Does the value of your home affect how you vote?

Does the value of your home affect how you vote?

Kenneth R. Harney on Sep 30, 2016

WASHINGTON – Do home values have any significance when it comes to presidential elections? Not directly. But indirectly they are manifestations of economic growth, unemployment rates, incomes, household formations, population inflows and outflows, along with historical patterns of land use and restrictions on building.

Almost certainly home values – and the rate at which they appreciate – have some subtle impact on homeowners’ outlooks- If your property value is falling or mired in negative equity, you’re probably less likely to have positive feelings about the current state of the economy and prospects for immediate improvements. If your home value has been steadily rising, you might be feeling a little better about your personal finances, more satisfied with economic trends and more sanguine about where things are headed.

With this in mind, I asked the housing analytics experts at Trulia, the online real estate data and sales information site, to do a purely statistical study of housing value trends in this election year’s battleground or swing states, plus all the traditional red (typically Republican) and blue (typically Democratic) states. The red and blue breakdowns were based on results from the past four presidential elections. Battleground states were based on recent polls taken before the first presidential debate. Values and appreciation were measured from January 2012 through July of this year.

So what did researchers find?

- There are drastic differences in median home values that set apart red states from blue states – maybe more than you knew. Of the top 10 highest-cost states, nine are solidly blue. Just one – Alaska – trends red. The six states with the lowest median homes values – West Virginia ($99,800), Oklahoma ($113, 400), Mississippi ($114,500), Arkansas ($114,700), Indiana ($116, 700), and Kansas ($120,800) – are all red. The $367,100 separation between the median price in the most costly mainland blue state (California at $466,900) and West Virginia is chasmic, as are the differences in underlying economic conditions. (Reliably blue Hawaii has the highest median, $565,900.)

- Battleground states (Florida, North Carolina, Ohio, Arizona, Nevada, Pennsylvania, New Hampshire and Georgia) are a mixed bag. Their relatively moderate home values generally resemble red states more than blue, but their recent jumps in annual appreciation rates, taken as a weighted average, are higher than either reds or blues. As of July, the appreciation rate for homes in battleground states was 6.4 percent, while in red states it was 5.23 percent and in blue states 5.14 percent.

- This year’s battleground states have experienced significantly different housing value patterns during the post-recession period. Though they are all seeing positive appreciation this year, they have radically contrasting recent histories. Nevada, Florida and Arizona were hotbeds of hyperinflation and toxic mortgage practices during the boom years, and all three suffered horrendous depreciation and foreclosure losses during the bust and recession. But since 2012, they have roared back. In January 2012, the median Nevada house was worth $122,800. As of this past July, that had grown to $218,400. In January 2012, the median Arizona house was valued at $136,500. Last July that had grown to $208,400. Florida has seen similar increases – a $126,300 post-recession median in early 2012, compared with $191,300 this year.

Several swing states, however, haven’t rebounded as energetically as the others because of economic issues. North Carolina, where recent polls indicate an exceptionally tight race, had a median value of $137,500 at the beginning of 2012; today it’s $153,300. Pennsylvania came out of the recession with a $143,600 median value; by mid-year 2016, that had grown to just $154,500. Ohio’s median has moved from $107,200 four years ago to $121,600 this year.

So what do we glean from these housing numbers? Certainly there are no predictions here about how homeowners will vote. Housing is just one element in an economic backdrop, not a key causative factor in voting behavior. But it cannot be totally ignored. Felipe Chacon, a housing data analyst with Trulia, commented in an interview that “if you’re hearing doom and gloom and you’re in a swing state that’s been doing relatively well recently,” maybe you are marginally less likely to believe the doom and gloom.

On the other hand, if you’re a homeowner in a traditionally blue state like Maine, where employment and income growth have lagged behind national averages and median home values have plunged from $180,400 at the start of 2012 to $134,500 as of July, you might be more open to messages that major changes in economic policies are needed.

Appraisal delays gumming up home sales

Appraisal delays gumming up home sales

Kenneth R. Harney on Sep 16, 2016

WASHINGTON – There’s trouble brewing in appraiserville – and it’s beginning to cost some unsuspecting home buyers money. If you’re planning to buy in the coming months, be aware.

The problem is part work overload, part resentment over fees. In many markets, diminishing numbers of experienced appraisers are available – or willing – to handle requests for their work on tight timetables and at fees that are sometimes lower than they earned a decade or more ago.

The net result- The system is getting gummed up. Scheduled home sale settlements are being delayed because banks and appraisal management companies can’t find appraisers who’ll do valuations on timetables needed for closing dates in realty contracts. A recent survey of agents by the National Association of Realtors found that appraisal problems were connected with 27 percent of delayed home sale closings, up from 16 percent earlier this year.

In some cases, panicked lenders and management companies are offering appraisers fat bonuses and “rush fees” just to complete valuations to meet deadlines. The extra charges can range anywhere from $200 to $1,000 or more, turning $500 appraisals into $1,200 or $1,500 expenses that typically get paid by home buyers.

Take this example provided to me by a mortgage broker in the Seattle area. Matt Culp, owner of Bainbridge Lending Group LLC, says clients who urgently needed to close on a newly built house – and to move out of their rented dwelling – were squeezed into paying $2,000 for an appraisal that normally would cost $625.

An appraisal management company had said that the quickest the valuation could be delivered was Oct. 6, weeks after their hoped-for closing date. Waiting that long, however, would have cost the borrowers their favorable rate lock and forced them to pay another month’s rent. But when Culp inquired about a rush fee, the appraiser agreed to a $2,000 total fee – $1,375 more than the earlier quote. For the extra money, the appraiser would put Culp’s clients at the top of the to-do list. The buyers agreed. The extra $1,375, charged to the borrowers’ credit card in advance of any work performed, was “extortion,” Culp told me. But it was less expensive than the alternatives.

Here’s another example, this time from the perspective of an appraisal management company. Brian C. Coester, CEO of Coester Valuation Management Services in Rockville, Maryland, said a lender in Nashville recently was willing to pay appraisers $1,100 for work that normally would have cost less than half of that, but still had difficulty finding takers. Coester’s firm, like other management companies, helps lenders link up with appraisers around the country. For its services, it takes a piece of the appraisal fee.

Appraisers have complained for several years that management companies are themselves a big part of the problem because they pay low fees to the appraiser and pocket 25 percent to 30 percent or more of what home buyers are charged. Plus they have unreasonable expectations about how quickly appraisers can churn out reports. Management company executives like Coester deny they underpay appraisers and instead suggest that there is an underlying “shortage” of appraisers caused in part by the aging of members of the profession, tougher qualifications and regulations, and by fewer new recruits coming in to replace them.

The Appraisal Institute, the profession’s largest trade group, confirms that there are fewer appraisers active today than in previous years – the ranks are down by 22 percent since 2007 to a total of 76,800 as of last December 31. But J. Scott Robinson, president of the group, told me one of the key reasons for the dwindling numbers is that management companies and lenders aren’t paying adequate fees to retain experienced appraisers or attract newcomers.

Jonathan Miller, a prominent New York-based appraiser, wrote in a recent blog that “there is no shortage of appraisers. There is a shortage of appraisers willing to work for half the market rate” – which is what he believes many appraisers get when they work for management companies as opposed to directly dealing with banks.

Whatever the causes – whether there is a true “shortage” or simply fewer appraisers willing to work for low net compensation – appraisal delays, combined with requests for “rush fees,” are realities in the marketplace. When setting contract deadlines for your closing, ask your real estate agent about conditions in your area. The more realistic the settlement date, the lower the likelihood you’ll be charged extra to get the work done.