loading...

May Home Sales Were Up, But Appraisal Problem Clouds Outlook

by Will Smith

image

The National Association of Realtors (NAR) reported this morning that existing-home sales rose about 2.4 percent from April to May thanks to historically low interest rates, home affordability, and the $8,000 first-time home buyer tax credit.

The annual rate of home sales increased to 4.77 million last month from 4.66 million in April, according to NAR statistics. While the uptick in sales is a positive sign for the housing market it is actually a smaller gain than expected, which comes as something of a disappointment.

NAR chief economist and spokesman Lawrence Yun cites bad appraisals as the culprit:

“The increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”

Yun warned the problem could worsen to the point that it hinders a housing recovery:

“In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”

In addition to stemming the spread of bad appraisals, NAR is pushing for an expansion of the $8,000 tax credit to all primary home buyers and an extension to 2010 (it is currently scheduled to expire this November 30th).

NAR also reported that the amount of distressed properties as a percentage of overall home sales shrank considerably, from 45 percent in April to 33 percent in May. Yun attributed this to increased activity from repeat buyers, who typically have more money to spend than first-time buyers and are therefore less inclined to buy distressed properties.

At the end of May the national housing inventory stood at 3.80 million, which would take 9.6 months to absorb at the current sales pace. Recall that 5 to 6 months of inventory is considered a normal market, while 7 months and above is considered a buyer’s market.

The national median home price for May was $173,000. The NAR cautions that this figure is “distorted” by sales of distressed properties, which are sold at a discount and pull down aggregate price values.

See other articles related to: mcwilliamsballard

This article originally published at https://dc.urbanturf.com/articles/blog/may_home_sales_were_up_but_appraisal_problem_clouds_outlook/1061

2 Comments

  1. andrew said at 10:56 am on Wednesday June 24, 2009:

    Both this posting and the original source miss the point. An appraisal which is below the offer price is not necessarily a “bad appraisal” - it could be that the home is overpriced. Apparently Mr. Yun is selectively forgetting that the failure of appraisers to independently value properties was one of the factors that made the housing bubble possible.

  1. Keith Sorem said at 1:12 am on Monday July 6, 2009:

    the truth is that the new system has as many flaws as the old one.  There was not vetting before implementation.  If you have MULTIPLE OFFERS above asking, and comps that support the price, then there should not be a problem with value.

    Inaccurate appraisals are a more significant problem now that before the change May first.

    It has to be noted that at the bottom of a market (speaking LA), one reason that average values have slipped is that absence of financing for homes that require loans over the $729K cap. 

    If we were selling as many million dollar plus homes as a year or so ago, the average would be higher, meaning that the average or median sale price would reflect that prices are probably actually increasing, exacerbating the appraisal issue and the need for COMPETENT, LOCAL APPRAISERS.

Comments are closed.

DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!

Northern Virginia

Profiles of 14 neighborhoods across Northern Virginia

Ballston
Looking to Give People A Reason to Stay Past 6pm
Clarendon
Happily Straddling the Line Between City and Suburb
Columbia Pike
Arlington’s Neglected Stepchild is Getting a Makeover
Crystal City
Turning Lemons into Lemonade
Lyon Village
Developing An Air of Exclusivity?
Rosslyn
Hitting Its Growth Spurt
Shirlington
An Urban Village Hitting Its Stride
Del Ray
Virginia’s Small Town Near the Big City
Eisenhower Avenue
The Vibrancy Might Take a Few Years
Huntington
The Quiet Neighborhood By the Beltway
Old Town
Mayberry By The Potomac
Parkfairfax
132 Commerical-Free Acres
Downtown Falls Church
Staying the Same in the Midst of Change
Tysons Corner
Radical Change Could Be On The Way

See more Northern Virginia »

Maryland

Profiles of 14 neighborhoods in suburban Maryland

Annapolis
Small-Town Living in the State Capital
Bethesda
Bedroom Community Gets Buzzing Cache
Cabin John
In With The New While Maintaining the Old
Chevy Chase
Affluence, Green Lawns and Pricey Homes
Downtown Silver Spring
Experiencing a Resurgence After a Bumpy History
Potomac
A Suburb on Steroids
Rockville Town Square
Despite the Dynamism, Still Somewhat Generic
Takoma Park
More Than a Little Bit Quirky
Wheaton
A Foodie Magnet on the Verge of Change
Capitol Heights
Kudzu, Front Porches and Crime
Hyattsville
Glass Half Full or Half Empty?
Mount Rainier
Artists, Affordable Homes and A Silo Full of Corn
National Harbor
A Development Rises Next to the Potomac
Riverdale Park
A Town Looking For Its Identity

See more Maryland »

Northwest DC

30+ neighborhood profiles for the city's biggest quadrant

16th Street Heights
DC's Sleeper Neighborhood
Bloomingdale
Where (Almost) Everyone Knows Your Name
AU Park
One of DC’s Last Frontiers Before the Suburbs
Brightwood
DC’s Northern Neighborhood on the Cusp
Burleith
DC’s 535 House Neighborhood
Cathedral Heights
Do You Know Where That Is?
Chevy Chase DC
Not to Be Confused With the Other Chevy Chase
Cleveland Park
Coming Back After A Rough Year
Columbia Heights
DC’s Most Diverse Neighborhood, But For How Long?
Crestwood
An Island of Serenity East of the Park
Dupont Circle
The Best of DC (For a Price)
Foggy Bottom & West End
Where the Institutional Meets the International
Forest Hills
Ambassadors and Adventurous Architecture
Foxhall Village
350 Homes Just West of Georgetown
Friendship Heights
A Shopping Mecca With a Few Places to Live
Georgetown
History, Hoyas and H&M
Glover Park
One of DC’s Preppier and More Family-Friendly Neighborhoods
Kalorama
A Posh View From Embassy Row
LeDroit Park
A Quiet Enclave in the Middle of the City
Logan Circle
Trendy Now, But Not By Accident
Mount Pleasant
Sought-After Homes Surround Main Street in Transition
Mount Vernon Triangle
From Seedy to Sought-After
Palisades
The Long, Skinny Neighborhood at the City’s Northwest Edge
Park View
It’s Not Petworth
Penn Quarter/Chinatown
DC’s Go-Go-Go Neighborhood
Petworth
Getting a Vibrancy of Its Own
Shaw
The Duke’s Former Stomping Ground
Shepherd Park
DC’s Garden of Diversity
Spring Valley
A Suburb With a DC Zip Code
Takoma
Not To Be Confused With Takoma Park
Tenleytown
Not Quite Like Its Neighbors
U Street Corridor
The Difference a Decade Makes
Woodley Park
Deceptively Residential
Adams Morgan
No Longer DC’s Hippest Neighborhood, But Still Loved by Residents

See more Northwest DC »

Southwest DC

The little quadrant that could

Southwest Waterfront
A Neighborhood Where A Change Is Gonna Come

See more Southwest DC »

Northeast DC

Profiles of 10 neighborhoods in NE

Brookland
New Development Could Shake Up Pastoral Peace
Deanwood
A Little Bit of Country Just Inside the District’s Borders
Eckington
Not to Be Confused With Bloomingdale
Fort Totten
Five Years Could Make a Big Difference
H Street
A Place To Party, and To Settle Down
Langdon
The Northeast Neighborhood That Few Know About
Michigan Park
A Newsletter-On-Your-Doorstep Community
NoMa
Evolving from a Brand to a Neighborhood
Rosedale
Ripe for Investment Right About Now
Trinidad
The Difference 5 Years Makes
Woodridge
Big Houses, A Dusty Commercial Strip and Potential

See more Northeast DC »

Southeast DC

6 neighborhoods from Capitol Hill to East of the River

Capitol Riverfront
Still Growing
Hill East
Capitol Hill’s Lesser Known Neighbor
Congress Heights
Gradually Rising
Hillcrest
Notable for Its Neighborliness
Historic Anacostia
Future Promise Breeds Cautious Optimism
Eastern Market
A More European Way of Living

See more Southeast DC »

Upcoming Seminars ▾