So-Called Economist Slams Appraisers
Is the cost-benefit of conservative appraisers worth it?
Mr. Adam Ozimek, who is described as a ‘senior economist’ at Moody’s Analytics (from a search I did) penned this gawd-awful piece: Appraisers May Be Holding Back the Housing Market, And That Might Be Okay. This piece appeared in Forbes.com on July 5 – the focus of which is to nearly blame ‘conservative’ appraisers for “holding back the market,” … but maybe it’s OK, he says. Where do they find these people, anyway?
I love it when so-called authority figures start off with speculations, not backed with any facts, and fill the space with conjectures, as Mr. Ozimek does in the article:
…this is a highly speculative post in multiple directions at once.
There isn’t a lot of data to back up either claim, and I wouldn’t elevate other above conjecture at this point.
Here is my first conjecture: appraisers are very conservative in the wake of the housing bubble, and are effectively keeping prices below their market levels.
The way to ensure the deal is for the appraisers to assess slightly higher than (or equal to) contract prices. Much anecdotal evidence suggests that such bias exists.
Then the blog piece almost concludes with this brilliant statement:
“Micro macroprudential policy in general seems under-discussed.”
Do any of you know what Mr. Ozimek means?
What I get out of this blog piece is we ‘conservative appraisers’ just need to rubber-stamp values in appraisals to the agreed purchase price of the homes being bought. But maybe not. We’d be best to employ some micro macroprudential policy process to figure it all out. (Help! Mr. George Dell… can you decipher this???!)
You can access the blog from this link, and it looks like it allows for comments from readers to be added, which I hope some of you will do.
Excerpt from the article:
So what gives? If housing demand is strong enough to quickly absorb supply, why aren’t prices rising faster and luring more sellers and new construction into the market? Why is supply low and price growth slow? Here is my first conjecture: appraisers are very conservative in the wake of the housing bubble, and are effectively keeping prices below their market levels.
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Garbage in Garbage out!
1. A few things, 95% of appraisals done for purchase transactions, appraise at or above the contract sales price. (which is one of the reasons there is a push to get ride of us), so I’m not sure why this author says we are conservative, that makes no sense)
2. I would guess this article is coming form angry home owner’s who are looking to tap equity from their home as their wages have not increased much since 2007 and are expecting appraiser’s to work miracles, by creating fictitious wealth, since many have limited savings and assets, other than their homes. (AND THEY BELIEVE ZILLOW!)
3. Since appraisals require older data to establish a value as of today’s effective date, hopefully appraiser’s are citing pending sales (i.e. more than 1) which are always your best indicators of the most current market trends, especially in upward or downward trending markets, as opposed to a sale which closed 12 months ago and was under contract 3 months prior to that.
Well, can not comment there without logging in. People need to study economics to understand the big picture. As the dollar weakens inflation continues and prices rise. There is a natural relationship between dollar devaluation and rising pricing. Masked inflation via the existing fiat system. Our government has the power to operate independent of taxation because of the printing press, a concept straight out of the communist manifesto. There is now a general confusion as people struggle to comprehend why free market principals are not applicable and pricing rises happen in one location but not the next, despite the federal control of basic lending accessibility which opens up access nationally. Well, of course the lending rate is not bringing equivalent movement in varying locations because external factors like employment are not tied directly to the rate. Furthermore, inventory is low because of record setting foreign investors zipping up American properties at an alarming 1/5th or more rate, year over year, as well as overwhelming corruption and bureaucracy in government approval processes for builders which clearly slows innovative concepts and more sensible developmental approaches. The people are burdened with incomprehensible debt and the government refuses to roll anything back. Pundits like this one are mixing up apples and oranges, clearly missing the big picture in vain attempts to find solutions in the parsed details without being willing to recognize the actual problems. If you look at these issues in terms of only current relationships under existing bureaucratic structures, you’re missing the big picture. What brought us here? An important first step to better economic understanding.
Appraisers neither hold back nor promote sale price or value increases. Competent appraisers know how to properly appraise in both increasing or declining markets. The real problem is lenders and AMCs don’t want to pay for competency.
They always need a scapegoat and to them it is us!!