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NAR: Future appraiser shortage is real

Realtors are again ringing alarm bells over a potential future
crisis in the appraisal industry.

In a new report, the National Association of Realtors (NAR) said that a wave of retiring appraisers
and a lack of new entrants into the field could create a serious shortage of
available appraisers for the housing and mortgage markets, particularly in rural areas.

NAR estimated that the current population of appraisers
stands at about 82,000 nationwide. That number could decline by roughly a
quarter over the next 30 years given the 2016 level of appraisers entering the
field, the trade group said.

NAR cited figures from the Appraisal Foundation, which keeps
tabs on people who pass the National Uniform Licensing and Certifications
Examinations exam each year, a requirement to practice.

In 2016, that number reached a new low at 662, which
is down from 2,087 in 2008. This number averaged just 1,000 from 2010 to 2014.

“We are well below replacement at this level, so we do need
more appraisers, and we need high-qualify appraisers,” said Ken Fears, NAR’s
director of housing finance and regional economics.

A wave of appraisers is expected to reach retirement age
over the next 10 to 15 years. Appraisers also have been leaving the industry
before reaching retirement as the government has ratcheted up the training
requirements and regulations.

“A lot of appraisers seem to be very concerned about the AMCs [appraisal management companies, through which lenders must now order appraisals services] adding to the workload without adding to their commissions, actually taking
away from their commissions,” Fears told Scotsman Guide News. “Essentially, in economics, we would call them rent
seekers. They are not really adding value.”

Fears said that increased automation will likely reduce the
demand for live appraisers. Even if a large number of future appraisals are handled through automation,
however, the industry will likely face a shortage of live appraisers. Fears noted that the modeling tends to work only in newer developments with similar properties. In neighborhoods with a lot of variation and aging properties, live appraisers will always be needed. 

“Even if we do automate roughly 50 percent of the GSE and
FHA space [loans purchased by Fannie Mae and Freddie Mac, and insured by the
Federal Housing Administration], that is not enough,” Fears said. “We need to
train a lot more people.” 






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  • With Expiration Looming, NAR, NAHB Applaud Flood Insurance Renewal Progress

    It remains to be seen if it passes into law, or how it
    will hold up during the process, but housing industry groups say an agreement
    has been hammered out for renewing the federal flood insurance program. Both
    the National Association of Home Builders (NAHB) and the National Association
    of Realtors® (NAR) say they have been working with the House Financial Services
    Committee on parameters, for, in the words of NAHB, “A viable, long-term flood
    insurance reauthorization bill that will keep the National Flood Insurance Program
    (NFIP) fiscally sound and enable home builders to provide safe and affordable
    housing to consumers.”

    A flood insurance policy is required of homeowners who
    live in certain Federal Emergency Management Agency (FEMA) designated flood
    plains and have a mortgage issued by any federally charted financial
    institution
    . The program
    provides $1.25 trillion in coverage for about 5 million policyholders
    nationwide. Policies are issued by private insurers but are backed
    by FEMA. Because not all homeowners are required to carry the insurance, risk
    is not shared over various levels of risk. 
    NFIP was authorized by an act of Congress in 1968 and has been
    reauthorized periodically since then.  

    The current reauthorization would be
    through the “21st Century Flood Reform Act.”  NAR said changes to the legislation have
    cleared the way
    for their endorsement of the bill.

    The Chicago Tribute, after the
    recent flooding in Illinois, reported that the federal program is indebted to
    the U.S. Treasury for $24.6 billion after massive payouts for damages caused by
    Hurricane Katrina, Superstorm Sandy, and other recent and devastating floods. NFIP
    is paying $400 million in interest on that debt.

    Flood insurance premiums do not
    reflect the true cost of the program and policies are not only backed by FEMA,
    they are federally subsidized. The last reauthorization of the program in 2012,
    the Biggert-Waters Flood Insurance Reform Act, required NFIP to raise premium rates
    to reflect true risk.

    While Biggert-Waters grandfathered existing
    policies, albeit with a gradual reduction of those subsidies, new policies were
    issued at a full risk-based rate. This caused immediate disruption in coastal
    and other flood-prone areas.  In 2013,
    MND wrote about one homeowner, in Pinellas County, Florida,
    who purchased a future retirement home in 2012 and paid a $3,300 premium for
    his first year of coverage.  When he
    received his next bill, it was for $24,300. 
    Congress quickly rolled back the risk-based premium requirement, but it
    continues to hang over the real estate market in lower elevation areas.

    Among the Financial Services
    Committee’s proposed changes that are supported by the housing groups are:

    • Elimination of a provision that
      would have ended NFIP coverage of new homes constructed in the 100-year
      floodplain;
    • Ensuring that “grandfathering” will
      remain for all policyholders if their risk changes when FEMA periodically
      revises its flood plain mapping.
    • Raises the annual premium floor for
      rate increases from its current 5 percent level to 6.5 percent rather than the
      8 percent originally proposed.

    The changes laid out in press
    releases from NAHB and NAR do not appear to address the problem of premium
    increases
    when properties change hands. There are anecdotal reports that uncertainty
    over this issue is already impacting real estate sales in some coastal areas.

    NAHB Chairman Grant MacDonald said, “NAHB
    commends House Financial Services Chairman Jeb Hensarling and Housing
    Subcommittee Chair Sean Duffy for their leadership in working with us to
    produce a bill that will preserve rate affordability, shore up the NFIP and
    address the concerns of the housing community. With the NFIP set to expire on Sept. 30, we urge the House to pass this bill quickly.”

    NAR President William E. Brown, said,
    “This legislation protects taxpayers, as well as homeowners, which is no
    easy task. The September 30 reauthorization deadline still looms in front of
    us, and Realtors® are eager to see this legislation progress
    quickly. Leaders on both sides of the aisle are well aware that this issue
    touches 22,000 communities – in every state, both coastal and inland. We’re
    grateful for the committee’s support and look forward to their continued
    efforts on behalf of homeowners.”

    Amid US real estate buying binge by foreign investors, Florida remains first choice

    Foreign investment in U.S. residential real estate recently skyrocketed to a new high with nearly half of all foreign sales happening in Florida, California and Texas.

    Related News/Archive

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    This year’s National Association of Realtors survey of international investing in U.S. real estate once again revealed that foreign buying is focused first and foremost on Florida, where 22 percent of such activities took place. The Sunshine State was followed by California and Texas (each at 12 percent), and then by New Jersey and Arizona (four percent apiece).

    Florida was the most popular state for Canadian buyers, fueled by a sharp increase in sales dollar volume. Chinese buyers mostly chose California, while Texas was the preferred state for Mexican buyers.

    Overall, 284,455 U.S. properties were bought by foreign buyers, up 32 percent from 2016. Purchases accounted for 10 percent of the dollar volume of existing-home sales, up from 8 percent last year.

    NAR’s study found that between April 2016 and March 2017, foreign buyers and recent immigrants purchased $153 billion of residential property. That’s a 49 percent jump from $103 billion in 2016 and surpasses the $103.9 billion in purchases in 2015 as the new survey high.

    “The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of U.S. property over the past year,” NAR chief economist Lawrence Yun stated.

    “While the strengthening of the U.S. dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work and invest.”

    Yun attributed the rise in Canadian purchasing property in U.S. markets that remain more affordable than in their own country.

    “Inventory shortages continue to drive up U.S. home values, but prices in five countries, including Canada, experienced even quicker appreciation,” said Yun.

    Foreign buyers typically paid $302,290, which was a 9.0 percent increase from the median sales price in the 2016 survey ($277,380) and above the sales price of all existing homes sold during the same period ($235,792).

    About 10 percent of foreign buyers paid over $1 million, and 44 percent of transactions were all-cash purchases, down from 50 percent in 2016.

    Nancy Quinn Honored As Realtor Emeritus By National Association Of Realtors

    Maynard, MA – Nancy Quinn, President/CEO of Berkshire Hathaway HomeServices N.E. Prime Properties, has earned the prestigious Realtor Emeritus status from the National Association of Realtors. The Realtor Emeritus designation is conferred on individuals who have held membership as a REALTOR with the National Association for a minimum of 40 years and have served at the national level. Quinn was honored with the award at Granite Links Golf Club in Quincy, MA on June 23, 2017.

    Quinn began her real estate career in 1977 with family-owned Ledgard Real Estate and Appraisal Company. In 1982, she assumed the lead role of the business, and affiliated with the Gallery of Homes franchise. In 1993, she was one of the founding members of New England Prime Properties, Inc., and franchised with Prudential Real Estate and Relocation. Quinn became the President/CEO of the company in 1995. In 2014, the company changed its franchise affiliation to Berkshire Hathaway HomeServices. During Quinn’s tenure, Berkshire Hathaway HomeServices N.E. Prime Properties has grown to 18 offices in Massachusetts, Southern Maine and Rhode Island.

    Quinn has served on numerous committees with The Greater Boston Real Estate Board, having been Chairperson of Government Affairs and a Marketing Director for her council. She also was on the Board of Directors for the Massachusetts Association of Realtors and served as President for both the Massachusetts Board of Real Estate Appraisers and Central Middlesex Multiple Listing Service.

    Realtors endorse House flood insurance extension | TheHill

    The National Association of Realtors (NAR) endorsed a House plan to renew and revamp the National Flood Insurance Program (NFIP) after holding out for several changes.

    NAR said Thursday that the group representing more than 1.2 million real estate agents and industry employees, backed the bill after lawmakers reduced proposed increases to flood insurance rates and preserved a policy that “protects homeowners from significant rate increases when a flood map changes.”

    NAR President William E. Brown praised House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Financial Services Housing and Insurance Subcommittee Chairman Sean DuffySean DuffyOvernight Finance: GOP offers measure to repeal arbitration rule | Feds fine Exxon M for Russian sanctions violations | Senate panel sticks with 2017 funding levels for budget | Trump tax nominee advances | Trump unveils first reg agenda Realtors endorse House flood insurance extension The Hill’s 12:30 Report MORE (R-Wis.) for working with the group on fixes to the bill.

    “The changes to the 21st Century Flood Reform Act will help give certainty to homeowners who have brought their property to code and have done their part to protect it against flood risk,” Brown said.

    “It’s a fair and reasonable approach that recognizes the need for accessible, affordable flood insurance, while taking us one step closer towards reauthorization.”

    NAR’s endorsement comes at a critical time for the House. Congress has until Oct. 1 to reauthorize the NFIP, first established in the 1960s to provide flood insurance to at-risk homes. Lawmakers are seizing on the deadline as a chance to cut the NFIP’s $24 billion debt and shift more flood insurance customers to a burgeoning private market.

    Private flood insurance was largely nonexistent when the NFIP was established in 1968, and Republicans are eager to reduce taxpayer exposure to risky homes by easing federal policy holders into private plans.

    The House reform plan is currently stalled in the House Financial Services Committee amid bipartisan opposition from more than 20 lawmakers.

    Brown said NAR is “eager to see this legislation progress quickly.”