The following is a statement by National Association of Realtors® President Charles McMillan:
“NAR and our 1.2 million members are pleased that the Federal Housing Finance Agency has instructed Fannie Mae and Freddie Mac to take action to clarify confusion over the new Home Valuation Code of Conduct for home appraisers implemented this past May.
“Our members were experiencing delayed and lost sales because of poor appraisals conducted often by inexperienced appraisers who were not familiar with the area. The ramifications were so great to our members and to the housing industry that I personally met with the New York Attorney General’s office and with the head of the FHFA to share our concerns.
“In those meetings I shared an NAR survey that found 76 percent of our members, representing both buyers and sellers, had experienced an increase in appraisal time since the new HVCC rules were enacted. Similarly, 71 percent of Realtors® noted an increase in the use of appraisers who were not from the local area. These factors often adversely affected the sale or the sales process, which occasionally resulted in the loss of a sale or a homeowner’s inability to refinance into today’s lower rates. I expressed our serious concern in the meetings.
“We took this information, and our concerns, to those organizations responsible for the changes and we are pleased that they listened. Today Fannie Mae and Freddie Mac issued clear guidance on two very important points that we raised in our meetings. First, the guidance states that lenders should use appraisers who have clear experience in the geographic area. Second, it clarifies that appraisers are not prohibited from talking to real estate agents.
“NAR has asked Congress and the FHFA to immediately implement an 18-month moratorium on the new HVCC rules to further address unintended consequences of this new rule. We will continue to push for this, but are pleased that this first step was taken today.”
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Thursday, July 30, 2009
Wednesday, July 29, 2009
New Home Sales Rise 11% in June
July 27, 2009 - Sales of newly built, single-family homes rose 11 percent in June to a seasonally adjusted annual rate of 384,000 units, according to U.S. Commerce Department numbers released today. Coming on the heels of an upwardly revised number for May, the gain marks a third consecutive month of improved sales activity.
“Today’s report is good news that indicates the nation’s housing market may be in the process of turning the corner,” said Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “That said, the key to moving us out of recession is to get Americans back to work. Congress and the Administration should know that housing can be a significant generator of good jobs. We need to make housing a priority in the recovery process, otherwise we could continue to bounce along a bottom for some time.”
“The big gain in home sales last month was reflected in three out of four regions and helped shrink the inventory of new homes for sale to its lowest level in years,” said NAHB Chief Economist David Crowe. “Even so, the pace of home sales in June 2009 was still more than 21 percent off the pace of sales in the same month last year, so we still have quite a way to go. The concern now is that complicating factors – particularly job losses, appraisal issues that are torpedoing more than a quarter of new-home sales, and the impending expiration of the first-time buyer tax credit – threaten to stifle the positive momentum.”
The number of newly built homes on the market declined for a 26th consecutive month in June, falling 4.1 percent to 281,000 units. This marks a relatively thin 8.8-month supply at the current sales pace.
New-home sales rose by double-digits in the Northeast (29.2 percent), Midwest (43.1 percent), and West (22.6 percent) in June. Meanwhile, sales activity declined 5.3 percent in the South, which is the country’s largest housing market.
“Today’s report is good news that indicates the nation’s housing market may be in the process of turning the corner,” said Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “That said, the key to moving us out of recession is to get Americans back to work. Congress and the Administration should know that housing can be a significant generator of good jobs. We need to make housing a priority in the recovery process, otherwise we could continue to bounce along a bottom for some time.”
“The big gain in home sales last month was reflected in three out of four regions and helped shrink the inventory of new homes for sale to its lowest level in years,” said NAHB Chief Economist David Crowe. “Even so, the pace of home sales in June 2009 was still more than 21 percent off the pace of sales in the same month last year, so we still have quite a way to go. The concern now is that complicating factors – particularly job losses, appraisal issues that are torpedoing more than a quarter of new-home sales, and the impending expiration of the first-time buyer tax credit – threaten to stifle the positive momentum.”
The number of newly built homes on the market declined for a 26th consecutive month in June, falling 4.1 percent to 281,000 units. This marks a relatively thin 8.8-month supply at the current sales pace.
New-home sales rose by double-digits in the Northeast (29.2 percent), Midwest (43.1 percent), and West (22.6 percent) in June. Meanwhile, sales activity declined 5.3 percent in the South, which is the country’s largest housing market.
Thursday, July 23, 2009
Existing-Home Sales Up Again
Washington, July 23, 2009
Existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.6 percent to a seasonally adjusted annual rate1 of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.90 million-unit level in June 2008.
Lawrence Yun, NAR chief economist, is hopeful about the gain. “The increase in existing-home sales occurred in all major regions of the country,” he said. “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions. Despite the rise in closed transactions, many Realtors® are reporting lost sales as a result of new appraisal standards that went into effect May 1 of this year.”
A June survey of NAR members shows 37 percent experienced at least one lost sale as a result of the new Home Valuation Code of Conduct, with seven out of 10 reporting an increased use of out-of-area appraisers. Seventy percent of NAR appraiser members said consumers were paying higher fees, while 85 percent report a perceived reduction in appraisal quality.
“Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations and access to local data, who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales,” Yun said. “In many cases, normal homes are being compared with distressed homes sold at a discount, which often are in subpar condition – this is causing real harm to both buyers and sellers.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.42 percent in June from 4.86 percent in May; the rate was 6.32 percent in June 2008. Mortgage interest rates have trended lower in recent weeks.
Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4-month supply2 at the current sales pace, down from a 9.8-month supply in May. Raw inventory totals are 14.9 percent below a year ago.
“This is another hopeful sign – if we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” Yun said.
An NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are very good opportunities. “Despite some of the challenges, the housing market continues to demonstrate signs of recovery,” he said. “The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it’s taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the December 1 expiration date. As a consequence, consumers need the expertise of Realtors® more than ever to navigate both the obstacles and opportunities in today’s market.”
The national median existing-home price3 for all housing types was $181,800 in June, which is 15.4 percent below June 2008. Distressed properties, which accounted for 31 percent of sales in June, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2 percent higher than the 4.31 million-unit pace a year ago. The median existing single-family home price was $181,600 in June, which is 15.0 percent below June 2008.
Existing condominium and co-op sales jumped 14.0 percent to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May, but are 3.1 percent below the 588,000-unit level in June 2008. The median existing condo price4 was $183,300 in June, down 18.9 percent from a year ago.
Regionally, existing-home sales in the Northeast rose 2.5 percent to an annual pace of 820,000 in June, but are 4.7 percent below a year ago. The median price in the Northeast was $249,400, down 5.9 percent from June 2008.
Existing-home sales in the Midwest increased 0.9 percent in June to a level of 1.10 million but are 1.8 percent lower than June 2008. The median price in the Midwest was $157,000, which is 9.1 percent below a year ago.
In the South, existing-home sales rose 4.0 percent to an annual pace of 1.81 million in June but are 3.7 percent below a year ago. The median price in the South was $163,200, down 11.9 percent from June 2008.
Existing-home sales in the West improved by 6.4 percent to an annual rate of 1.16 million in June, and are 11.5 percent higher than June 2008. The median price in the West was $214,800, which is 24.9 percent below a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.6 percent to a seasonally adjusted annual rate1 of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.90 million-unit level in June 2008.
Lawrence Yun, NAR chief economist, is hopeful about the gain. “The increase in existing-home sales occurred in all major regions of the country,” he said. “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions. Despite the rise in closed transactions, many Realtors® are reporting lost sales as a result of new appraisal standards that went into effect May 1 of this year.”
A June survey of NAR members shows 37 percent experienced at least one lost sale as a result of the new Home Valuation Code of Conduct, with seven out of 10 reporting an increased use of out-of-area appraisers. Seventy percent of NAR appraiser members said consumers were paying higher fees, while 85 percent report a perceived reduction in appraisal quality.
“Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations and access to local data, who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales,” Yun said. “In many cases, normal homes are being compared with distressed homes sold at a discount, which often are in subpar condition – this is causing real harm to both buyers and sellers.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.42 percent in June from 4.86 percent in May; the rate was 6.32 percent in June 2008. Mortgage interest rates have trended lower in recent weeks.
Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4-month supply2 at the current sales pace, down from a 9.8-month supply in May. Raw inventory totals are 14.9 percent below a year ago.
“This is another hopeful sign – if we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” Yun said.
An NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are very good opportunities. “Despite some of the challenges, the housing market continues to demonstrate signs of recovery,” he said. “The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it’s taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the December 1 expiration date. As a consequence, consumers need the expertise of Realtors® more than ever to navigate both the obstacles and opportunities in today’s market.”
The national median existing-home price3 for all housing types was $181,800 in June, which is 15.4 percent below June 2008. Distressed properties, which accounted for 31 percent of sales in June, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2 percent higher than the 4.31 million-unit pace a year ago. The median existing single-family home price was $181,600 in June, which is 15.0 percent below June 2008.
Existing condominium and co-op sales jumped 14.0 percent to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May, but are 3.1 percent below the 588,000-unit level in June 2008. The median existing condo price4 was $183,300 in June, down 18.9 percent from a year ago.
Regionally, existing-home sales in the Northeast rose 2.5 percent to an annual pace of 820,000 in June, but are 4.7 percent below a year ago. The median price in the Northeast was $249,400, down 5.9 percent from June 2008.
Existing-home sales in the Midwest increased 0.9 percent in June to a level of 1.10 million but are 1.8 percent lower than June 2008. The median price in the Midwest was $157,000, which is 9.1 percent below a year ago.
In the South, existing-home sales rose 4.0 percent to an annual pace of 1.81 million in June but are 3.7 percent below a year ago. The median price in the South was $163,200, down 11.9 percent from June 2008.
Existing-home sales in the West improved by 6.4 percent to an annual rate of 1.16 million in June, and are 11.5 percent higher than June 2008. The median price in the West was $214,800, which is 24.9 percent below a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Tuesday, July 21, 2009
Signs of Stability: Market Shows 12th Consecutive Monthly Decrease in Number of Listed Homes
RISMEDIA, July 21, 2009-
The U.S. housing market continues to show signs of stabilization with a drop in the number of Multiple Listing Service (MLS)-listed homes for the twelfth consecutive month. The number of single family homes and condos listed for sale according to MLS data decreased in June 2009 from May by 2.1%, bringing the total number of active listings in 28 major U.S. markets to 696,858, according to national real estate brokerage ZipRealty.
Additionally, ZipRealty tracked an increase in the median list price in the 28 markets to $270,440 in June from $270,027 in May. Despite the sequential increase the median list price still decreased 2.72 percent when compared to June 2008.
Other highlights from ZipRealty’s Housing Inventory Index, compiled from local Multiple Listing Service (MLS) data, for June 2009 include:
-Las Vegas, Los Angeles and Phoenix all recorded a decline in inventory which may have contributed to some homes receiving multiple bids.-Median list prices have flattened or increased in Las Vegas, Phoenix, San Francisco Bay Area and Los Angeles, pointing toward stabilization in those areas.-While South Florida has substantially fewer homes for sale than last summer, housing inventory there is plentiful. For example, Miami has 27.1% more homes listed for sale compared to Los Angeles even though Miami has a significantly smaller population than Los Angeles.-California is seeing the most dramatic inventory declines with massive year-over-year inventory reductions: Los Angeles saw a 53.9% decrease year-over-year while Bakersfield/Fresno tracked a 56.2% decrease.-Several major metros that have been hit hardest by foreclosures had limited inventory in June 2009, which is at levels not seen or experienced in years.
“‘Affordability’ has been the buzz word in real estate this summer, and with a significant number of listed homes bank-owned, we’re seeing instances in some areas of banks dropping prices to generate more offers from buyers,” said ZipRealty President and CEO Patrick Lashinsky. “If the number of home listings continue declining and buyer interest and activity remains strong, we should see sales prices and home values increase as we head into the fall.”
For more information, visit www.ziprealty.com.
The U.S. housing market continues to show signs of stabilization with a drop in the number of Multiple Listing Service (MLS)-listed homes for the twelfth consecutive month. The number of single family homes and condos listed for sale according to MLS data decreased in June 2009 from May by 2.1%, bringing the total number of active listings in 28 major U.S. markets to 696,858, according to national real estate brokerage ZipRealty.
Additionally, ZipRealty tracked an increase in the median list price in the 28 markets to $270,440 in June from $270,027 in May. Despite the sequential increase the median list price still decreased 2.72 percent when compared to June 2008.
Other highlights from ZipRealty’s Housing Inventory Index, compiled from local Multiple Listing Service (MLS) data, for June 2009 include:
-Las Vegas, Los Angeles and Phoenix all recorded a decline in inventory which may have contributed to some homes receiving multiple bids.-Median list prices have flattened or increased in Las Vegas, Phoenix, San Francisco Bay Area and Los Angeles, pointing toward stabilization in those areas.-While South Florida has substantially fewer homes for sale than last summer, housing inventory there is plentiful. For example, Miami has 27.1% more homes listed for sale compared to Los Angeles even though Miami has a significantly smaller population than Los Angeles.-California is seeing the most dramatic inventory declines with massive year-over-year inventory reductions: Los Angeles saw a 53.9% decrease year-over-year while Bakersfield/Fresno tracked a 56.2% decrease.-Several major metros that have been hit hardest by foreclosures had limited inventory in June 2009, which is at levels not seen or experienced in years.
“‘Affordability’ has been the buzz word in real estate this summer, and with a significant number of listed homes bank-owned, we’re seeing instances in some areas of banks dropping prices to generate more offers from buyers,” said ZipRealty President and CEO Patrick Lashinsky. “If the number of home listings continue declining and buyer interest and activity remains strong, we should see sales prices and home values increase as we head into the fall.”
For more information, visit www.ziprealty.com.
Monday, July 20, 2009
Keeping You Updated on the Market
MARKET RECAP:
The missing piece to the housing-market puzzle has been put in place, thanks to the new-home market finally showing signs of sustained recovery. Homebuilders unexpectedly broke ground on more homes in June, as construction of single-family projects jumped by the most since 2004. The 3.6% increase brought starts to an annual rate of 582,000 units, the highest level since November, and followed a 562,000 pace in May. Even more encouraging, building permits, a sign of future construction, rose the most in the past 12 months.
Not surprisingly, home builders are feeling a little more upbeat these days. Sentiment in July jumped to its highest level since September 2008, based on the National Association of Home Builders/Wells Fargo Housing Market Index, which posted a 17 reading, a two-point improvement over June's reading.
It's no secret that lower borrowing costs and low prices are making houses more affordable. Speaking of the former, they continue to improve. The benchmark 30-year fixed-rate mortgage inched lower to average 5.58% last week, according to Bankrate.com's national survey of large lenders, while the benchmark 15-year fixed-rate mortgage remained unchanged, averaging 4.93%. That fact that rates held steady is good news, considering that consumer and producer prices spiked higher than expected last month on rising energy costs.
Money to Spare!
All that talk about TARP recipients withholding their bailout funds appears to be just that – talk. Lending among the top 21 recipients of bailout funds through the Capital Purchase Program within the Treasury Department’s Troubled Asset Relief Program posted growth in May, with mortgage originations rising by 7% over April’s figures.
Furthermore, there is more money available to lend to more people. A few weeks ago we mentioned Fannie Mae's and Freddie Mac's home affordable refinance program. It's worth plugging again. The HARP affects millions of homeowners currently in Fannie Mae or Freddie Mac loans and permits first-mortgage loan amounts up to 125% of the home's current appraised value, with and without a second mortgage already attached. In addition, closing costs and as many as two payments can be rolled into the loan and up to $2,000 can be taken out of the mortgage.
More funds are available through use of the highly promoted $8,000 first-time home buyer's credit, though confusion among the public remains high, according to a recent RE/MAX survey. A leading confusion is what happens to the full $8,000 if a qualified individual or couple pays less than $8,000 in federal taxes? The answer is straightforward: They get a refund check for the difference. Another confusing aspect to many potential home buyers is the possibility of repayment. An earlier version of the first-time buyer tax credit did have to be repaid, meaning that it functioned like an interest-free loan. The updated version, approved this year, eliminates the need for repayment unless the home is sold within three years.
The missing piece to the housing-market puzzle has been put in place, thanks to the new-home market finally showing signs of sustained recovery. Homebuilders unexpectedly broke ground on more homes in June, as construction of single-family projects jumped by the most since 2004. The 3.6% increase brought starts to an annual rate of 582,000 units, the highest level since November, and followed a 562,000 pace in May. Even more encouraging, building permits, a sign of future construction, rose the most in the past 12 months.
Not surprisingly, home builders are feeling a little more upbeat these days. Sentiment in July jumped to its highest level since September 2008, based on the National Association of Home Builders/Wells Fargo Housing Market Index, which posted a 17 reading, a two-point improvement over June's reading.
It's no secret that lower borrowing costs and low prices are making houses more affordable. Speaking of the former, they continue to improve. The benchmark 30-year fixed-rate mortgage inched lower to average 5.58% last week, according to Bankrate.com's national survey of large lenders, while the benchmark 15-year fixed-rate mortgage remained unchanged, averaging 4.93%. That fact that rates held steady is good news, considering that consumer and producer prices spiked higher than expected last month on rising energy costs.
Money to Spare!
All that talk about TARP recipients withholding their bailout funds appears to be just that – talk. Lending among the top 21 recipients of bailout funds through the Capital Purchase Program within the Treasury Department’s Troubled Asset Relief Program posted growth in May, with mortgage originations rising by 7% over April’s figures.
Furthermore, there is more money available to lend to more people. A few weeks ago we mentioned Fannie Mae's and Freddie Mac's home affordable refinance program. It's worth plugging again. The HARP affects millions of homeowners currently in Fannie Mae or Freddie Mac loans and permits first-mortgage loan amounts up to 125% of the home's current appraised value, with and without a second mortgage already attached. In addition, closing costs and as many as two payments can be rolled into the loan and up to $2,000 can be taken out of the mortgage.
More funds are available through use of the highly promoted $8,000 first-time home buyer's credit, though confusion among the public remains high, according to a recent RE/MAX survey. A leading confusion is what happens to the full $8,000 if a qualified individual or couple pays less than $8,000 in federal taxes? The answer is straightforward: They get a refund check for the difference. Another confusing aspect to many potential home buyers is the possibility of repayment. An earlier version of the first-time buyer tax credit did have to be repaid, meaning that it functioned like an interest-free loan. The updated version, approved this year, eliminates the need for repayment unless the home is sold within three years.
Friday, July 17, 2009
Real Estate Today : NAR is Bringing Real Estate to Radio
Real Estate Today, an-NAR produced, national radio show, debuted in February 2009 and is currently broadcast on more than 25 stations across the country. On Saturday, July 11, 2009, the show first aired on 77WABC in New York City, the number-one radio market in the nation.
The show also airs nationwide on XM and Sirius Satellite Radio, and worldwide at www.RETRadio.com – visit the site any time to listen to current or past programs.
Real Estate Today covers the benefits and challenges of homeownership, from expert advice on buying and selling, to remodeling and landscaping, to the state of the current market and home financing issues.
The show's interactive experience offers listeners an opportunity to exchange information and learn from some of the nation’s most recognized experts on a variety of real estate related topics such as buying and selling homes, obtaining mortgages, seasonal markets, home improvements and more. Guests often include key lawmakers, NAR leadership, staging and remodeling experts, and respected members of the national media.
Hosted by award-winning radio broadcaster Gil Gross, the show offers a fast-paced format that includes the week's top real estate news, listener call-ins, field reports and customizable segments on local market conditions.
The show also airs nationwide on XM and Sirius Satellite Radio, and worldwide at www.RETRadio.com – visit the site any time to listen to current or past programs.
Real Estate Today covers the benefits and challenges of homeownership, from expert advice on buying and selling, to remodeling and landscaping, to the state of the current market and home financing issues.
The show's interactive experience offers listeners an opportunity to exchange information and learn from some of the nation’s most recognized experts on a variety of real estate related topics such as buying and selling homes, obtaining mortgages, seasonal markets, home improvements and more. Guests often include key lawmakers, NAR leadership, staging and remodeling experts, and respected members of the national media.
Hosted by award-winning radio broadcaster Gil Gross, the show offers a fast-paced format that includes the week's top real estate news, listener call-ins, field reports and customizable segments on local market conditions.
Wednesday, July 15, 2009
Faulty Appraisal Process Harming Housing and the Economy
Twenty-six percent of builders are seeing signed sales contracts fall through the cracks because appraisals on their homes are coming in below the contract sales price, according to a nationwide survey conducted by the National Association of Home Builders (NAHB)."Home builders are increasingly concerned that inappropriate appraisal practices are needlessly driving down home values. This, in turn, is slowing new home sales, causing more workers to lose their jobs and putting a drag on the economic recovery," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. The survey showed that nearly 60 percent of the builders are reporting that inadequate appraisals are causing serious problems in the market, with the biggest problem being comparables of new single-family homes that are too often based on foreclosures and distressed sales. "Lost home sales are killing jobs, deepening the housing slump and hurting local economic activity," said Robson, adding that construction of 100 single-family homes adds 324 local jobs, $21.1 million in local income and $2.2 million in taxes and other revenue for local governments with the first year. Of those who are reporting appraisal problems, 54 percent said that the appraisal amount was actually less than the cost of building the home.Robson said that foreclosure and distressed sales should not be used without appropriate adjustments to reflect the expenditure that would be required to bring them up to the condition and quality that represents a reasonable alternative for the home buyer.In what Robson called a step in the right direction, Freddie Mac on July 10 issued a Guide Bulletin publicly stating that it does not require appraisers to use Real Estate Owned, foreclosures or short sales in selecting comparable sales to provide an accurate opinion on home values based on market data. Freddie further stipulated that appraisers must "certify that comparable sales chosen are those most similar to the subject property."While the appraisal practices currently in use are taking a heavy toll on the housing market, they are also further exacerbating economic distress by affecting the availability of acquisition, development and construction (AD&C) credit.Falling appraised values for land and subdivisions under development have led some financial institutions to stop lending to developers and builders, to demand additional equity and even to call performing loans, Robson said."If the spigot for housing production loans is cut off, there can be no housing recovery, and this has major implications for the economy as a whole," said Robson.NAHB is calling on housing and federal financial regulators to adopt clear, concise regulatory guidance that will allow appraisers to develop realistic valuations based on sales that are truly comparable.In neighborhoods where the comps include a large number of short sales or foreclosures, appraisers should have the option of expanding the geographic area or extending the time frame for eligible sales to get a more representative picture of the value of homes sold in the area."You can't compare a well-constructed new home with a foreclosed property that has been vacant for months and was probably neglected for a long time before it was vacated," said Robson. "Acting now to establish proper regulatory guidelines for those who use distressed or foreclosed properties as comps when determining home values will help to stabilize home prices and home sales and put people back to work."
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