2014 Inventory Reduction Impact

Posted by Miranda Imperi Union Home Mortgage on Thursday, May 1st, 2014 at 8:42am.    1101 Views

Shrinking Housing Market Affects House Value Appraisal

How Much is My Home Worth?It’s widely known that the housing market has witnessed a steady recovery in many areas of the country.  It is also becoming increasingly evident that due to a lack of inventory in a multitude of markets, there are obstacles for those of us working in the industry for Home Sellers and Buyers.  What is important is to create awareness of the current challenges we face in light, specifically in the second quarter of 2014.

Over time it has been common to witness MSA’s where a lack of inventory has driven pricing in an upward trend due to demand (Phoenix, Los Angeles, Orlando, etc.).  While the trend is more common in warm weather states, many areas of the Great Lakes Region are now navigating through an inventory shortage as well so we have to be readily armed with the right information.  The main challenge is in how we may be able to justify swift increases in valuations in accordance with regulated lending. 

“The lack of inventory is a big obstacle for the housing market right now. It becomes a supply and demand issue; without more homes available, home prices will continue to rise.” 

-  Jed Smith, managing director of quantitative research for the National Association of Realtors.

Good news for home values – yes – but it is important to realize the counter-effect in determining whether a home’s value is true and accurate as opposed to artificially inflated. 

In accordance with current appraisal requirements, Appraisers are required to view each property, utilizing the most similar and recent comparable properties sold to assist in determining a property’s valuation (ex. an Appraiser will view a comparable property that sold in the past few months in favor of a comparable property that sold in 2013).

To a Lender, more recent comparable properties provide a more current and perceived evaluation of the current market and as inventory was much more abundant in the Great Lakes Region during the winter months, sales prices for similar properties may have been lower even three to four months ago than are available today.  With an active third quarter of 2013 and first quarter of 2014, many comparable sales from this time-frame are available and if sales were lower in a specific 

The key to success is a realistic approach in determining a home’s value, including advanced detailed research through a Licensed Realtor to ensure a property fits within a supportable price range.  Save any market-based data you may have researched to support a value in the event you need to provide additional supporting material if you do encounter a low appraisal.  And don’t panic.  Realtors and Lenders will continually work together to explore every angle to ensure the appraisal meets within regulatory compliance and as important, and benefits Buyers and Sellers, that can potentially impact a property’s appraised value today.

Miranda Imperi
Director of Social Media Marketing
Union Home Mortgage
Direct 440-287-7330, Email mimperi@unionhomemortgage.com

4 Responses to "2014 Inventory Reduction Impact"

Greg Hancock wrote: Hello Miranda,

Thanks for friend'ing me on Facebook. This is a great read, and as an active Realtor, I can tell you my business partner Marty Snyder and I have seen this grow and grow as the number of houses on Ohio's real estate market continue to decline. Sometimes appraisers are very frustrating though, and while most are competent, many are not and often the appraisal comes back lower than the offer price, throwing a monkey wrench in the works. Just like Realtors use MLS's to conduct comparative market analysis or CMA's to help sellers understand house value and a low, median and highest suggested price range, so do appraisers, but I think perhaps they're just not as good at it. I'm glad banks are no longer able to dictate which appraisers must be used, but now I wish appraisers were held to a higher standard of accuracy.... we'll see, maybe one day! :)

Posted on Thursday, May 1st, 2014 at 10:41am.

Steve Bayard wrote: Miranda, I so have to agree with this... and agree with Greg Hancock as well about appraisers and expectations on house value when there's an accepted offer in the works. Having a good mortgage lender or two in your back pocket as a Realtor is a necessity for success, for the both the real estate agent, and for his or her clients. Welcome aboard as one of Berkshire Hathaway HomeServices - Preferred Realty's preferred lending associates!

Posted on Thursday, May 1st, 2014 at 1:02pm.

Marty Snyder wrote: Hello Miranda!

Just wanted to say welcome aboard to you and Union Home Mortgage as a preferred mortgage lender of BHHS - Professional Realty. Love this post btw, very informative for both buyers and newly licensed real estate agents. Have to agree with Greg Hancock too, wish there was some sort of better standard for appraisers. It's good they use the MLS but amazing how many times I had to do more CMA's and comps to show an appraiser how far off they were on house value and home worth.

Good Realtors won't just sit there but get proactive about pointing out obvious miscalculations on the appraisers part!

Posted on Thursday, May 1st, 2014 at 1:16pm.

Miranda Imperi: Union Home Mortgage wrote: Thanks for all the wonderful feedback, everyone!

Posted on Thursday, May 1st, 2014 at 1:38pm.

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