Housing Market Boom May Tempt Sellers to Overprice – According to HomeLight’s Top Agent Insights report, buyers should beware, it’s a seller’s market and homeowners are holding firm on the price. More than half or 52% of about 1,000 real estate professionals recently surveyed believe the biggest challenge that home sellers will face in 2021 is the temptation to overprice their homes due to the hot market conditions. The homebuying frenzy since the pandemic, mixed with a low inventory of homes for sale, has placed sellers in the driver’s seat. Home prices have been rising by double-digit percentages annually. Nearly 15% of real estate pros surveyed also said they were concerned that bidding wars will drive more offers above appraised values in 2021.
Source and link to the full article: “Top Agent Insights Q4 2020 Report,” HomeLight (2021) and “Half of Redfin Home Offers Faced Bidding Wars in December as Housing Market Defied Holiday Slump,” Redfin (Jan. 15, 2021)
FHFA Seeks Comments on Overhauling Appraisal Process – Based on The Federal Housing Finance Agency’s latest update, they are requesting public input on policies and practices regarding the home appraisal process. FHFA is weighing a series of proposals, including one on increasing the valuation options for loans that are backed by Fannie and Freddie. “Modernizing the appraisal process has the potential to create a more streamlined and accurate collateral valuation process,” FHFA Director Mark Calabria said in a statement announcing the request for public input. “But if modernization is not properly adopted, it could have negative unintended consequences. The comments we receive will inform how we will modernize appraisals to improve both loan quality and the origination process.” FHFA is exploring numerous proposals, such as increasing the use of appraisal waivers, where instead of a traditional appraisal an automated valuation method is employed that uses existing data to determine value. FHFA is considering allowing “hybrid appraisals,” in which a third-party goes to the home to collect necessary information and then provides the information to an appraiser offsite who then completes the valuation. FHFA is also exploring the use of desktop and exterior-only appraisals. The agency did this during the pandemic to protect the health and safety of appraisers.
Source and link to the full article: “Federal Regulators Want to Overhaul Home Appraisals—Here’s How That Could Hurt Both Buyers and Sellers,” MarketWatch (Jan. 7, 2021)
Inventory Hits All-Time Low as Buyer Demand Explodes – According to realtor.com®’s Monthly Housing Trends Report home buyers’ choices are increasingly limited. The number of homes for sale sank to an all-time low in December, dipping below 700,000 for the first time ever. Home buyer demand remains high, causing bidding wars for the few homes on the market. Home prices are up by double-digit numbers compared to a year ago. “The shortage of homes for sale has been an ongoing issue for the last couple of years, but in December, the combination of the holiday inventory slowdown and the pandemic buying trend caused it to dip to its lowest level in history,” says Danielle Hale, realtor.com®’s chief economist. “Looking forward, we could see new lows in the next couple of months as buyers remain relatively active, but a surge of new COVID-19 cases may slow the number of sellers entering the market.”
Source and link to the full article: realtor.com®
FHFA Extends Relaxed Pandemic Lending Standards – Based on the Federal Housing Finance Agency announcement, it will continue to allow for alternative appraisals and employment verifications on government-backed loans until Feb. 28 to prevent settlement delays. The relaxed lending and appraisal standards for mortgage financing giants Fannie Mae and Freddie Mac were first put into place by the FHFA in response to the COVID-19 pandemic in March 2020. They allow for alternative verifications of employment and appraisals. The standards were originally set to expire on January 31st. “The changes are to ensure continued support for borrowers during the COVID-19 national emergency,” the FHFA said in a statement recently. “FHFA will continue to monitor the coronavirus situation and update policies as needed.” During the initial stages of the COVID-19 outbreak, lenders reported struggles in being able to obtain an appraisal based on a full interior and exterior inspection of the property. The government-sponsored enterprises were directed to permit drive-up appraisals or desktop appraisals in certain situations so that appraisals could move forward and not delay settlements. Also, as businesses closed during the pandemic, lenders reported struggling with being able to verify borrowers’ employment. In response, the GSEs began accepting alternative forms of employment verification, such as a recent pay stub.