The week beginning Aug. 16 continued the pick-up in appraisal activity that started the week earlier, signaling perhaps a more robust August when the home sales and mortgage application numbers come in later.
Appraisals rose 1.12% for the week, after rising 2.34% last week, says Kevin Golden, director of analytics for a la mode inc.
“I think the numbers are up as a lag from the increased applications from the last couple of weeks. Over the last month, the volume has been flat,” Golden said.
HousingWire is partnering with a la mode, inc., an appraisal forms software company which has tracked the appraisal volume throughout the country since 2006, to provide a weekly read on appraisal volume.
Appraisal volume is an indicator of market strength and has a few advantages over mortgage applications, especially since fallout is less for appraisals since they are ordered later in the mortgage process after credit worthiness has been approved.
Here’s the latest:
New this week, David Bunton, president of The Appraisal Foundation, is joining HousingWire’s weekly appraisal news roundup.
This week, he discusses green valuation and the three Valuation Advisories related to it.
Take it away, David...
We at The Appraisal Foundation are delighted to join The Wrap column, contributing a post each week on important updates in the profession. First a little background on who we are: The Appraisal Standards Board of TAF develops the Uniform Standards of Professional Appraisal Practice, the Congressionally-authorized standards for real estate appraisers. The Appraiser Qualifications Board of TAF establishes the Congressionally-authorized minimum qualifications to obtain state appraiser licenses and certifications. The Appraisal Practices Board of TAF provides voluntary guidance on recognized valuation methods and techniques for all valuation professionals.
Starting this week, we will be sharing some of our insights to The Wrap column in the form of a weekly write-up on updates, resources, and timely information for appraisers.
For this first installment, we decided to focus on a growing topic of interest for many appraisers across the country: green valuation. In an effort to assist appraisers, the APB recently released the first of three Valuation Advisories related to green valuation. The advisory, Valuation of Green and High Performance Property: Background and Core Competency, which can be read here, provides guidance related to the basic concepts necessary for appraisers to credibly value green buildings and/or energy-efficient features.
In particular, the advisory familiarizes appraisers with important terms, resources, and rating systems, such as the HERS rating, Energy Star rating, and the National Green building standard. In addition, it outlines the specific sections of USPAP most relevant to green valuation that appraisers should keep in mind when taking on relevant assignments.
In the coming months, TAF will release two additional advisories specifically focused on the methodology used to value green properties. One will focus on 1-4 unit residential properties, while the other will address commercial, multifamily, and institutional properties. These advisories will first be introduced as exposure drafts open to the public for review and input. We encourage you to weigh in and offer any feedback that will help the APB produce meaningful final advisories.
Appraisers, get ready for more work coming your way, at least in the short term, if the Federal Reserve raises interest rates. It sounds counter-intuitive, but consider this from Matthew Pointon, and economist with Capital Economics.
“Indeed, there is some evidence that a gentle rise in rates can spur some potential buyers to get into the market before the best deals are gone, providing a modest short-term boost to housing market activity,” he says in a client note. “The link between housing market activity and interest rates is well established. Other things equal, higher interest rates will act to depress mortgage applications, housing sales and housing starts.”
He says higher rates reduce the affordability of housing which tends to cut sales, and that, in turn, can weigh on starts.
“And higher interest rates could also trigger a rise in delinquency rates, leading to a tightening in lending standards. It is not surprising, therefore, that in the 25 years leading up to the financial crisis, there was a strong inverse relationship between real mortgage rates and home sales per capita,” Pointon says.