Information Misrepresentation

The National Association of Home Builders (NAHB) reported this week one out of every three of its builder members has lost a sale during the last six months because of home values reported by appraisers.

NAHB Chairman Bob Nielson said, "The inappropriate use of distressed and foreclosed sales as comparables in determining new home values is needlessly driving down home prices, killing home sales, causing more workers to lose their jobs and delaying a housing and economic recovery."

The NAHB did not stop there, further hammering appraisers with the following:

* According the Association, appraisers are using "faulty" practices by utilizing distressed homes as potential comparable sales against new homes. Mr Nielson said in a statement that "This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market."

* Mr Nielson notes that in many cases, new home appraisals are coming in below the cost of construction, because of flawed appraisals for utilizing existing and potentially distressed homes.

* Per the NAHB, These appraisal practices are a major contributing factor to the current acquisition, development and construction (AD&C) lending crisis that has choked off credit for home builders and threatens to prolong the current housing downturn. Falling appraised values for land and subdivisions under development have led some financial institutions to stop lending to developers and builders, to demand additional equity and even to call performing loans.

* The NAHB has been having summits, with leaders throughout the housing industry in an effort to find solutions that will allow appraisers to develop realistic valuations based on sales that are truly comparable.

Mr Nielson and the NAHB concludes that, you guessed it, “Major reforms in appraisal practices and oversight are needed to ensure that appraisals accurately reflect true market values and don’t contribute to price volatility or harm aspiring home owners and move-up buyers.”

One thing I know from the real estate world: It is always the appraisers fault. NOT! What we do have from the NAHB is information misrepresentation.

This must have been some series of summits. A bunch of bureaucrats gathered together to central plan the housing recovery, culminating in the one thing we need less, not more, of; additional regulations.

If additional regulations were the answer, the sweeping regulatory action spearheaded by former HUD Secretary and Architect of Ruin Andrew Cuomo, The Home Valuation Code of Conduct (HVCC), would have done the trick. Instead, it has wrecked the appraisal industry, leaving unregulated Appraisal Management Companies to coordinate, and in many cases dictate, appraisal performance.

Since distressed properties make up approximately 65% of the market here in Florida, it would be highly inappropriate to fail to consider these as potential comparable sales, provided the gross living area, age, amenities, and, of course, condition, were reasonably similar.

By applying political pressure to "develop realistic valuations," made as instructed will become a reality and as a result, valuations will be lacking in adequate support and accurate value.

Appraisal practices, as governed by the Uniform Standards of Appraisal Practice (USPAP), provide a framework for appraisers nationwide to adhere to in an effort to provide consistent and accurate valuation through the three approaches to value. These voluminous guidelines are a contributing factor to providing the industry with appraisal reports arriving at well supported value indications , not further deteriorating the housing crisis as the NAHB says.

Conspicuously absent from the many factors cited by the NAHB for the continued downward pressure on the housing market are the actions of the Obama administration. It is well documented that the origins of the collapse centered around the governments efforts to provide housing to buyers the marketplace weeded out. These potential buyers were not weeded out due to race, as ACORN would have you believe, but due to the higher risk associated with their ability to repay the loan. Before political correctness ran amok, his used to be referred to as sound business practice.

Among those applying pressure to the banks in the form of threatening race related boycotts was a young attorney for ACORN, Barack Obama.

While George Bush made failed attempts at forcing Congress to rein in the Government Sponsored Entities known as Fannie Mae and Freddie Mac, under House Finance Chairman Barney Frank, the Congress looked the other way.

Meanwhile, instead of letting the market cleanse itself, the administration has invented program after program to reward bad behavior and prop up the values of housing, which has only prolonged the pain and the problem. Government, who cannot be trusted, should leave the housing marketplace and let the free market establish a base for prices. In fact, we now learn the housing numbers have astonishingly been inflated.

Housing is not the only place numbers are inflated. Government spending, regulation and taxation is what is crushing the job market, with unemployment actually around 12% rather than the reported 8.6%, and for buyers to feel comfortable making large purchases in the form of housing, the job market needs to be at worst steady. Under this administration, there is no job creation, debt is expanding exponentially and Americans are in fear for the future.

Until jobs can be created in large numbers and the government diminishes involvement in what should be private sector activity, continued negative pressure on the housing market and America will remain.

As Ronald Reagan accurately said, "Government is not the solution to the problem, government is the problem."

Get The Lead Out!

I recently attended a continuing education class and had to tackle my wallet as it bolted for the door. In what can only be described as a staggering example of an overreach of governmental regulation, the EPA has implemented new costly regulatory measures to combat potential issues involving lead based paint, which is found in buildings constructed before 1978. An NBC affiliate has more:



The Better Business Bureau offers further explanation.

Like the greater majority of governmental intervention in the marketplace on behalf of the consumer, the new requirements, which are beyond extensive, are going to cause significant strains to an already bludgeoned housing industry and small businesses in supporting industries. Jeremy Drobeck of 1st Class Mortgage Service is not happy. Take a listen:



FOX Business's Dagen McDowell and Brian Sullivan have more:



The Wall Street Journal thinks you are willing to suck down more costs to defend against lead based paint, but FOX Business's Brian Sullivan sums up the unintended consequences. Property owners who own homes built prior to 1978 who are considering repairs face an estimated 25% in additional costs per project as businesses must pass along the extra costs of completing the job. These additional costs serve as a tax raising expenses which could make these renovations cost prohibitive.

As a property owner of these type of properties, I will now refrain from taking on upgrading projects that fall under the new EPA requirements. In my capacity as an investor, I will be much more inclined on purchases for renovation and for long term holding to seek out buildings built after 1978. Since I am no doubt not alone in this mindset, in my capacity as an appraiser perhaps a negative adjustment should be applied to all homes built before 1978 due to the extra costs associated with any repairs that may be required going forward.

Who will enforce these regulations anyhow, since county code enforcement workers are plenty busy already. Could it be the 6000 person civilian army President Obama has recently implemented?



Currently, our government is engaging in the installation of excessive regulations, much in support of global warming from cap and trade, that will severely handicap economic growth and prosperity. These regulations take the form of a tax, and you need not be Milton Friedman to recognize that when you tax something, you get less of it. With the implementation of the looming cap and trade bill, the residential governance on the energy efficiency of improvements and this overreach regarding lead based paint, it appears that property rights are under alarming assault. In addition, property values will face additional negative pricing pressure and any future recovery of the housing market will be handicapped.

Free market capitalism remains the best path to prosperity!

Is Economic Life of HVCC Over

The Home Valuation Code of Conduct, a brainchild of New York Attorney General Andrew Cuomo, became law as a regulatory mechanism on the hiring and management of the appraisal process , could see the end of it's economic life. The HVCC, along with hundreds of other governmental regulatory laws enacted, should have never became law.

In October of 2009, Rep. Gary Miller, (R:CA), joined by Rep. Michele Bachmann (R:MN), Rep. Childers (D:MS) and Manzullo (R-IL), offered an amendment to sunset the HVCC.

Now, it appears Senator Casey (D:PA) will offer similar language to the Senate. This will be very welcome news to all industries associated with the housing market and free market capitalists everywhere.

Dagan McDowell of FOX Business News has more on the potential demise of HVCC. Take a listen:



One can only hope the HVCC is put behind us, but even if the government sunsets the law, one wonders if banks, many of whom are partially owned by the government, and government sponsored entities such as Fannie Mae and Freddie Mac, will still implement the standards of the code.

Dangers to Prosperity Lurk in Cap & Trade

On his radio program Friday afternoon, Rush Limbaugh referenced an article from The American Thinker blog regarding the Cap & Trade legislation, and the untold hidden land mines associated with it.

The cap and trade legislation is being pushed as a vehicle for America to curb emissions as part of the fight against global warming, which is greatest hoax of all time.

While is is always an excellent, cost effective idea for individuals and corporations to refrain from polluting, further costly regulatory legislation is arena unnecessary. Until the global warming hoax is completely exposed, and given our main stream media this could take some time, it acts a tax on business which is passed on to the consumer and prohibits economic growth and prosperity. And with a multitude of recent reports questioning the validity of global warming evidence, it becomes apparent that global warming is more about governmental control than climate change and represents a vehicle for the global transfer of wealth.

Trying to ascertain what is what in a 1400 page bill is daunting, particularly when it refers back to other bills. Have at it! However, it appears that under the Waxman-Markey bill, which recently passed the House, the costs of real estate transactions, ownership and new construction will go up.

Essentially, an administrator (czar) of The Environmental Protection Agency, appointed by the President, will develop a national set of enforceable building codes which all new construction must adhere to which mandates increases in energy efficiency by approximately 30%.

Each home, new and existing, will be investigated to determine a "final score" on energy efficiency and labeled. While there is much confusion as to whether homes must meet certain requirements prior to a sale, a few things come to mind which are not clearly spelled out in the bill.

The bill makes a distinction between public housing and assisted housing, but does not define the parameters of such. So, I am wondering, are homes whose loans have been recently modified with government money "assisted housing"?

The bill does spell out that if you rent property to assisted renters or provide public housing and receive monetary incentives to retrofit your property you cannot pass any costs on to the renter by way of rental rate increases, even though you have seemingly improved the property.

Over the past year, approximately 75% of new mortgage loans have been FHA loans, so I wonder if since the government holds the note they can mandate the retrofit. In fact, with Fannie and Freddie's loan portfolio and the Obama administration owning large positions in many major banks, will those properties be subject to the retrofit legislation? Will new FHA loan interest rates be based upon the energy rating of the improvement?

The bill does give the administrator the ability to adjust annually the energy requirements, so they will start out low in an effort to enhance the probability of the bill passing only to be adjusted without legislation going forward, no doubt a bad idea. This legislation, if it becomes law, will be an assault on property rights, seizure of yet another portion of our freedom and a new level of taxation to help in the fight against the speculative global warming. Quite obviously, building codes should be set by local governing bodies and a federal mandate in this arena, similar to the recently passed health care bill, is likely unconstitutional.

At any rate, if passed into law, the legislation will increase costs of home ownership, increase the difficulty of selling improved properties and limit choice for property owners. The new law would make the administrator one of the most powerful players in our government and would be asking the public to trust the governing adjustments going forward. Has this administration earned our trust? To the contrary, they appear to be running a thugocracy full of deceit and corruption.

It looks like through excessive regulatory legislation in an effort to combat the speculative global warming issues, the government is going to put a governor on the appreciation of home values, which in istelf is an attack on free market capitalism.

States Rights Rule

You may have noticed that in recent months, the stories regarding eminent domain have been increasing. The Federal Government has been making a power grab on several fronts, and land acquisition is one of them. Check out this conversation regarding the goings on in Utah:



Keep any eye on this one, and I predict in the end, States rights will rule.

Seizure of Property

Eminent Domain is a hot topic and the government continues to have a big appetite for property. Take listen to this example on FOX & Friends.



A battle, also in Virginia, is set to go to the judicial system. The very lovely Shannon Bream, a fellow Seminole who earned a Juris Doctorate with honors from Florida State University College of Law, reports:

Vacancy Rate Crushing Investors

With Blackrock and Tishman Speyer walking away from the humongous New York City residential apartment community Stuyvesant Town, is there a difference in the morality of a commercial enterprise handing back ownership to the lenders versus a normal homeowner. And interesting discussion on CNBC hosted by Erin Burnett:



The economic environment created by the housing crisis and exacerbated by the deplorable policies enacted and looming legislation by the Obama administration, have forced the unemployment rate to remain swollen and the prosepct for improvement in that regard to remain handicapped.

In fact, apartment vacancies are at a 30 year high and, with a over supply of available living opportunites inclusing a shadow inventory, relief in not in sight.

A Great Opportunity?

Chris Cotter and the lovely Tracy Byrnes of FOX Business discuss the housing market with Rand Mortgages Drew Kessler. Take a listen:



The market is relatively stable these days, but much of the transfers are on lower value homes and many of these sales are influenced by governmental incentives.

Loan modifications are few and far between and there is a second wave of foreclosures on the way, and this wave will consist of much higher valued homes than the previous sub prime heavy pool.

Governmental policies are anti-small business, which has a very negative impact on unemployment. The unemployment rate is very high, and relief in this arena is not present on the horizon. Until jobs come back, middle level housing values will continue to be under pressure and transactions in this range will be curtailed.

In the event you do have money and have a safe, decent paying job, I agree with Mr. Kessler that you may never see this kind of opportunity again. But, until rates start to rise, there is no rush since the economic conditions seem here to stay until our government once again embraces free market capitalism.

Free Parking?

And you thought there were a significant amount of vacant homes here in Central Florida. Apparently, via Phil Keating and FOX News, there are a dozen or so car lots available as well. Take a listen:



It would be interesting to appraise one of these parcels.

Happening Now

For homeowners, credit is still marginally difficult to secure even as most banks have received federal assistance to resume fair and prudent lending practices. But, while even the most intellectually challenged banker can make money borrowing short at next to free and lending long at around 5%, few banks are doing so. Why? Do they know something we don't? Is there another shoe to drop?

FOX Business Neil Cavuto uncovers it is happening as we speak.



Unfortunately, the economic policies of the current administration, which can be summed up as an assault on small business, is prohibiting the marketplace from resuming economic growth. Yes, a jobless recovery.

If these proposed actions, from excessive new regulation, increased taxation, "skyrocketing" energy costs under cap & trade to the insane prospect of government run health care, the prognosis for real recovery is bleak.

The commercial real estate sector cannot bounce back without small business expansion, which is fueled by entrepreneurs who start and expand small businesses, and thus occupy office and retail space. The current environment is not supportive to small business. A sad situation indeed.

Contesting Property Taxes

Rebecca Diamond is the co-host of The FOX Business Channel show "Happy Hour", which is held live each weekday at The Bulls and Bears Pub at the Waldorf Astoria in New York City. Part of the show is a segment called The Diamond District, and during the following segment Diamond interviews Dani Babb, author the of "The Accidental Landlord", and the discussion involves property taxes. Take a listen:



Most of this information is correct. Almost every appraisal we do these days finds the subject property over assessed. Our company, Accurate Property Values can help property owners with the entire process of contesting tax assessments. We have relationships with most county offices in Central Florida and an extensive history in participating in the appeals process.

Please feel welcome to visit our website or give us a call at 407-488-6458 to discuss your current position. Time is of the essence as these appeals must be finalized by early September. We have introductory offers beginning at just $49, which would be quite a bargain to know you are paying taxes based on accurate assessments or if you are able to reduce your assessed value, which over time could be a very significant savings.

Feds Strike Blow To Orlando Economy

The actions of our government never cease to amaze me. Orlando, has been put on a "no fun" list of cities to avoid for conventions and business meeting going forward. CNBC's Mark Haines chats with Orlando Mayor Buddy Dyer about this nonsense:



Since the government is commanding more control of the economy seemingly daily, should this policy become strictly implemented, the policy would strike a blow to our number one local industry, tourism, which would be a catastrophe for the Orlando economy .

It is indeed time to take a stand on the "remaking of America", as the implemetation of these idiotic policies going forward, (Cap & Trade and nationalized health care?) will continue to handicap our economic growth. Higher taxes and regulation cause limited economic growth which equates to a limited increase, if any, in employment. With consumers handicapped in spending in a very suspect job market, growth will be non existent.

You do not have be an economist to recognize this is not good.