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Archive | August, 2011

Discounted Competition Is About to Enter the Market




InfoGraphic

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Delinquency Rates Dropping Dramatically




In yesterday’s blog post, we explained that the ‘shadow inventory’ of distressed properties which has hung over the housing market will soon be released for sale. The real estate market won’t recover until we work our way through this discounted inventory.

The great news is that as these properties exit the bottom of the inventory funnel, there are fewer homes entering the top of the funnel. The best indicator of future foreclosures is the number of households that fall 90 days delinquent on their mortgage payments. This number is falling dramatically. As the S&P Shadow Inventory Report states:

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Shadow Inventory: Luckily, Here It Comes




One of the biggest challenges to the housing industry throughout the rest of the year will be the increase in discounted properties coming unto the market. There is a glut of foreclosures that have been delayed by the court systems in many states while paperwork was corrected. The banks are rectifying their paperwork and processes. Now, more and more states are clearing the way for the banks to resume repossessing these properties.

As these properties find their way to the market, the prices of non-distressed properties in the region will be adversely impacted for two reasons.

  1. There are a finite number of homebuyers in any market. A portion of these buyers will purchase the distressed properties new to the market because they can get them at discounted prices.
  2. As these distressed properties sell, they will become comparable sales used by appraisers to establish value on all homes (both distressed and non-distressed) sold in the future. Since these properties are sold at a discount, they will have a negative impact on other valuations.
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Distressed Property: The Impact on House Values




We are honored to have Chip Wagner, an icon in the appraisal industry and our good friend, as a guest blogger yesterday and today. Yesterday, Chip defined the role of the appraiser in today’s real estate market. – The KCM Crew

Today, Chip will discuss the impact distressed properties have on housing values.

Contrary to the alarming nature being used in reporting that appraisers are killing deals, I would bet that most of my peer appraisers are not seeking the lowest possible sales to use in their appraisals. They are searching the data available in the real estate market for the best comparables out there. But the reality is that good comparables are hard to find.

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The Appraiser’s Role in Today’s Real Estate Transaction




We are honored to have Chip Wagner, an icon in the appraisal industry and our good friend, as a guest blogger today and tomorrow. Tomorrow, Chip will discuss the impact distressed properties have on housing values. Today, Chip defines the role of the appraiser in today’s real estate transaction. – The KCM Crew

I have been saying for a couple of years while real estate values were in decline, my bigger concern was going to be when this market stabilizes and tries to improve. In my February 2011 eNewsletter, I stated:

“My concern has been that once the real estate market hits bottom, it will be a difficult transition into an improving (appreciating) market after 4-5 years of decline. This seems to be happening right now, with much of the difficulty being the distressed market activity competing with the arm’s length transactions.

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