Residential Appraising in a Declining Market

Nancy Summer Jung says:

Lenders are getting aggressive about appraisals in declining markets:

“04/07/2026 12:35:10 pm
Review of Market Conditions – Good afternoon. We are kindly asking to reconsider the indication of declining markets. We believe the market is stable to increasing. Kindly review and indicate if we can correct to stable based on recent activity, removing the declining markets indicator. Thank you.

Detailed Market Analysis is already included in the original appraisal report, please see Additional Comments on pg. 3. “Market Analysis”. If additional information supporting the “belief” that the market conditions are “stable to increasing” can be provided, a further analysis of that data could be performed by me.

04/07/2026 08:09:55 pm
Stable Market Indication Request – We request reconsideration of the “Declining” market designation. The report references a ~3.65?preciation rate; however, a variance of this size alone does not establish a declining market—particularly given the limited data set noted in the report. Additionally, the report contains conflicting conclusions, including references to the neighborhood analysis citing rapid growth, high demand, short marketing time, and supply constraints, all of which are more consistent with a stable market. Based on this, a “Stable” market designation appears more consistent with the overall analysis. We are not requesting a value change—only alignment of the market trend indicator with the report’s data.

This is a repetitive, inadequate request, no conflicting, quantifiable data is being provided to support a change in the subject’s one unit market trend of declining. There is a 3.65% annual depreciation rate as indicated by market analysis of over 400 sales in the subject’s market area, this is NOT a limited data set, and -3.65% is a SIGNIFICANT pecentage of value reduction.

This report does NOT have conflicting conclusions. There are new subdivisions and developments underway, sales are strong with reasonable DOM to closing, and this is due to sellers consistently REDUCING prices, to counter large amounts of competition, increased interest rates, and the real estate bubble of 2020 that doubled housing prices within a few months. Prices are steadily declining in the Dallas/Fort Worth area for the past 5 years, of varying amounts with very few exceptions (central Dallas 1M$+ new residential construction is still appreciating) across the board depending on the local market area. Builders are reducing prices, offering rate buydowns, temporary variable interest rate reductions, closing cost assistance, and discounts to maintain expected sales volumes. Existing homes are being sold at lower list prices. There will be no changes to the declining market stated in this report without credible numerical data to support a revision.”

I was double checking a few details, specifically the definition of a declining market, which across the board is a decline in property values (check), and exactly what percentage of decline would be reasonable, found suggestions from -4% to -9%, way to broad a range to be credible, particularly when a +3% to +5% is suggested to indicate an appreciating market, seriously inconsistent, folks. I’m sticking to my guns on this one, the market area here has been in a slight (from -2% up to -8%), steady decline for 4 to 5 years here, and so far has not shown any signs of leveling.

I’ve been performing local market analysis on every report and measuring by ANSI standards for all 22 years of my appraisal career, this may be new to lenders, but they better get used to it, just say’n.