Appraisers say that it is becoming increasingly harder pinpoint what a home is worth. With a flood of inventory hitting the market from rising foreclosures appraisals are coming in low. Roughly 40 percent of all home sales in 2009 were foreclosures or short sales, meaning the property sold for less than the mortgage. Appraisers they are setting home values accord to the reality of the market and some appraisers are comparing distressed properties to brand-new homes.
Adding to the problem is that many real estate appraisers are now hired under new industry rules. Designed to limit conflicts of interest that can bias an appraisal. Appraisers are hired from outside the area and don't have the local knowledge to find homes that can be a better benchmark for regular homes.
According to analysts and economists there may be another wave of potential home foreclosures in 2010 which could cause home prices to fall another 5% to 10% before the market stabilizes. One reason for more foreclosures is that in 2009 many lenders were under pressure from the Obama Administration to postpone repossessions until loan modifications could be made. The postponed foreclosures will now be done in 2010.
Low mortgage rates have helped millions of homeowners reduce payments on their existing homes. The combination of cheap mortgages and lower prices has pushed the “affordability” index close to its highest level in nearly two decades, according to the National Association of Home Builders.The sales of existing homes picked up with a big boost from the extended tax credit. The hope is that by this spring, the housing market and economy will begin showing sustainable growth without the help of the government. The real estate market is highly seasonal, so the most relevant statistic isn't the month-to-month trend but the year-to-year trend.
For more information on the real estate market contact the Andrea Crossman Group.