A recent analysis by the Appraisal Institute says the number of people working as appraisers has dropped 15 percent since 2007. It's also anticipated to decrease another 25 percent to 35 percent over the next decade as a result of retirements and fewer entrants into the profession.
Given information like that, is anyone finding that real estate appraisals seem to be lagging behind the recent rise in the housing market?
Part of the appraisal process requires comparing the property that is selling with comparable sales in the same area.
The housing market has seen an uptick since December and it seems to me appraisers have nothing new with which to compare.
As a result, banks — looking at the appraisals — are lending less money than a property might be worth to the buyer and seller.
Of course, that is unless the buyer is willing to pay the difference.
That means when buyers make an offer contingent on appraisal, many are finding the seller's market is held back by what the banks are willing to lend — all at a time when interest rates just experienced the largest single-day rise in almost 30 years.
As home values have increased in the past six months, there might not be enough recent sales data to make an accurate and reasonable comparison.
Appraisals are snapshots in time, based on facts.
In that case, the comparison can be with a property sold six or more months ago, during a more depressed market. As the market picks up, that's hardly a reasonable comparison.
That recently happened to two members of my family.
They found a property they liked at a price they could afford, but when the appraisal came back, it was for less than the price agreed upon by the buyers and the seller.
One of those family members reluctantly backed off, a decision I now think they regret.
I'd really be curious if any Realtors out there are running up against this problem and, if you are, how has it impacted you?
Davis poised for opportunity
For the first time since 2006, Daniel Davis is no longer at the helm of the Northeast Florida Builders Association.
On July 1, Davis became CEO of the JAX Chamber.
(On a personal note, like Davis' predecessor, Arnold Tritt, he and I always have had a great relationship and I admire his professionalism.)
When the selection was announced in May, it started some interesting political conversations around local water coolers.
At the time, it still was undecided if Davis would continue to serve as a Republican member of the Florida House of Representatives, a post he has held since 2010.
It has been agreed that Davis will serve out his current term, but not seek re-election in 2014.
He also has not been shy in the past about his interest of being mayor of Jacksonville, leaving many to think he was seriously considering running in 2015.
Yet, when the Financial News & Daily Record asked Davis about those plans at his hiring news conference, Davis made it clear that his new job has removed him from the 2015 race.
What about 2019, when there will be no potential of an incumbent to campaign against?
It could be easy to argue that his new position as chamber leader places Davis in a front row seat if he still wants to run for mayor when that race rolls around.
He will be 46 and his resume will include tenures on the City Council, where he served as president for a year, and in the Legislature.
In addition, Davis will maintain his close ties to the politically influential builders organization and now has become the face and voice of local business.
One knock on Davis as a potential mayoral candidate has been that he's not well known across Jacksonville and his base is limited to the Westside he's represented.
With five years of mixing and mingling with the business community, Davis has a built-in opportunity to introduce himself all over the county by meeting and speaking with individuals and organizations about job creation and building a better Jacksonville.
He can broaden his base and vastly improve his chances to raise big money.
Plus, you can bet that if Jacksonville Mayor Alvin Brown serves a second term, Republican business leaders, including people in the housing industry, will be more than ready for a pro-business candidate to be in the mayor's office in 2019.
Building permits up, but down
Well, we obviously are not out of the woods yet.
While the number of building permits issued in the second quarter of this year tops the same quarter a year ago, the number of permits issued in May in Northeast Florida slipped from April, according to the Northeast Florida Builders Association.
The May total was 544 permits, compared to 606 in April.
St. Johns County construction continues to lead Duval County with 248 permits in May compared to 175 for Duval.
Counterpoints to investor column
In a previous column, I wrote that many industry experts are saying cash transactions from investors looking to flip real estate are threatening the housing recovery and creating fewer, not more, homeowners.
That prompted a response from Mark Prideaux of VyStar Real Estate Services, whose resume includes Realtor, former commercial agent, former homebuilder and current investor.
"Investors are providing great services to the current market. As prices rise, more owners are freed from being underwater and thus more are free to sell," Prideaux wrote.
"Without investors, thousands of junk homes would remain on the market … continuing to be eyesores and dragging down neighborhood values," he wrote.
Prideaux listed 10 reasons why he felt my comments were incorrect.
• Investors are NOT "preventing" homebuyers from making mortgaged purchases. If anything, it is the new cumbersome loan approval process and the buyers' own financial situations.
• Flippers can't "inflate" housing prices. The market sets the price. Why would an investor or flipper pay more than a home is worth? They don't.
• Investors are buying because they see opportunity.
• So much of the current stock of inventory is in such poor shape that homebuyers can't receive Federal Housing Administration loans, nor can first-time homebuyers access bond programs. The programs are too restrictive.
• Most first-time homebuyers want nothing to do with homes in ill repair.
• Investors buy and repair homes that non-investors, or homebuyers, buy.
• Without investors, this would be a very quiet market.
• There are not hordes of homebuyers out there.
• Investors are doing Realtors and future homebuyers and current homeowners a service.
• Fannie, Freddie, Wall Street and the Community Reinvestment Act are not at work here.
Prideaux also argued that institutional buyers "are for the most part quite sophisticated and are smart enough not to flood the market in the future."
On his next point, there is no doubt Mark and I agree.
"What housing needs is a more vibrant economy," he wrote.
"It needs people to find more jobs, it needs people to become more transient again; it needs more people above water again," he said.
Finally, he said investors are part of the cure.
"They buy material, hire workers, get loans, hire Realtors, sell homes, increase neighborhood values and bring homeowners above water. Investors fixing and repairing and selling homes is boost to the economy in and of itself," he said.
I appreciate Mark for sharing his thoughts.
— Jim Bailey is publisher of Realty/Builder Connection and president of Bailey Publishing & Communications Inc. He can be reached at [email protected].