I know people are angry when they lose their homes. I would be too. However, I find it repulsive to see how many foreclosed owners trash their properties before vacating. Life happens, not always the way we would like. But it's no excuse to act like animals.
@Noreen
I agree that you shouldn't include distressed properties in the price calculation. The reason is that 1) They are below market 2) Most of them are in bad shape 3) eventually that inventory will be gone and we will return to a more "normal" market 4) Most of the analysis I have seen shows that a lot of the distressed properties that haven't been bought aren't desirable and should just be bulldozed cause its not economical for people to buy them.
Time to get out the bulldozer and speed up the process!
@Value Hiker
Amazing! That almost exactly matches my experience. So how in the real world can you have "professionals" evaluating a property and coming up with values that have a 40% range! that is absurb. That is like if a stock traded on the market and every week it had a 40% swing.
I think the conclusion we have is that tha appraisal business is completely screwed up and being manipulated by banks.
@Noreen
I think there's more than that to it, Noreen, I really do. The main reason is that the foreclosure rate where I live (Gallatin Co., MT), is really low. Less than 3% I think. So foreclosures aren't really in the appraisal picture here.
in fact, the Case-Shiller stats are also including foreclosures and short sales. it seems like it would be more accurate to separate them out of the overall price stats.
The problem with the bank appraisals is that the numbers are being pulled down by foreclosures and short sales. They should be really basing the comps on only fair market sales.
Re: No money, no improvement
Value Hiker
4/20/2012 11:45:01 AM
Recently my next door neighbors sold their house, which is the same builder, same model, same year, comparable decoration. Here is my house valuation from different entities
1. The county give me an appraisal 15% higher than sale price
2. The Insurance give me an appraisal of rebuilt cost 20% above county's estimate
3. Mortgage company gave me an appraisal 15% below the sale price. The funny part is the appraisal did show the sale price of my next door neighbor, but they preferred to use the shortsale price of a house a few blocks away, which has different model, builder, and year.
If I can sell my house to the county and buy back from my mortgage company, what a wonderful world it will be.
Also, I have been tracking the local housing inventory. It has been shrinking, but of course like everywhere there is a fair amount of new construction from the boom on the market (empty). From the data I have seen existing homes inventory is getting tight, but the houses built at the end of the boom (2006-2007) are still there. But there has also been a pickup in new construction. I asked a local builder why this is happening and this is a paraphrase of what he said:
"It's cheaper to either buy an existing home or build a new one than buy one of the new homes that were built in 2007 at the top. If the banks own them in foreclosure or they are a short sale they don't want to sell them at a low price because then they have to write off money on the balance sheet."
In other words -- the economics are messed up because banks are afraid to mark down their own foreclosure inventory even though when you apply for a loan they want to give you the lowest possible appraisal.
And some banks wonder why people are angry at them?
Yes, apparently the land is worthless. LOL. And according to the banks, it's feasible to build a new home at 30% less than what the insurance companies says. I guess they think they know what they are talking about.
Why should we have to carry the baggage of the banks' crappy balance sheets?!
Re: No money, no improvement
tokyogai
4/20/2012 10:31:39 AM
Scott- your story is similar to what I am being told by agents here. Banks are really pushing for low appraisals and in many cases the appraisals are below the rebuilding cost- forgetting the value of the land. This really needs to get fixed before the market can do any meaningful recivery.
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