Current Market Conditions Posted with Feb. 08 Data

I just posted the March Current Market Conditions Report (that includes Feb. sales data.) Its a very mixed picture. The volume of sales is down from a year earlier, but has steadied. The average sales price dropped again for the 5th month, but the median sales price remained stable at $164,000. February new activity, though, at least from my perspective, was very slow and a lot of the inquiries I've gotten in the past month have been for very bargain priced properties.

I have lots more data (and as usual, opinions) in the full Current Market Conditions report. Please check it out and then come back and add your thoughts about what you think the market is doing.

Comments

[Chris L]

A new agreement between the NY Attorney General and Fannie and Freddie should promote independence and accuracy of appraisals. But it's going to cost buyers.

http://money.cnn.com/2008/03/12/real_estate/mortgage_brokers_attack_GSE_pact/index.htm?postversion=2008031204

[David Knudsen]

Chris, thanks for that link. Very interesting. But I don't know if Cuomo's agreement gets to the heart of the problem. It seems like it could be just a cash cow windfall for appraisers. If a mortgage broker wants to submit 3 applications, there will need to be 3 appraisals. But what if the 3 lenders all order the appraisal from the same appraisal service? Do you think the appraiser is going to go out to the house 3 times, take 3 sets of photos and measure the house 3 times? I doubt it. They're just going to collect 3 fees.

Even if each of the 3 lenders orders from a different appraiser, in the end each lender only has the benefit of one appraisal. I think a far better use of resources would be to have 3 independent appraisals done, and have all 3 available to each lender. There are often wide discrepencies in appraisals, particularly in low density rural areas like Sullivan where good, responsive comps can be hard to find. I think it would be a tremendous advantage to underwriters to have 2 or 3 appraisal to review, so compare the comps they used and the adjustments they made.

Also, I think that lenders need to start paying for good appraisals, not just ordering from the cheapest providers. One of the changes in the past few years has been the trend by large lenders to order appraisals through regional appraisal services, who them subcontract out the actual appraisals. Under this system, I've had appraisers come up from as far away as Westchester County. They aren't members of the Sullivan MLS (and think that the Greater Hudson Valley MLS is the only MLS covering Sullivan), they're not aware of non-MLS sales in Sullivan and basically just don't know the market. The local appraisers do, and because so much of our recent sales data isn't available electronically, take extra pains to hand track sales and keep their own data.

I'm not saying that all appraisers working through these regional systems are 'bad'; I've worked with many who are very knowledgeable about the Sullivan market. Personally, I think that if an appraiser doesn't really know a market, they should decline the appraisal. But I have that opinion about real estate brokers, as well. I don't understand how a broker in Westchester believes they can adequately market a property in Sullivan County or vice versa.

Finally, I think a big problem is the requirement by Fannie Mae and Freddie Mac that the appraiser review the sales contract as part of the appraisal process. I understand why they added that requirement 15 months ago, so that the appraiser can pick up anything in the contract that might impact the sales price relative to value, like a seller concession or the inclusion of personal property. But the contract clearly states the sales price, which consciously or unconscioiusly, sets the number to 'hit'. In Ohio, I believe, the law states that an appraiser can not to informed of the sales price at any point in the appraisal process. (I'm not sure how that jives with teh Fannie Mae requirement, or if its in court.)

I personally think the contract should be removed from the appraisal process, and appraiser should do the appraisal 'blind', without knowledge of the sales price. The lender, though, would have a copy of the contract, and their underwriting department could then make any adjustments for items like seller concessions.

[Pauline Horen]

I would be a very happy person if those figures were real. I have a wonderful condo for sale in Liberty which has everything including the kitchen sink. IT WONT SELL It's listed with century 21 in Liberty. So do I agree with you NO.

[Debbie]

Love the website and your blogs. I am a new seller in Sullivan. Have lived here 18 years and recently did "open listings" of my home with several local real estate agencies. Like some buyers I am not in a hurry....My husband and I are almost "empty nesters" looking to relocate south. We are just getting our feet wet in this process and learning about market value and quite frankly sort of "testing the real estate broker's waters". The end result will be giving the exclusive to agency that we like the most so to have MLS exposure. I truley was educated by the information you posted.