Appraisal Institute Presentation

Appraisal Institute Presentation September 19, 2009 Breckenridge, Colorado

Objectives
Explanation of Various Residential RE Statistical Models
Relating sub-markets to the whole
HVCC information from NAR
Introduction to absorption rate pricing

Statistical Models-CS
Case-Shiller – based on paired residential re- sales in 20 MSA’s - including Denver
sold to Fiserv (S&P) which uses the data to develop indices to support sales of options + tradable futures on ChiMerEx
is applicable only to residential resale’s
data is gathered from recorded information
calculated monthly using a 3 month rolling average and published with a 2 month lag

Statistical Models-O
FHFA (OFHEO)
Released Quarterly
Data from FNMA and FREDDIE, includes refinances
Is a modified version of the WRS approach developed by CS
Excludes sales made with jumbo, FHA, and VA financing and multi-family sales

Statistical Model-Z
Uses the proprietary algorithm “Zestimate” for any given county using recorded data
Refreshed daily
Demonstrates the Median Price
Offers a median MSA value by intuiting a value for each individual property and applying that to all residential properties in a given county
It is a SWAG developed from a WAG

Statistical Model-M
Denver Local MLS Data from Metrolist Inc.
Reflects true sale price, is not an index
Is not weighted or seasonally adjusted
Excludes most new homes sold
Excludes private sales
Does not include refinance information
Suspect because of entry methods

Case-Shiller vs. Denver Actual

Case-Shiller vs. OFHEO

Case-Shiller-OFHEO vs. Actual

Case-Shiller Comparison

Zillow – Denver vs. United States

Denver Average Residential Sold Price

Denver Median Residential Sold Price

Denver Market Activity-MLS

Average Days on Market for Metro Denver Residential

Average Days on Market for Metro Denver Condo

Residential Price Change Analysis

Condo Price Change Analysis

Seasonal Influx Index-Residential

Seasonal Influx Index-Condo

Total Combined Number of Homes for Sale by Year-MLS

Total Combined Number of Homes Sold by Year-MLS

Total Homes sold in Metro Denver as reported by Metrolist
2003 – 47,966
2004 – 54,012
2005 – 53,005
2006 – 50,244
2007 – 49,789
2008 – 47,837
y-t-d 2009 – 27,708
2009 - 40,200 - Projected year end
Excludes new homes sold onsite and private sales

Sold Price-Metro vs. HR

Sold Price-Metro vs. GVR

Sold Price-Metro vs. Wash Park

DOM for Metro vs. HR

DOM for Metro vs GVR

DOM for Metro vs Wash Park

HVCC Impact on the Housing Sales Market
No Empirical Data
NAR has developed Anecdotal Data
Random Sample of 40,000 REALTORS
3,600 responses generated.
The HVCC appears to negatively affect the processing time of a real estate closing
Lost sales were reported by 37% of REALTORS reporting

Additional Time
76% of REALTORS reported additional time is needed to obtain an appraisal.

Appraiser Fees
Reduced fees reported by ½ of Appraiser respondents.

Increased Costs to Consumers
Percentage of Cost Increases

Unfamiliar Geographic Area
71% of Realtors reported an increase in out of area appraisers accepting assignments

Denver Absorption Rate

Absorption Rate Pricing
AR is the current inventory divided by
last months closed sales X 12 divided by 52
inventory _____________
lms x 12 / 52

AR Example
21,000 (current inventory)
_____________
(sales) 3000 X 12 / 52
Absorption Rate is 30.33 weeks or
7.58 months (buyers market)

What does it mean?
A balanced sub-market is a 6 months supply
Less than 6 months, a sense of urgency develops with buyers, prices go up:
Sellers Market
More than 6 months, a sense of urgency develops with sellers, prices go down:
Buyers Market

Wrapping Up
The various market statistical models trend with relative consistency in spite of different approaches
Markets are very local, comparables must be geographically and temporally close
HVCC is negatively affecting the market
AP Pricing is leading REALTORS toward a better pricing model

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Appraisal Institute Presentation

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Appraisal Institute Presentation — Presentation Transcript