of transactions, taking a little over 30,000 units from the rental market.

The top markets for apartment investment over the last year were Manhattan, Phoenix, Los Angeles, Tampa, Orlando and Atlanta.

The areas with the lowest apartment vacancies currently include Fort Lauderdale, Northern New Jersey, Washington, West Palm Beach, Miami and Tampa, all with vacancy rates of 2.5 percent or less.

Multifamily net absorption is likely to be 256,500 units in 59 tracked metro areas this year, compared with 351,000 absorbed in 2005.

Hospitality Market

With rising construction activity, hotel occupancies are forecast at 63.4 percent in 2006 compared with 64.5 percent last year, and revenue per available room (RevPAR) is projected to grow to $72.37 in 2006, up 7.5 percent from $70.47 last year. An additional 17,500 hotel rooms should be added to the inventory in 52 markets tracked in 2006, up from only 5,600 last year.
Markets with the highest RevPAR include New York City, Washington, Honolulu, West Palm Beach, San Francisco and Miami, with RevPAR in excess of $103, in contrast with the national average of $80 expected for the first quarter, which is the highest ever.

Hospitality markets with the highest level of construction include Houston, Orlando, Fort Worth, Washington, Atlanta and San Diego. Overall transaction activity during the first quarter totaled 660 hotels with a combined value of $23 billion; 2006 is expected to be a record for the number of properties changing hands.”

From http://www.realestateconsulting.com

Sales Slower Than Reported

“Relying on data without understanding the methodology can lead to wrong conclusions. For example, the Census Bureau is reporting that new home sales are only down 6% from one year ago, which we know is incorrect. For accurate new home sales estimates, see the press releases of publicly traded home builders – all of whom are reporting sales (orders) that are down 20% - 40% from one year ago. The NAHB Housing Market Index, as well as almost every industry source we contact each month, supports the fact that sales are down 20% from one year ago in more than 70% of the markets we track (Texas, the Carolinas, Georgia and New Mexico are some of the major exceptions).

Economic Growth…………………………………………………………………..C
The economy is on solid ground, which gives the Fed the confidence it needs to continue raising rates to fight inflation. Revisions show that GDP increased at an annual rate of 5.3% through the first quarter of 2006, which is higher than previously thought. Job growth improved slightly in May, adding 1.9 million jobs to the economy over the previous year, but is down from 2.0 million-plus growth in February and March. Retail sales increased 6.6% over the previous year. Inflation rose slightly to 2.3% after remaining flat at 2.1% for three months. Personal income growth improved slightly to 5.4%, and remains below its historical average of 7.4%.

Leading Indicators…………………………………………………………………C-
The leading indicator index declined to 2.9% on an annualized basis over the last six months, down from the previous month’s value of 3.9%. Each of the four stock market indices that we track posted losses in May, and saw their 12-month gains cut in half from April. Builder stock prices, as measured by the S&P Super Homebuilding Index, are declining, with the index showing a 24% decline over the last year.

Mortgage Rates………………………………………………………………………B
At month’s end, fixed rates had increased to 6.62%, while adjustable rates declined to 5.61%, widening the spread between the two. The Fed Funds rate rose to 5.00%, with another increase widely expected at the next Fed meeting. The percentage of loans with an adjustable rate rose to 30.7% in May.

Consumer Behavior………………………………………………………………..C
Consumer confidence slid in May, dropping to 103.2, which is still above historical averages. The biggest decline was felt in New England, where the regional index fell 27.5 points to a rating of 75. The Consumer Sentiment Index and Consumer Comfort Index decreased during the month and remain below their historical averages.

Existing Home Market………………………………………………………………B
Existing home sales fell to 6.76 million in April, with decreases in all four geographic regions. The median existing home price rose to $223,000. The inventory of existing homes increased to 6.0 months, which is its highest value since February 1998, and the volume of existing inventory reached 3.38 million homes. The pending home sales index declined in April to 111.8, just above its historical average.

New Home Market………………………………………………………………….C
The Housing Market Index (HMI) continues its downward slide, reaching 45 in May, and lending further credence to a softening market. Annualized new home sales increased in April to 1.20 million units. Sales per the Census Bureau are down nearly 6% from one year ago, which appears very incorrect as almost all publicly traded builders have reported orders down 20% - 40% and the HMI (a measure of sales and traffic) is also down 40%. The median new home price rose to $238,500, while appreciation decelerates. According to the Census Bureau, the supply of unsold homes decreased to 5.8 months, and the months supply of standing inventory increased to 1.3 months. New home sales are worse than reported by the Census Bureau partially because the Census Bureau methodology was not set up to account for cancellations.

Housing Supply……………………………………………………………………..C
Annualized housing starts fell to 1.85 million in April, which is down 11% from one year ago. Single-family starts fell 9% for the month to 1.53 million. Single-family permits fell 4% from March to 1.50 million, and total permits fell to 1.98 million.”

For the complete article and more data please refer to this link.

The complete final rule can be found here

On June 7, 2006, HUD published a final rule in the Federal Register amending regulations at 24 CFR 203.37a prohibiting property flipping in HUD’s single-family mortgage insurance programs by providing additional exceptions to the time restrictions on sales. The rule and this mortgagee letter become effective for mortgages endorsed for insurance on or after July 7, 2006. This Mortgagee Letter also rescinds, in their entirety, Mortgagee Letters 2003-07 and 2005-05.

The additional categories of properties exempted from the time restrictions include sales of properties by:

• State and Federally chartered financial Institutions and government-sponsored enterprises (GSEs) (e.g., Fannie Mae and Freddie Mac)
• Local and State government agencies
• Nonprofits approved to purchase HUD REO properties at a discount
• Sales of properties within Presidentially-Declared Disaster Areas (upon FHA’s announcement of eligibility in a mortgagee letter specific to said disaster)

Overvalued Markets
From BusinessWeek Online

“National City Corp., the Cleveland-based banking company, and market researcher Global Insight are out today with the latest edition of their widely watched quarterly report on overvalued housing markets. It finds that 71 markets, representing 39% of the value of single-family homes in the U.S., were “extremely overvalued” in the first quarter of 2006. As recently as the first quarter of 2004, only three markets representing 1% of total home value were considered extremely overvalued. California and Florida account for 17 of the 20 most overvalued markets.”

The Joint Center for Housing Studies is Harvard University’s center for information and research on housing in the United States. The Joint Center analyzes the dynamic relationships between housing markets and economic, demographic, and social trends, providing leaders in government, business, and the non-profit sector with the knowledge needed to develop effective policies and strategies.

Each year the Joint Center releases a report on the Nation’s Housing Market and by following this link, you can see the 2006 report. Some excerpts from the report include:

“The housing boom came under increasing pressure in 2005. With interest rates rising, builders in many states responded to slower sales and larger inventories by scaling back on production. Meanwhile, the surge in energy costs hit household budgets just as higher interest rates started to crimp the spending of homeowners with adjustable mortgages.”

“Nevertheless, the housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation. As long as these positive forces remain in place, the current slowdown should be moderate.”

“Over the longer term, household growth is expected to accelerate from about 12.6 million over the past ten years to 14.6 million over the next ten. When combined with projected income gains and a rising tide of wealth, strengthening demand should lift housing production and investment to new highs.”

“But with the economy generating so many low-wage jobs and land use restrictions driving up housing costs, today’s widespread affordability problems will also intensify.”

The 2006 Report can be found here

The 2005 Report can be found here

Established in 1959, the Joint Center is a collaborative unit affiliated with the Harvard Design School and the Kennedy School of Government. Through its rich array of research, education, and public outreach programs, the Joint Center serves as a convener for informed discussion on a broad range of issues in the housing sector of the nation’s economy. In doing so, it educates business leaders, government officials, policy makers, and the public on critical and emerging factors affecting housing and our communities.