WASHINGTON (June 28, 2012) – Developing and reporting
property values more accurately is critical to improving market performance,
reducing risk and strengthening the housing finance system, according to the
National Association of Realtors®.
That was the message delivered today by Frank Gregoire,
immediate past chair of NAR’s Real Property Valuation Committee, in testimony
before the House Financial Services Subcommittee on Insurance, Housing and
Community Involvement regarding appraisal oversight.
“As the leading advocate for housing issues, Realtors®
know that an accurate appraisal is an important part of the home buying process
and that a strong and independent appraisal industry is critical to restoring
faith in the mortgage origination process,” said Gregoire, a state-certified residential
appraiser and president of Gregoire & Gregoire, Inc., in St. Petersburg,
Fla. “There are many challenges currently facing the appraisal industry, and we
see appraisals as one of the most crucial and overlooked aspects of the
recovery of the real estate market.”
In his testimony, Gregoire said that a number of issues
are impacting the credible valuation of real property, including appraiser
competency and local market knowledge, challenges in accurately estimating
market value in stabilizing markets, and the lack of oversight and regulation
of Appraisal Management Companies (AMCs).
While many AMCs provide legitimate services for
legitimate fees, a large number of AMCs are contributing to problems in the
appraisal business and the overall housing market, said Gregoire. There is
evidence that AMCs are often compromising appraiser independence by insisting
appraisers include specific transactions as comparable sales, complete
appraisals in unreasonably short turnaround times and comply with a broad scope
of work not commensurate with the fee paid.
Many AMCs also require appraisers to accept any and all
liability if a loan defaults if there is any claim related to the value of the
property. All of this puts pressure on the appraiser, compromises their independence
and negatively impacts the quality of the appraisal report, said Gregoire.
“Appraisers are facing undue pressure by AMCs to complete
appraisals using distressed transactions as comparable sales, to deliver
completed appraisal reports faster, and do a greater scope of work for a lower
fee than a competing vendor,” said Gregoire. “The end result is that lenders
and consumers are being underserved, and all of this is contributing to the
failure to recognize positive movement in prices and values in many markets,
creating an additional obstacle to the housing market recovery.”
NAR strongly supports the independence of appraisers and
the appraisal process, and believes that all AMCs should be required to
register with the state appraisal regulatory agencies where they are providing
appraisal management services. Currently, AMCs that are subsidiaries of lenders
are regulated at the federal level and not subject to state AMC registration
requirements, which exacerbates problems because it leads to different
standards and creates confusion. Lenders should also be prohibited from
retaining an AMC’s services if that lender maintains any level of ownership in
the AMC.
Other appraisal challenges include limitations of the
current reporting format, lagging market information, discrepancies in market
definitions, the funding structure of appraisal programs, and a declining
number of appraisers. NAR represents about 30,000 state-licensed and certified
appraisers throughout the country, who report that their colleagues are leaving
the industry for many reasons, but among the most cited is that experienced
appraisers refuse to work under the current AMC-imposed climate.
Gregoire said that while appraisals are the gold standard
for mortgage origination, there is also an important role for broker price
opinions, comparative market analyses and automated valuation models. While
some organizations focus only on appraisals, NAR is the only real estate trade
association that can speak with authority on appraisals and alternative
valuation products.
NAR has long been seeking to ensure credible valuation of
real property for the industry and since 1993 has encouraged appraiser members
to demonstrate their professional competence by earning one or both of NAR’s
appraisal designations.
The Residential Accredited Appraiser (RAA) and General Accredited Appraiser
(GAA) are awarded to certified appraisers with education and experience in
excess of the minimum state qualifications.
Earlier this year, NAR also adopted the Responsible
Valuation Policy, which serves as a guide for members and staff in
advocacy efforts for federal legislation and regulatory policy. Through its
subsidiary, the Realtors® Property Resource (RPR), and its Real
Property Valuation Committee, NAR is able to provide one of the most
comprehensive sets of data and tools for determining credible home values.
The National Association of Realtors®, “The
Voice for Real Estate,” is America’s largest trade association, representing 1
million members involved in all aspects of the residential and commercial real
estate industries.
Horizon Properties Inc. is Guam’s leading real estate services provider and property managementcompany. We work diligently to fulfill the requirements of buyers and renters, while working towards a smooth, hassle-free transaction for sellers. Our innovative and “customer first” approach towardsproperty management results in outstanding property care and profitability.
WASHINGTON (June 28, 2012) – Developing and reporting property values more accurately is critical to improving market performance, reducing risk and strengthening the housing finance system, according to the National Association of Realtors®.
That was the message delivered today by Frank Gregoire, immediate past chair of NAR’s Real Property Valuation Committee, in testimony before the House Financial Services Subcommittee on Insurance, Housing and Community Involvement regarding appraisal oversight.
“As the leading advocate for housing issues, Realtors® know that an accurate appraisal is an important part of the home buying process and that a strong and independent appraisal industry is critical to restoring faith in the mortgage origination process,” said Gregoire, a state-certified residential appraiser and president of Gregoire & Gregoire, Inc., in St. Petersburg, Fla. “There are many challenges currently facing the appraisal industry, and we see appraisals as one of the most crucial and overlooked aspects of the recovery of the real estate market.”
In his testimony, Gregoire said that a number of issues are impacting the credible valuation of real property, including appraiser competency and local market knowledge, challenges in accurately estimating market value in stabilizing markets, and the lack of oversight and regulation of Appraisal Management Companies (AMCs).
While many AMCs provide legitimate services for legitimate fees, a large number of AMCs are contributing to problems in the appraisal business and the overall housing market, said Gregoire. There is evidence that AMCs are often compromising appraiser independence by insisting appraisers include specific transactions as comparable sales, complete appraisals in unreasonably short turnaround times and comply with a broad scope of work not commensurate with the fee paid.
Many AMCs also require appraisers to accept any and all liability if a loan defaults if there is any claim related to the value of the property. All of this puts pressure on the appraiser, compromises their independence and negatively impacts the quality of the appraisal report, said Gregoire.
“Appraisers are facing undue pressure by AMCs to complete appraisals using distressed transactions as comparable sales, to deliver completed appraisal reports faster, and do a greater scope of work for a lower fee than a competing vendor,” said Gregoire. “The end result is that lenders and consumers are being underserved, and all of this is contributing to the failure to recognize positive movement in prices and values in many markets, creating an additional obstacle to the housing market recovery.”
NAR strongly supports the independence of appraisers and the appraisal process, and believes that all AMCs should be required to register with the state appraisal regulatory agencies where they are providing appraisal management services. Currently, AMCs that are subsidiaries of lenders are regulated at the federal level and not subject to state AMC registration requirements, which exacerbates problems because it leads to different standards and creates confusion. Lenders should also be prohibited from retaining an AMC’s services if that lender maintains any level of ownership in the AMC.
Other appraisal challenges include limitations of the current reporting format, lagging market information, discrepancies in market definitions, the funding structure of appraisal programs, and a declining number of appraisers. NAR represents about 30,000 state-licensed and certified appraisers throughout the country, who report that their colleagues are leaving the industry for many reasons, but among the most cited is that experienced appraisers refuse to work under the current AMC-imposed climate.
Gregoire said that while appraisals are the gold standard for mortgage origination, there is also an important role for broker price opinions, comparative market analyses and automated valuation models. While some organizations focus only on appraisals, NAR is the only real estate trade association that can speak with authority on appraisals and alternative valuation products.
NAR has long been seeking to ensure credible valuation of real property for the industry and since 1993 has encouraged appraiser members to demonstrate their professional competence by earning one or both of NAR’s appraisal designations. The Residential Accredited Appraiser (RAA) and General Accredited Appraiser (GAA) are awarded to certified appraisers with education and experience in excess of the minimum state qualifications.
Earlier this year, NAR also adopted the Responsible Valuation Policy, which serves as a guide for members and staff in advocacy efforts for federal legislation and regulatory policy. Through its subsidiary, the Realtors® Property Resource (RPR), and its Real Property Valuation Committee, NAR is able to provide one of the most comprehensive sets of data and tools for determining credible home values.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
Horizon Properties
Inc. is
Guam’s leading real estate services provider and property management company. We
work diligently to fulfill the requirements of buyers and renters, while working towards
a smooth, hassle-free transaction for sellers. Our
innovative and “customer first” approach towards property management results in
outstanding property care and profitability.
The discussion of inventory shortage has become more prevalent and more pronounced. The data at the national level clearly shows fewer listings. The decline in inventory has been particularly sharp in the following markets based on large broker reports from those areas: Phoenix, Las Vegas, San Jose, Cape Coral, downtown Seattle, and even the suburbs of Detroit. Local inventory data from Realtor.com also confirms that most markets have a measurably lower inventory now compared to one year ago.
Though new home construction has started to recover, the number of new homes coming onto the market today is far below the historical average and not even close to satisfying the current inventory shortage. In fact, the absorption of new homes is greater than new supply, thereby resulting in an actual fall in the number of newly constructed homes for sale.
The only potential source of relief to inventory shortage could be from distressed properties, the homes with a seriously delinquent mortgage problem or homes already in some stage of foreclosure. But any inventory addition from this submarket will only be for the short term because the pipeline of distressed homes is thinning out as well. At peak a couple of years ago there were 4.7 million homes with mortgages that were late by at least 3 months or already in foreclosure (according to a NAR estimate based on data from the Mortgage Bankers Association). As of the first quarter, 3.5 million homes are in the distressed stage. The more aggressive refinancing programs via HARP and HAMP for distressed homeowners will also further reduce the figure. Foreclosure completions occurring with each passing day further removes more properties off the distressed list and into financially-strong hands as evidenced by exceptionally low mortgage default rates of homebuyers from 2009 onward. Therefore, one cannot assume that some looming shadow inventory numbers are on the horizon to help relieve the housing shortage conditions of today.
Interestingly, the states with the increasingly acute housing shortages are the ones facing a rapid depletion in shadow inventory. Arizona and California are two examples. These states are non-judicial foreclosure states, meaning that a homeowner who does not pay his or her mortgage on time faces the immediate prospect of being forced out (California has been recently passing new laws to slow that process, however).
Meanwhile, states with continued decent numbers of inventory have a high shadow overhang. Illinois and Connecticut are examples. These two states require judicial proceedings before a home can be foreclosed and judges have been taking their time.
Very interesting dynamics are developing. Areas facing housing shortages today will likely continue to face shortage conditions over the intermediate future. Areas without a housing shortage could have excess inventory in the near future.
The one important unknown to all the inventory equations is the number of normal (non-distressed) homeowners who have been waiting and waiting to put their homes on the market. It is not possible to quantify. However, one would suspect that most of these non-delinquent homeowners would only list their home for sale with the intention of buying another one as a trade-up or trade-down property, so the net impact on inventory would be a wash.
Horizon Properties
Inc. is
Guam’s leading real estate services provider and property management company. We
work diligently to fulfill the requirements of buyers and renters, while working towards
a smooth, hassle-free transaction for sellers. Our
innovative and “customer first” approach towards property management results in
outstanding property care and profitability.
WASHINGTON (June 11, 2012) – Due to low prices and the relative weakness of the dollar, international buyers continue to identify the U.S. as a desirable place to own property and make a profitable investment.
According to the National Association of Realtors® 2012 Profile of International Home Buying Activity, total residential international sales in the U.S. for the past year ending March 2012 equaled $82.5 billion, up from $66.4 billion in 2011. Total international sales were evenly split between non-resident foreigners and recent immigrants. The survey asked Realtors® to report their international business activity within the U.S. for the 12 months ending March 2012.
“Today’s advantageous market conditions have drawn more and more foreign buyers to the U.S. in recent years, signaling how desirable and profitable owning property in this country can be,” said NAR President Moe Veissi, broker-owner of Veissi & Associates, Inc. in Miami, Fla. “Low housing prices, a good inventory condition and increased buying power with today’s exchange rates help attract international clients. Foreign buyers also have the advantage of working with a Realtor®. Realtors® who specialize in serving international clientele have a truly global perspective; they know what hurdles foreign buyers face when purchasing property in the U.S., and have the expertise and knowledge that comes from working with clients from different cultures and real estate practices.”
International buyers bought homes throughout the country, but four states accounted for 51 percent of the purchases – Florida, California, Texas and Arizona. Florida has been the fastest growing destination of choice, accounting for 26 percent of foreign purchases. California was second with 11 percent and Texas and Arizona accounted for seven percent. Proximity to the home country, the presence of relatives and friends, the convenience of air transportation, and climate and location are all important considerations to prospective foreign buyers. Locations on the East Coast generally attract European buyers, while Asian buyers tend to purchase on the West Coast, particularly California. Florida attracts a diverse set of international buyers including South Americans, Europeans and Canadians. Meanwhile, Texas remains popular among Mexican buyers. Within markets in an individual state, it is not unusual to find concentrations of people grouped by nationality.
“Foreign buyers recognize that owning a home in the U.S. has many benefits, both financial and social,” said Veissi. “Many purchase property as an investment, vacation home, or to diversify their portfolio. In addition, many recent immigrants view homeownership as an important accomplishment. They believe that being a homeowner is one of many ways they become established in the U.S. and attain stability, security, and a sense of community.”
International buyers came from all over the globe, but Canada, China (The People’s Republic of China including Hong Kong), Mexico, India, and the United Kingdom accounted for 55 percent of all international transactions, according to the survey. Canada and China remain the fastest-growing home countries. Canada accounted for 24 percent of international sales while China accounted for 11 percent, up from nine percent in 2011. Mexico was third with eight percent of sales and India and the U.K. both accounted for six percent.
Forty-five percent of international purchases were under $250,000. In addition, there appears to be a gradual increasing trend toward purchases in the $250,000 to $500,000 price range. In 2012 this range accounted for 30 percent of purchases, up from 28 percent in 2011. The average price paid by an international buyer was $400,000 compared to the overall U.S. average of $212,000. Several reasons account for why the average international home price is higher than the average overall price. The international client is typically wealthier than the domestic buyer and is looking for a property in a specialized niche, for example, a larger property suitable for multi-generational living, or a property that establishes the individual’s presence and standing in the community.
Many homes purchased by foreign buyers are used as a primary residence. Vacation and rental use are also major reasons for a purchase. More than half – 66 percent – of survey respondents reported international buyers purchased detached single-family homes. About half of international buyers, 52 percent, preferred to buy in a suburban area and about a quarter, 23 percent, bought in a central city/urban area.
Sixty-two percent of international purchases were all cash, which has increased since 2007. International buyers still experience many financing challenges when purchasing a home in the U.S. In fact, among transactions that failed, Realtors® reported that in 26 percent of the cases financing issues were the problem. The difficulties facing foreign buyers in trying to obtain a mortgage include lack of U.S.-based credit history and hurdles in meeting mortgage requirements. Other reasons for not purchasing properties were cost/taxes/insurance and immigration laws.
Twenty-seven percent of Realtors® reported having worked with international clients this year. Fifty-two percent of Realtors® reported that international transactions accounted for one to 10 percent of their total transactions, while 27 percent reported that they made up more than 10 percent of total transactions. Realtor® specialization on the buyer’s side of the market – such as foreign language capabilities, cultural affinity or orientation with the prospective purchaser and experience in explaining the U.S. real estate – appear to be important in working with foreign buyers.
NAR helps Realtors® expand their businesses globally. The Certified International Property Specialist designation prepares Realtors® to service the growing international market in their local community by focusing on culture, exchange rates, investment trends, and legal issues. The CIPS® Global Network is comprised of over 2,000 Realtors® worldwide.
In addition, Realtor.com® International delivers U.S. residential listings to buyers across the global, as well as listings from international data providers. As NAR’s official property website, Realtor.com® increases exposure of U.S. properties to global markets and helps Realtors® grow their global business. Last month over 950,000 international unique visitors searched for U.S. properties on the site (as reported by Omniture Site Catalyst for May 2012 as an aggregate of all countries other than the U.S.).
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
Horizon Properties
Inc. is
Guam’s leading real estate services provider and property management company. We
work diligently to fulfill the requirements of buyers and renters, while working towards
a smooth, hassle-free transaction for sellers. Our
innovative and “customer first” approach towards property management results in
outstanding property care and profitability.
