I’ve been reading reports from other areas of the country about low appraisals. Basically, the appraisals are coming in low because they are not recognizing the shift in the market, and that because of excessively low inventory that prices are on the rise.
I have not experienced it yet in our market, but I can see it as a possibility. Like flowers in the spring, one feels right now if they look closely enough that they could actually watch them grow. That is how I am feeling about the prices of homes in the market at this time. I can almost see them rise.
So are low appraisals coming here next? And when the appraisers model is to look back 6 months, how do they adjust for prices that appear to be visibly rising? First thing that they need is to justify the price with multiple offers. That we are getting. Next there need to be all cash sales. These are typically investor buyers, or relocation buyers. We are getting both of those. Or, there need to be buyers who can afford to pay the difference between the appraisal and the purchase price (and want the house enough to “overpay”).
The people that will be impacted if appraisal start coming in low will be the first time buyers, or those with low downpayments.
While we definitely need a recovery in the market and I do believe that home prices dipped abnormally low on their correction. I do not want to see another bubble like we had in 2004-2006.