WASHINGTON, DC - Although the economy has been growing lately, fallout from the recent recession continued to negatively impact commercial real estate sectors in the fourth quarter, but there is hope for some improvement next year, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said commercial real estate almost always lags the economy. "Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions," he said.
"With the job market expected to turn for the better later this year, we'll see rising demand for office and warehouse space, but that isn't likely before 2011," Yun said. "At the same time, improved consumer confidence would help sustain the retail sector and encourage more people to enter the rental market."
Yun notes that commercial vacancy rates remain high in most market areas and are depressing rents.
For the rest of this article and more industry news go to News & Views at: www.RealtyRates.com
The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute, the nation's largest association of real estate appraisers. (The materials presented in the publication represent the opinions and views of the authors.)
"Zillow's Estimates of Single-Family Housing Values," by Daniel R. Hollas, Ph.D., Ronald C. Rutherford, Ph.D., and Thomas A. Thomson, Ph.D., examines how Zillow's estimates of value, known as Zestimates, compare to actual sale prices. Zillow.com is an automated valuation model Web site.
The authors looked at home sales in Arlington, Texas, a location where Zillow has indicated its data has the highest accuracy level. The authors' study found that 40 percent of the homes in the sample were overvalued by Zillow by more than 10 percent compared to actual sale prices. The study's authors suggested that Zillow may not take into account the occupancy of properties, which has been shown to affect sale prices.
Other studies have shown that on average homeowners' overestimate the values of their homes by 5.1 percent and new owners overvalue their homes by about 8.4 percent. The authors conclude, therefore, that while Zillow is a helpful tool, it may not be more accurate than the owners' own estimates of value.
To read the Appraisal Journal's Winter 2010 cover article on Zillow estimates of value, click here: Zillow's Estimates of Single-Family Housing Values.
http://lumlibrary.org/webpac/pdf/TAJ2010/TAJW10pg_026-032T.pdf
With property values well below where they were three years ago, borrowers are increasingly trying to negotiate reductions in their loan balances. But doing so could trigger a substantial tax hit on any forgiveness of debt. The tax-liability issue became fodder for headlines in recent weeks Read Full Story
WASHINGTON | Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.
The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who were expecting a 5 percent increase over December's pace.
While winter storms were partly to blame, home sales have fallen for three straight months despite sweeping government support. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.
"There is no doubt that January and February are going to be messy months for housing, given the severe weather conditions, but that doesn't take away from the fact that the housing sector has taken another big step back, even with the government aid," Jennifer Lee, a senior economist at BMO Capital Markets, said in a research note.
A rebound in housing in the second half of last year helped to boost overall economic growth back into positive territory. Each new home built, for example, creates about three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.
However, economists are worried that if housing falters in coming months, that will be one more headwind the recovery will have to overcome. The decline to an annual purchase rate of 309,000 in January was 6 percent below the previous record low set in January last year.
"I don't think we are going to have a double-dip recession in housing, but it is going to take us longer to recover from a very deep hole," said Patrick Newport, an economist at IHS Global Insight.
January's weakness was evident in all regions except the Midwest, where sales posted a 2.1 percent increase. Sales were down 35 percent in the Northeast, 12 percent in the West and almost 10 percent in the South.
The drop in sales pushed the median sales price down to $203,500. That was down 5.6 percent from December's median sales price of $215,600, and off 2.4 percent from year-ago prices.
New home sales for all of 2009 had fallen by almost 23 percent to 374,000, the worst year on record. The National Association of Home Builders is forecasting that sales will rise to more than 500,000 sales this year, an improvement from 2009 but still far below the boom years of 2003 through 2006 when builders clocked more than 1 million new home sales per year.
January's data increased concerns that the housing rebound could falter in coming months as the government withdraws the support it has used to try to bolster the housing market. The real estate crisis was the epicenter of the country's overall recession, the worst downturn since the 1930s.
The Federal Reserve has been holding down mortgage rates by buying $1.25 trillion in mortgage-backed securities, but that program is set to end March 31. And temporary tax credits to bolster home buying are scheduled to expire at the end of April.
Federal Reserve Chairman Ben Bernanke told Congress Wednesday that by holding the securities on its books the central bank would continue to help keep mortgage rates low. Economists believe that as long as the Fed owns the securities it will reduce the overall supply and thus help support the price.
Bernanke, delivering the Fed's twice-a-year economic report to Congress, said that the Fed's record low interest rates were still needed to attack high unemployment levels and help the overall economy recover.
a la mode's "Appraisal Fee Reference™ "is the authoritative guide to median and average fees observed between clients and independent fee appraisers when specifying the Uniform Residential Appraisal Report, or URAR. It provides statistical data on hundreds of thousands of URAR transactions at the national, regional, and state levels, covering all 3,221 counties and local administrative districts in the fifty United States, the District of Columbia, Puerto Rico, and Guam."
"The transactions we observe between lender clients and appraisal clients using Mercury Network's technology backbone form the basis of the fee data reported here. The analysis excludes reports ordered by known appraisal management companies, or AMCs, in order to determine the customary fees paid to independent fee appraisers when they are engaged directly, without middlemen."
Monthly reports will be available. Data is from a la mode's Mercury Network, used for appraisal ordering "
Click here for more information and to download the report. Registration required for downloads.
http://www.mercuryvmp.com/analytics/reports
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An analysis conducted by the Appraisal Institute of failed banks shows that nearly two-thirds had been previously cited by federal bank examiners or had ongoing appraisal administration problems, highlighting a significant weakness in many struggling financial institutions.
"An analysis conducted by the Appraisal Institute of failed banks shows that nearly two-thirds had been previously cited by federal bank examiners or had ongoing appraisal administration problems, highlighting a significant weakness in many struggling financial institutions."
Click here to read the full story and download the report
Here's a quote:
"A typical scenario begins with a commercial appraiser who sues to collect an unpaid fee from a lender for whom he's done several appraisals in the last few years. In the intervening months, the loan went into default. The bank sues right back and files a cross-complaint for negligence claiming that the appraiser overvalued the property and alleging that the bank incurred 50 times more damage than the appraiser's unpaid fee."
"We've also seen commercial appraisers who rendered expert witness services have significant unpaid fees at the end of a litigation. When the final bill remains unpaid, the expert witness appraiser sues the client for the fees. The client sues back blaming the appraiser for an unsatisfying result in the litigation. (When your client's already in litigation -- that's a client who is more predisposed to suing you.)"
Click here to read the full comments
ASA, along with the Appraisal Institute (AI), the American Society of Farm Managers and Rural Appraisers (ASFMRA), and the National Association of Independent Fee Appraisers (NAIFA) sent a letter on Jan. 27 to Maryland Delegate Frank M. Conaway, Jr., opposing a bill he introduced that would make it a misdemeanor for an appraiser to “provide real estate appraisal services if the…appraiser knows the asking price or the selling price of the real estate being appraised at the time the appraisal is conducted.” Penalties would range from a $500 fine for a first offense up to a $5,000 fine and 90-day license suspension for a third offense. The bill, House Bill 42, would also provide for an additional civil money penalty of up to $5,000 per violation that could be imposed by the Maryland State Commission of Real Estate Appraisers and Home Inspectors.
The letter advises Delegate Conaway that his bill is “in direct violation of USPAP,” and that the legislation would “effectively scuttle the sale of any Maryland residential property” in a federally related transaction. In addition, ASA and its partners emphasize that “appraisers are among the most highly regulated and accountable professions in the United States,” pointing to several layers of federal, state, and designating organization regulations. This position was bolstered by the fiscal note to HB 42, which suggests the “bill’s provisions conflict with current practice under the Uniform Standards of Professional Appraisal Practice.”
LAKELAND | Twila Jarvis always thought foreclosures happened to other people, not to her.
It couldn't happen when you've worked hard and have been a responsible homeowner for virtually your entire adult life, she reasoned.
Yet earlier this month, Jarvis found herself packing the contents of her mobile home at Lakeland Harbor. She had fallen short on payments after two years without steady work.
Jarvis' home was one of 10,747 foreclosure cases filed last year in Polk County, surpassing the previous year's record of 9,467. The Lakeland metro area had the nation's 18th-highest foreclosure rate, according to data from the RealtyTrac firm.
"I've never been in a situation like this,'' the 61-year-old Jarvis said. "Ever. I'm not used to being helpless."
Jarvis has mostly survived on odd jobs and her military-widow benefits. "It's horrible."
Nationwide, a record 2.8 million properties received foreclosure notices last year, up 21 percent from 2008. Florida had the nation's second-highest foreclosure total, behind California.
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