Appraisal new technologies

Tucson doesn’t create enough good jobs, have a stable influx of new people, or have friendly policies for new business, therefore the housing market is extremely volatile. We rode the wave of increased prices last year as everyone believed the housing market was improving, and indeed several areas of the country saw great gains- however Tucson has remained sluggish and probably will until 2016. The price increase in 2013 has flattened this year and only lower priced homes continue to be in a sellers market range. Still a few investors are buying, but that has slowed also.
Current credit liabilities and banking requirements with loans, documentations, house pricing, have increased the pressure of more accurate valuations. Appraisers have made adjustments to the changing increase of market data using advanced analytics and influencing technology, both having a significant influence on how the appraisers come up with value. The seemingly endless information, facts, figures, numbers, and charts is leading regulators to hold banks to a higher standard thus turning down more individuals for loans. In return they are holding appraisers to more stringent requirements and increased usage of mobile technology for market analysis. Big data is one of the five biggest trends redefining the valuation process. Augmented reality,a virtual layer of data with geographic specificity, will facilitate market analysis. These new technologies will be enhanced by experienced appraisers in your area who understand the value of mega data, and the changing economics of YOUR community. Be aware poor appraisals have become part of the problem in house price devaluation/ fluctuation, banking standards, and government policies, nobody is really winning here. Low values of homes keep people from moving, relocating, fixing up their home, or feeling positive about the economy.
It is a complicated time to buy, buy only if you anticipate staying 5 years. Realize a 3% increase in home values will be the norm. We are finishing up a 7 year downturn in the business/builder cycle, perhaps the model will return in a positive upturn-

Same old, same old….

It seems to me the great recession just keeps on giving, or should I say taking. Home repossessions will be topping 1 million, up from 804,000 in 2011. Total foreclosures fell 34% in 2011 national to 1.89 million, so we are still cleaning up inventories. Housing inventories are slowly going down , but only a few can really get credit to buy, are stable enough to purchase a house and or feel confident with the economy. The MEDIA will continue to report a very rosy picture, but the reality is still tepid, barely breathing. The houses that are selling are forclosures and distressed sales- don’t sell if you can help it. It still isn’t a good time. Things, the micro economies(house values) are improving, however the macro economies are NOT. The job markets are improving in certain areas, that weren’t affected to begin with, some house sales(pricing) are improving, however it is so diferent from area to area, Tucson is still considered declining overall. Watch out for the statistics from January because they are going to be ugly, it will be affecting all sorts of numbers- stocks, housing, and retail. Remember people buy when they feel confident. 2012 should be a better year, that means- stablization of prices generally speaking, however gas is going to affect people in a negative, way once again. That has a negative affect on how people feel about buying- it all runs together.
The greatest asset Tucson has is our weather – because boomers will come with money and THAT ALONE, is the future. It will grow our markets. At some point we WILL need more housing, apartments, inexpenisve first time homes, and single family residences. Yea, to the future of growth.
I have lived in Tucson my whole life and have watched the building cycles, this is an odd one- because of the continuation of negative influences. Prices won’t be increasing any time soon, but hopefully we will feel more confident. Several factors need to come together to make our market stronger. More lending flexibility(Frank Dodd regulations -government), lower cost of ownership(local taxes,government) , increase in educational values and a strongereducational system(local governement), and so it goes, there is a theme that we cannot readily fix. Several personal ideals come into play also, personal responsibility- (affording what you buy),being realistic about values going forward, and understaning what it takes to be a homeowner. Buying a homes is an investment with time and resources. Until these things are understood in the market the housing slump will not improve. It is slowly improving, but it could just continue this way until 2015 -flat. Then it becomes a TEN year business cycle, not a seven. Be involved understand real estate before you buy! Use a MAI appraiser to understand value before buying, or selling- real estate agents job is to SELL understand that fact- they don’t eat if they don’t sell!

Keep waiting!

The housing market in NOT going to improve anytime soon. With poor slow improving unemployment, foreclosures, bank regulations and financial constraints the housing market is doomed to death. Don’t buy anything unless you have money(cash) a really undeniably stable job and are going to stay for 5 years. The market has a long way to go to pull itself from sinking. It is no ones market! Keep in cash, keep debt low and be prepared for a rocky ride throughout next year. The election is the absolute pivital point of the housing market . Houses continue to go down, there is very little value that is stable in the stock market, and gold and gas are rising, this combination is only waiting for for one ounce of bad information to drop further. Foreclosures still out sell existing homes, and prices have been pushed lower, the good signs, inventory is dropping, interest is at record lows, and new homes are beginning to sell. Buyers with great credit are buying multiple houses, however rents are still weak in Tucson. There really is no good sign yet, keep waiting. You finally need to realize the house prices of 2005,2006, and 2007 are gone and will NOT return for twenty years. Be prepared to take a hit at some point.

What does a Real Estate Appraiser really do for ME?

An Appraiser protects your interest in your biggest assest and understands the local market trends! He is a person with a service to offer the community where he lives and cares about. There is so much controversy over how the housing market is failing I thought it would be good to bring some professional insight into the mix. The governement’s view point of housing lacks the knowledge of how the free market really works- and because now FEAR has controlled the buyers/ sellers in the market ,the competive edge of the market has changed- exactly like the stock market. A great point to remember, (when trying to make money) when eveyone runs away – you STAY. Now is a good time to buy, it is just conviencing the average buyer with money and good credit. This housing market however, is not going to turn around anytime soon. The govenment policies will have to change to really make a positive impact on sales. We will continue to improve slowly at best, otherwise flat and that means house prices will remain the same.
Now to explain WHY an appraiser is an important PERSON in the mix.
We are professionals (MAI, SRA, designated appraisers)that often study market trends nationally, understand and relate to values in time(estate properties), can review markets in particular stigmatized neighborhoods through documentations, and have specific collected data that most normal individuals can’t afford to use or have. For instance, how problems with Zillow affect your property; it can’t compare YOUR views, YOUR particular property assests, it can only clump information that is gathered on the computer and average that information together to get an average- therefore often it is severly incorrect. If banks use these number you won’t ever get a loan, some real estate agents use something called a CMA Comparative market analysis- this too has its faults. Real Estate agents look at the property from a SALES point of view , not a value- Two entirely different ways to understand property- often it is only about making the sale, being your FRIEND, working the area, and so on. Remember it is thier job and if they don’t make a sale, they don’t eat.. Appraisers have no interest in what the price of the property is only value. They care what it will sell for-in a specific time frame. So if an appraiser from Phoenix( out of the Tucson area ) comes into to appraise your home they only know to compare Phoenix prices, zillow or CMAs the lowest values…..they only have access to computer statistics, BAD news for you the seller! They really have no interest, they are salaried employes for a management company- they just do thier job, from a form. They are often from out of the area!
This is a big problem in the housing market now- many unqualified appraisers are coming through management companies (because they are cheap and ordered through an online management company from banks, they have minimum educations, qualifications and only do houses because the government gives them a format form. You get no extra choices for views, custom, neighborhood accommodations, and so on. If this continues we might as well all live in track homes because that is where the value is going. We all will have equal living arrangements. Ask your banking institution for an MAI or ask “Does all the money I pay go directly to the appraiser?” You will be shocked out of the $350.00 you pay the bank keeps most of it and gets the cheapest guy to simply write a report. Repeat, I said “write a report” not do an appraisal of your property.That IS not good for you or looking out for your interests. Be aware, be a wise consumer, protect your valuable assest, pay attention to governement rules and how they affect your assests. These are difficult times for homeowners and if mortage tax breaks go away we all are going to take another hit. Hang in there we are half way through 2011 and maybe the end of 2012 will be better! Realistically it looks like 2013 .

Who needs to own a house anyway?

We are now in a new era of extending declining house losses, way too much government intervention, and a new found realization that not everyone can buy a house. Going forward into the unforeseeable future many people will NOT be able to purchase a house. Many first time home buyers will be out of the market as of April 1st because of more financial reforms, others just won’t qualify because of lower credit scores and some won’t be able to buy because they have no way of saving a down payment because of increased cost of living. This is a sad moment in our history, NOTHING has improved in the real estate market since the downturn begin in 2007. Most business cycles have been seven years, it looks like the housing market may be ten, and really may not be considered starting until September 2008 ???? Yyks! Does that mean 2018? How long can a cycle last and what will cause the cycle of deflation in housing to change.
Well first and foremost, we need demand- and that just isn’t happening. We need money earned, jobs and stability in our economy. Do you see or feel any one of these factors occurring? This trend may stay for several years and only as families grow will more need for new houses occur, a new generation of buyers, jobs, and a different administration. A lot of outside factors are going to need to change before any price increases occur. A few areas have stabilized, but most markets are slow or declining. As the spring selling quarter begins we will all be holding our breath hoping for a small increase. No one, except homeowners seems to be worried or addressing this issue, many people are sitting thinking things will soon change and values will go back up to where they were a few years ago- sorry you have lost it, most, if not all your equity from 2005-2009. When prices do begin to go up it is usually very very slow 3% a year.
It may become to trend to rent, rental prices have stabilized and many people can’t afford the repairs, taxes or down payment. That is ok, especially if you own rentals, but beware now may not be the time to buy, especially if many local governments take away the mortgage income tax credit. There is going to be NO advantage to owning a home soon!

Is refinancing a joke????

I dare someone to just try to refinance and complete the process in a month. If your credit is stellar, you have salaried jobs with longevity, money in the bank, and of course equity in your house, you are ready to get a loan! How many of us have all of that in this economy? The 4% loans are now history. The idea of getting some cash out of your home is pretty much over too. The Federal government, i.e. Fannie Mae and Freddie Mac, have made it very tough on the banks. Getting a loan has gone from stupid easy, to stupid hard. Every loan is scrutinized. It seems that the lenders are looking for a way to NOT lend money, as opposed to finding ways to help consumers get loans. The difficulty associated with getting financing contributes to the housing decline. Getting a loan is difficult, time consuming and an exercise in patience. Today only the cream of the crop get a new loan, and only those with perfect credit (over 800)get the advertised lowest interest rate.
How would you like someone to tell you- pay all your charge cards off, and then close the accounts, then send all rental leases, signed with security deposits, list all bank accounts, savings accounts, and retirement accounts. You must prove that all bills are paid, that you have a small debt ratio, and no installment payments. Don’t buy a car, don’t charge anything until you’ve signed the refinance papers, and don’t use your line of credit. Just don’t live your life until your refi is done! That is basically what we went through to get a new loan at a lower interest rate.
Yes, this is what is currently happening out in the happy land of loans. Those of us who could really use an extra $500-$800 in our pocket, who have good credit, are responsible, are “playing by the rules” seem to be, once again! paying for others mistakes. Seems unfair to me, seems like a lot of people could use help now- to keep them in their house which would help to stabilize the market. Government intervention hasn’t worked so well, not only has it prolonged the turmoil in the market, it has exacerbated the severity of the downtrend.
Here, in Tucson, foreclosures are still a significant portion of the market. We keep increasing the number of foreclosures, where is the help? How do we turn this trend around?
All areas of Tucson have been affected in the downtrend. The Largest number of sales are those homes priced under $249,999. The largest sub price is $120,000- 139,999. The numbers of sales is slowly trending up only because of distressed sales. The median price is down about 33%. Remember if you need and want to sell you must “get ahead of the market. If you price your home too low in a rising market, the market will bid the price up, however, if you over price your home in a declining market, the market ignores you! The area defined by MLS as the “Northwest” has the most houses for sale, almost 2000. 2011 isn’t going to be any easier, in fact more people will lose their home and job.
Perhaps a small glimmer to remember, we are decreasing the number of houses on the market and Tucson is in the sun belt, has affordable housing, and is a great retirement community. We can offer better weather than most communities, and a lot of free outdoor activities. Tucson can sell itself under the proper economic conditions.
Other ideas to help with property values during hard times. A new coat of paint on the outside trim and front door, keep up with repairs, add trees on the west to decrease utilities, dejunk the garage and closets. Be sure to pay attention the the actual cost of updating: realize you won’t get all the money back if you need to sell.
Most business cycles are 7 years, we have 2 more years before things even out. Then we should begin some type of new trend. Tucson runs a few years behind other cities so I will keep my fingers crossed.

Tucson is slow to improve

December 2010, here we are at the end of the year and values still remain deflated, sales are difficult, and financing is hard to get. Nothing has really improved this year, we can only hope next year will improve.

The chances of price increases, value appreciation, or positive housing growth is going to be slow and difficult next year. It’s the economy!!

Over and over again I have to state this because people still won’t believe it, now believe it! Between high unemployment, slow consumer spending and general fear people are NOT buying or willing to part with money.

The US economy will remain sluggish and probably should grow by about 2.6% in 2011, that’s not enough to feel an improvement. According to the National Association for Business Economics the jobless rate will remain above 9% next year, at least the relapse of the recession is getting weaker. We will have another year of flat-lining in housing before any real growth to improve housing values. Still too many foreclosures are flooding the market.

Hang on, it may be tough again next year. At least the banks are now taking a longer time to release new foreclosures onto the market. This allows housing sales to occur that can lift the comparable sales by adding in stronger values. This pricing situation takes time to remove the weaker sales and will eventually solidify normal market pricing. The market has tightened and sales are occuring. The Tucson listing numbers have dropped dramatically. Tucson is slower to recover than other metropolitan areas, but at least its a great place to work and live, that is, if you have a job!

What can we expect now?

We are clearing out some of the back log in housing inventory, however things still look bleak. The July statistics are dismal at best. Only one positive sign is appearing, Tucson is beginning to move in the right direction! Pending contract increased by 47%, however new listings also increased by 23.65%. People must be getting tired of waiting to list their property, it still isn’t time to sell if you have been waiting, prices are still declining. High foreclosures, credit availability, high job losses, and track over building is pushing the prices down, but perhaps a base is beginning to form.

The average sales price for July 2010 is now $192,072. Tucson has returned to a 2004 price value. The last 3 years the prices in pockets of the city, have fluctuated up and down , but the downward pricing trend has been widespread.

Zip codes with stronger sales have been 85706, 85718, 85745, 85757, at least 30 units have sold in these areas over the past year. Tucson still has a large number of listings 6,668, coming off its highs of 10,387 in April of 2007. Home sales volume from July 2009 to July 2010 is down 39%, unit sales (the number of) is down 33% too.

I know these statistics look overwhelming depressed, however the number of houses on the market has slowly gone down, and that will eventually help to stabilize our market.

Tucson’s market is generally slower to recover than other metropolitan areas, accompanied by slow job growth, a slower pattern of growth, and harder regulations on credit. This takes times to improve these areas too, in fact several years. We are probably looking at 2012 until stabilization occurs in Tucson ‘s real estate markets across the city.

This winter with newcomers, visitors and hopefully a stronger national economy our local economy may continue to improve, but all signs lead to a very, very slow recovery and a difficult time ahead for real estate in Tucson!

Remember to call Jeffrey Patch 520 326-6066, Tucson Real Estate Appraisal Inc. The ONLY Tucson Real Estate appraisal team that has worked in this market for 40 continuous years.

He is an MAI., SRA, licensed real estate appraiser in the state of Arizona for 30 years. Call him today with your questions or to order a report.

Maybe housing is stabilizing????

Don’t think you will be getting rich any time soon. The housing market is teetering. All odds are against the recovery of a strong market, there is just to much uncertainty out in the economy. There is another wave of foreclosures coming, high unemployment and to much government control to allow credit to freely flow into the markets.

I am not sure the direction we need to go to stabilize the local market. The houses that are selling are distressed sales, foreclosures or short sales, not much good comparable fair value sales.

Tucson runs at least one year behind other national markets and seems to be still losing values. Our local economy is suffering and our state economy is broke. Arizona has so many economic issues currently that need to be resolved before our values can stabilize. At this time is it probably the best choice to stay put , appeal your taxes if they went up, don’t put more money into your house, and make the payments on time. This market will not be a sellers market for several years, and may NEVER return to the pre-market values. Accept the current values and move forward! If you have cash, a stable income, and a good job buy a house now, the pickings are good! It can be difficult to qualify, have good credit, be pre-approved. Don’t use all your cash reserves.


I have been writing Real Estate appraisals in Tucson since 1977. I am TUCSON REAL ESTATE APPRAISAL, Jeffrey C. Patch Inc., I picked the name in 1985 four years after starting my business, I wanted an original name to represent where I worked and what I did. Since then, there have been several impostors, but I have had the name so long, most bankers and lenders, in the community know me and how I work.

I have been around in the good markets and the bad markets, I understand the markets in Tucson. I have seen Tucson grow and expand all across the valley. It will take some time for Tucson to absorb all the track homes which have been given back, or acquired by lenders. Fortunately, several submarkets have already hit bottom. The area off of Valencia, west of the casino seems to have stabilized. Homes which were $250,000 are now $125,000 to $140,000. They’re selling well. Other areas have yet to reach the bottom.

Read my blog to get interesting facts and to help you make market timed decisions- this is a very tough time to be selling.

Check out my web page on Google at State licensing has legitimized the lowest common denominator. According to the “state” if you have a license for 10 minutes, you’re as qualified as someone with 20 years.

Thank you for reading,

Jeffrey C Patch, MAI, SRA
(520) 326-6066