Update To This Week’s Crib Chatter Schedule
I’m going to be out of town at the end of the week and I have other things I have to take care of all week long as well.
Therefore, there will be fewer posts this week than normal. Today, there will only be two posts. There will be posts every day however.
Thanks- Sabrina.
Meanwhile, Case Shiller saw its fourth straight monthly increase.
From Crain’s:
The S&P/Case-Shiller index of Chicago-area single-family home prices rose 2.7 percent from June to July, according to a report released this morning. The local index jumped 4.6 percent from May to June and 4.5 percent from April to May.
The July index number is the highest for the area since September. Chicago-area prices are still are down almost 1 percent year-over-year, according to the report.
A 20-city composite price index increased 1.6 percent from June to July and was up 1.2 percent on a year-over-year basis, according to the report.
“The news on home prices in this report confirm recent good news about housing,” David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a release. “Single-family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing.
“All in all, we are more optimistic about housing. Upbeat trends continue. For the third time in a row, all 20 cities and both composites had monthly gains.”
Chicago-area home prices post third straight strong increase [Crain’s Chicago Business, September 25, 2012]
Are you too busy because you are looking for a house/condo to buy before you are “priced out forever”?!!
Well the city of Chicago sent me an assessment letter a few days ago that said my property value went up year over year so it must be true, right?
“Well the city of Chicago sent me an assessment letter”
Mine was down about 15%. I think that Berrios is rebalancing the resi assessments so that the condos (maybe not including yours Sonies) that were underassessed compared to market value over the past decade or so are getting assessed closer to fair value.
Even if this isn’t really a sign of recovery, it could help out those of us who are underwater. If the value of my place, even if only on paper, comes up some I might actually have a shot at refinancing at today’s lower rates.
Totally anecdotal, but I know a lot of people that have bought this summer, including myself. Seems that a lot of late 20’s/early 30 somethings are tired of paying high rents and ready to take advantage of the low interest rates.
Do these stats figure into the appraisal process when one buys/sells a house? My neighbors have reported appraisals all over the map lately.
Jenny, not directly. Appraisals are driven by recently sold properties that are most similar to the subject property being appraised. It totally depends on the sales mix at the time of the appraisal. Appraisals are backward looking.
I bought because I didn’t want to be priced out forever. And because Suzanne researched it and it just made sense.
And because telling people you rent in Glendale Heights has a certain negative cachet
The question to me then, is if appraisals are based on recent sales and people can’t buy unless the appraisal comes back for the less than/equal to the purchase price, how can prices ever rise? Is it all just waiting for a cash buyers?
I bought because I wanted my kid started school, rates are low, prices appear to be pretty good, and there are some decent properties out there. Plus, my mortgage (not including property taxes) is equivalent to my present rent.
Moving from a 3/1 rental flat to a 3/2.5 house.
“I think that Berrios is rebalancing the resi assessments so that the condos (maybe not including yours Sonies) that were underassessed compared to market value over the past decade or so are getting assessed closer to fair value.”
Indeed. Our value and taxes have gone up about 80%. Appeal is under way.
“Our value and taxes have gone up about 80%”
If your 2012 AV is 1.8x your 2011 AV, I’d expect your ’12-pay-’13 taxes to be 2x (or slightly more) your ’11-pay’-12 taxes. I’m totally expecting my .85x to lead to a tax bill almost exactly the same size.
Is your AV close to what you’d reasonably expect (10% of) your sale price to be?
“Mine was down about 15%.”
Where do I show up w my check? Hostile takeovers would add some excitement.
“Seems that a lot of late 20?s/early 30 somethings are tired of paying high rents and ready to take advantage of the low interest rates.”
The Fed is buying up MBS at the rate of $40 billion PER MONTH!! However, this move ironically only favors the rich and upper-middle class, not Main Street. 69% of borrowers cannot qualify for the “historically low rates”: http://weekendrealestatereport.com/2012/09/study-shows-69-of-homeowners-have-high-rate/
“And because telling people you rent in Glendale Heights has a certain negative cachet”
right up there with Bensenville and Crestwood!
” My neighbors have reported appraisals all over the map lately.”
They are indeed all over the map. I’ve seen some really dumb appraisals including my own when I bought my place. Mine came in 42% ABOVE what I paid for it. I assure you that was not even close. Then I’ve seen some come in really low, with no credit for a spectacular view. They are bringing appraisers in as far away as from Rockford and they know nothing about the market here.
“if appraisals are based on recent sales and people can’t buy unless the appraisal comes back for the less than/equal to the purchase price, how can prices ever rise? Is it all just waiting for a cash buyers?”
That in fact has been happening. The problem with appraisals is that they look backwards and in a rising price environment it’s not at all clear how the appraisals can work out to market value. I have heard of several cases where people have had to just come up with extra cash to cover the difference.
“And because Suzanne researched it and it just made sense.”
Who is this Suzanne person who you guys always refer to?
“Who is this Suzanne person”
http://www.slate.com/articles/business/ad_report_card/2006/04/the_nastiest_wife_on_television.html
http://www.youtube.com/watch?v=zcTjhXSmnmc
lol i forgot the guy was such a pussy in that commercial
BWAHA! I’ve never seen the commercial.
It sounds just so…awkwardly entertaining!
As for “The Debate”: It’s terrifying. The problem lies in the performances. That beleaguered husband, dough-faced and weary, seems highly sympathetic as he expresses a few doubts about this major life decision. Meanwhile, the wife (who looks like a more hostile Mary Louise Parker—though she lacks MLP’s patented bone-dry delivery) just knits her eyebrows at the guy like he’s unfathomably dense. Later, she jabs him with an accusatory “What?!”—her eyes wide and wild, her neck muscles flexed, her head twitching in disbelief at what a ninny her husband’s turned out to be.
The capper comes when their real estate agent, who we discover has been listening in on what should be a private and delicate moment, takes sides with the wife and thereby crumbles the husband’s defenses. Don’t listen to her, John. Of course your agent wants you to buy a house you can’t afford—she gets a bigger commission!
My link is the commercial, Milk
“Who is this Suzanne person who you guys always refer to?”
Hah. I’d always assumed it was a long ago cc realtor.
“Is your AV close to what you’d reasonably expect (10% of) your sale price to be?”
I guess the answer is: yes!. Seriously, nonny, if you’re willing to share some details of your process as you go through it, taht’d be v interesting.
“Hah. I’d always assumed it was a long ago cc realtor.”
hahah. i always thought it was that crazy money chick on all the day time tv and on pbs a while back.
Jenny (September 25, 2012, 10:50 am)
The question to me then, is if appraisals are based on recent sales and people can’t buy unless the appraisal comes back for the less than/equal to the purchase price, how can prices ever rise? Is it all just waiting for a cash buyers?
The place I bought appraised for less than I felt the property was worth, so I brought extra money to the table, to keep the 80/20 loan to value ratio my lender needed. So the deal does not have to be an all cash but buyers may need more than 20% if they want the property and seller can’t or won’t lower the price.
Jenny,
You should have made the seller’s reduce the price or walked. Never pay the difference between purchase price and appraised value….throwing money away
“You should have made the seller’s reduce the price or walked. Never pay the difference between purchase price and appraised value….throwing money away”
Was LPN not jenny who actually said s/he did that. But appraisals are sometimes nutty, right? Suppose you look at an appraisal and can tell that the reason it was low was the inclusion of clearly non comparable places…
“They are bringing appraisers in as far away as from Rockford and they know nothing about the market here.”
My understanding is they are also replacement refereeing in the NFL
I know people who are trying to do a short sale now. The appraisal came back at $100k higher than the price they were asking. There is NO WAY, they would be able to sell their place for $100k above what they were asking.
On the flip side, I see others trying to buy a place and the appraisal comes back for less than the purchase price and they either have to walk away or bring extra money to the table. Buyers don’t want to feel like they are overpaying. Sellers can’t always afford to lower the price.
Appraisals also seem to set the standard for the entire neighborhood. One house comes in too low and then all the other sellers in the area need to lower their prices or worry the appraisal will be too low.
I’m just glad I’m not selling or buying at the moment.
I’d be more than happy to buy but there just isn’t anything worth buying in my neighborhood. The same old places that have been sitting for months or years can go ahead and raise their prices if they want. It isn’t going to work. Nobody wanted them when they were cheaper, nobody wants them now.
The appraisal problem was caused by Andrew Cuomo, current Gov of NY. When he was AG, he sued WAMU right as the bubble was bursting for appraisal fraud. WAMU was supposedly putting pressure on appraisers to inflate values. As a result of his investigation into WAMU, he forced Fannie/Freddie to require that all appraisals to be ordered through Appraisal Management Companies (AMCs).
Appraisals used to be ordered by the individual loan officer/mortgage broker. However, some appraisers felt the would lose business if they didn’t “hit the value” and ultimately kill a deal. The AMCs are supposed to take an influence out of the appraisal process. The Loan Officer can no longer have any contact with the appraiser and has no say over who is chosen for the job.
The problem is the AMCs are third party businesses, although some are owned by the Too Big Too Fail banks. As a result, cost and quantity is more important than quality. Hence Gary’s experience of getting appraisers coming from west Podunk to appraise properties in Lincoln Park. The AMCs just pick the cheapest even if the appraiser is not qualified for the job. In addition, the AMCs take a cut of the appraisers earnings. In the past, an appraiser might make $300 for an assignment and keep it all. Now, the AMCs charges $400, pay the appraiser $150-$200, and the AMC keeps the rest. End result is predictable. Higher cost appraisals done by least qualified appraisers.
It is nearly impossible to challenge appraisers for crappy work too these days. The reality is that appraisers don’t really get in trouble much for undervaluing a property. However, there is a lot of liability for over valuing a property.
Do the appraisers know the contract price before making the appraisal?
“Do the appraisers know the contract price before making the appraisal?”
Yes
We are in the middle of refinancing. The appraiser was from Naperville. Appraisal came in right where we needed it for a 15 year, 2.875% mortgage. For how it’s working for us, I don’t care if he came from Mars.
Jenny, yes they get a copy of the purchase contract. Truthfully, it is very rare that I see appraisals come up short on a purchase. I’ve seen it maybe five or six times in 10 years. They almost always come in at the purchase price or slightly higher. The contract is obviously an anchor for the value. Usually on a purchase the appraiser is looking to support the contract price the best they can.
Refinances are a shot in the dark though… never know what you are going to get back.
I don’t normally post anymore but thought I’d share a quick story….
I just did a cash out refinance to free up some capital from my home. ( I paid cash for the home and construction costs). My neighbor sold his place and while nice, is a tier down from my place in terms of finishes and is 200 sq ft small. I would have been happy with an appraisal that came back at my neighbor’s sale price, though mine would probably sell for 5-10% more. The appraisal came back $85k lower. The appraiser who was from the northern burbs used properties in both Ukrainian Village and Humboldt park to justify his appraisal. I told the bank that they would lose my business unless they reordered an appraisal after I sent them extensive suport for 5 properties within 5 blocks that were more appropriate comps. The relented after I agreeed to pay $500 if the appraisal came back the same. ….
Magically my property appraised for my neighbor’s sale price and 3 of the 5 comps I sent were used.
200 sq ft smaller…
“Therefore, there will be fewer posts this week than normal. Today, there will only be two posts. There will be posts every day however.”
I want my money back on my CC subscription.
Wait, thats right…. this site is free!
Have a good week Sabrina.
> Wait, thats right…. this site is free!
You get what you pay for.
” The appraiser who was from the northern burbs used properties in both Ukrainian Village and Humboldt park to justify his appraisal.”
Had a similar issue. My appraiser used all these comps from Humboldt and none from my area. So it was $250 up in smoke unless I brought cash to the table. Hopefully it will all work out, I gave the appraisal to the county as part of my tax appeal. It even has comps for them to look at. 🙂
The best of all worlds would be to get my taxes lowered and then get lucky with another appraisal and lower my monthly payment a good bit.
Once again, there will be limited posts today (Oct 1) because of time constraints. There will only be the morning post.
But hopefully we’ll be back on a regular schedule later this week.
Also- as I said in the other comment- if anyone has any properties they’re dying to see on CribChatter, send them to me at cribchatter@yahoo.com.