Category Archives: Home Values

Home Values Compared to the Peak of 2006-2007

by The KCM Crew

Home Values Compared to the Peak of 2006-2007

There is no doubt that the housing market has recovered from the meltdown that occurred just a few short years ago. However, in some states home values still have not returned to the prices we saw in 2006 and 2007.

Here is a breakdown showing where current prices are in each state as compared to peak prices.


HPI Price Since Peak



Who says now is a great time to buy a house?

Wall St. Journal & Forbes: “It’s time to buy a home”

We believe very strongly that now is the time to buy a home. Some will say we are just saying this to create real estate transactions and commissions. Because of that, today we will quote what those outside the real estate profession are saying to the people who look to them for financial advice.

The Wall Street Journal

Last week, in an article entitled It’s Time to Buy That House, the WSJ told their subscribers:

“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”

In an article two weeks ago, (the on-line blog for WSJ) told their readers:

“Now could be the best time in history to buy a home.”

In a report to their subscribers, Capital Economics reported that:

“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.”

Why is this important? Last week, Forbes explained to their readers:

“If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).”

They went on to explain the advantages of homeownership during retirement:

“Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement…

At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference not to mention the impact of NOT having to pay a mortgage.  How much less would you have to save for retirement if you didn’t pay the mortgage?”

Bottom Line

When the iconic financial newspaper and the iconic financial magazine say that it now makes financial sense to purchase a house, perhaps it’s time to buy a home.

Source:  KCM

13,780 homes sold yesterday

To all those who have declared the real estate market dead, we want you to know that over 13,780 houses sold yesterday, 13,780 will sell today and 13,780 will sell tomorrow.


That is the average number of homes that sell each and every day in this country according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. NAR reported that sales had increased 7.7% over the month before and 18.6% over the year before. According to the report, annualized sales now stand at 5.03 million. Divide that number by 365 (days in a year) and we can see that, on average, well over 13,000 homes sell every day.

We realize that these numbers are below the record for homes sold in 2006. We also know that we may never see those numbers again (and that is probably a good thing). But to say that the current real estate market is dead or that houses are not selling is totally inaccurate. We have over 13,000 pieces of evidence to prove that.

What about those foreclosures still on the books…

Windows of Opportunity Beginning to Close for Sellers

We have suggested that sellers who need to sell within the next 18 months had a ‘window of opportunity’ to sell at higher prices. They needed to put their houses up for sale immediately before a flood of distressed properties were introduced to the market. This window is beginning to close. The paperwork challenges faced by banks that caused a delay in the foreclosure process over the last ten months are starting to clear. It seems that these houses are now coming to the market.

RealtyTrac reported in their September Foreclosure Report:

“Default notices were filed for the first time on a  total of 78,880 U.S. properties in August, a nine-month high and a 33 percent  increase from July — the biggest month-over-month increase since August 2007.”

James Saccacio, chief executive officer of RealtyTrac explained:

“The big increase in new foreclosure actions may be a signal that lenders are starting to push through some of the foreclosures delayed by robo-signing and other documentation problems. It also foreshadows more bank repossessions in the coming months as these new foreclosures make their way through the process.”

Diana Olick, of CNBC’s Realty Check quoted a spokesperson for Bank of America:

“ Strong gains like that from July to August demonstrate our progress – primarily in judicial states — clearing more volume to advance to foreclosure once we pass the numerous quality controls we have in place and exhaust all options with homeowners.”

The impact will be felt from coast to coast. New Jersey Superior Court Judge Mary Jacobson recently cleared the way for the top banks to resume foreclosures in the state. The impact this will have on the number of distressed properties can be clearly seen in these statistics reported by Housing Wire:

“In October, New Jersey had the 24th highest foreclosure rate in the country, with servicers filing roughly 5,200 foreclosures that month, according to RealtyTrac. By July, the Garden State’s foreclosure rate dropped to 42nd with just 1,112 filings last month.”

ForeclosureRadar, which handles research in California, Oregon, Washington, Arizona and Nevada, last week reported:

“Foreclosure starts rose in every state.”

Bottom Line

If you currently are selling your home, price it to compel a buyer to purchase it now. Waiting will cause you to compete with an increased number of distressed properties which sell at dramatically discounted prices.



Home Valuation – An Expert Appraiser’s View

Valuing real estate has never been an easy task for an appraiser. In the past it was difficult keeping up with steadily increasing values. Today, we must stay on top of every sale, dissecting it to determine if it is arms length, weeding through REO, Short Sales and other various distressed properties. Sales are not easy to come by these days and so many are tainted it is often impossible to arrive at a truly meaningful and supportable value. If that is not enough, federal appraisal guidelines have changed so much, I often feel I have both hands tied behind my back.

The good news is that we are seeing some stabilization in the Metro Atlanta real estate market. The inventory of homes for sale has dropped and the number of foreclosed properties has leveled off a bit. New home construction is happening again. This is due to the huge drop in existing inventory of new homes and the unprecedented decline in the value of vacant land and developed lots.  This drop is just enough to allow a builder to be profitable when building a new home.

The new homes we are seeing going up are somewhat more modest than those of recent past. Builders are reluctant to build enormous houses on speculation and buyers have had a dose of reality and are looking for smaller, less flashy homes. I feel this sector of the market, new home construction, will grow the most over the next 12 months. This should increase jobs which will bolster the economy as well as the real estate market.

Appraisal regulations are easing a bit as we transition from HVCC rules to the Dodd Frank Act. Appraisers will be more fairly treated and receive “reasonable compensation”. One of the problems for the appraisal business was the rise of the Appraisal Management Companies (AMC’s) which sought the appraiser who would do the job the fastest and the cheapest. This was most often not in the best interest of the real estate market. Appraisers were rushing through assignments and justifying it based on the extremely low fees they were paid. This lead to sloppy work and inaccurate appraisals. With the help of this recent legislation, appraisers are now given the time to accurately analyze the market and complete a competent appraisal. The problem still remains however, that too many appraisal management companies do not have sophisticated assigning software to get the job to the appraiser with the most “geographical competence”.

The best way to protect yourself when listing your home is to consult with a real estate professional and hire the most competent appraiser in the area to perform a pre-listing or what we call a consultation appraisal. Our firm offers a product where we will come to the house and perform a thorough appraisal inspection. We will complete our appraisal report and review it with you and your agent. This will allow you and your agent to choose the most appropriate list price for your home. Our service does not end there. We are your consultant all the way through closing. Most importantly, we will be there to defend our appraisal and help you in the event that the bank appraisal comes in low. We will write the letter of rebuttal to the lender – doing it in such as way as to outline all the deficiencies in the bank appraisal and offering concrete evidence and additional sales to support our value.

We have seen the number of low appraisals on good arm’s length purchases skyrocket over the past 12-18 months. This is due to multiple issues. First is the new regulations which sever contact between loan officer and appraiser – many appraisers now use this as a shield to allow themselves to be conservative. But why would they want to be conservative? The number of lawsuits by lenders of appraisers has risen at a staggering rate. Furthermore, underwriters are feeling the pressure of the mortgage meltdown and are scrutinizing every appraisal. It is much easier for me to come in low – less work and less grief from the underwriter. This infuriates me – appraisers should never have an effect on the market. Our job is not to DETERMINE market value but to INTERPRET market value. If there is a true arm’s length purchase agreement between a willing and knowledgeable buyer and a willing and knowledgeable seller – that is market value! That does not mean that we can always produce an appraisal which will justify it to the lender but the appraiser should make every attempt to let the market move on its own accord.  I spend the majority of my time working with agents who have not hired us to do the consultation on the front end and end up with a low appraisal on the back end. Over nine times out of ten the appraiser is wrong and the sales price is justified. The problem is that the “cat is out of the bag”. The underwriter has the appraisal and usually the appraiser is too stubborn or incompetent to reason with to correct the appraisal. We have a 99% success rate with our consultation appraisal service and less than a 50% success rate when I come in after the bank appraisal has been completed. Appraisers are not allowed to revise their appraisal reports – even if I get them to agree that they were wrong – unless the underwriter gives them permission. On top of all this, a low appraisal is going to create significant problems with the buyer. They either want to get out of the deal or demand a reduction.

The ultimate goal here is to help the market recover on its own. If a low appraisal is not resolved everyone loses – the buyer, the seller, the agents and most importantly the market – because either the deal dies or the seller reluctantly reduces the sales price and that neighborhood just took two steps backwards!

In summary, hire a real estate professional that knows the market, and consider a “pre-listing” appraisal to protect your investment.