Industry leaders converged in Denver Colorado last week to discuss some of the changes coming to the industry. Some major announcements were made and there was a lot of discussion on what is to come for the country and real estate market. While there were four days of sessions covering a range of different topics, here were the sessions and panels that will affect the appraiser audience the most.
Weathering the Insurance Crisis: With Peter Carroll of CoreLogic, Ethan Aumann of APCIA, and Don White of PennyMac
With the severity and frequency of natural disasters increasing along with the increased cost of building, the insurance industry has lost 10’s of billions of dollars in the last couple of years. Global catastrophes have doubled in the last decade but the biggest driver of rising losses is the demographic shift coming with migration trends. Where we are seeing the greatest level of climate risk is also where we are seeing the greatest influx of people. This is heavily weighted by Florida, especially coastal areas. The panelists spoke on the problem of residents obtaining insurance policies and the rising rates (or even in some cases denying coverage). This is significantly affecting affordability which will leading to potential delinquencies. They stated the average insurance premium has increased by up to 50% in the last 5 years and is up 13% nationally in the last 12 months. This is impacting the affordability measures put in place to assist consumers in these areas.
Market Outlook with Mike Fratantoni, Ph.D., Joel Kan, and Marina Walsh, CMB all of the Mortgage Bankers Association
There is some great news for appraisers and the real estate industry has a whole. They are projecting the FED to get interest rates to 3.5% by the end of 2025. The panelists stated they are currently seeing a lot of rate volatility because of election uncertainty. The lack of inventory is still an issue but they projected this to get better with an expected increase of new construction. Of this year’s increase in new construction starts, 80% are going to first-time home buyers. But they did note that new construction homes are shrinking with 3-bedroom homes becoming more common and 18% of new construction being townhomes. One-third of homes on the market now are new construction. Traditionally, new construction has hovered around the 10% mark. On the downside, they noted seeing delinquency fissures starting to show across all loan types but in particular FHA loans. They noted seeing increases the number of loans going into forbearance over the last four months.
Housing Leader Insight with The Honorable Adrianne Todman, Acting Secretary at the US Department of Housing and Urban Development, and Naa Awaa Tagoe, Deputy Director FHFA
Todman mentioned that HUD was looking into accelerating production to meet housing demand by looking at an emphasis on starter homes and getting more homes in this range through 3D printing and Modular housing. She also mentioned how the government’s greatest role is to step in when there is a natural disaster and help consumers who have lost their homes, family, and community in the wake of these disasters.
The big news of the day from an appraisal industry point of view was when Naa Awaa Tagoe announced that FHFA was increasing Appraisal Waiver and Appraisal Waiver with Property Data Collector flexibilities. Straight Appraisal Waivers have been increased it to apply to loans with an LTV of 90% and with PDC to up to 97%. It will be interesting to see the volume of loans that are affected by these policies and if the lenders will start to use these to a greater extent. They have also streamlined the alternative processes to combine the pipeline for Fannie Mae and Freddie Mac. FHFA has also expanded its pilot for fee-based repurchase structure.
A conversation with former Speaker of the House, John Boehner, with Bob Broeksmit, CMB of MBA and John Boehner, Speaker of the House of Representatives (2011 – 2015)
This session was a frank discussion covering what to expect from the coming election and looking back on John Boehner’s time as Speaker of the House. Boehner began by talking about how he got into politics and started by running for his neighborhood’s HOA. His biggest advice to anyone looking to get into politics is to be authentic. He stated that both political parties have pushed themselves to their extreme left & right. There are no moderates anymore and the media has increased this divide. When asked about his prediction for the coming election he thought it would be a close race in the Senate, Congress, and for the president. He thought that whoever wins the Whitehouse will control the house but that republicans would win the senate regardless. He said, “If the election was held today Trump wins, He has a bigger lead according to polls than he had the previous two elections”. He went on to talk about how neither candidate has a plan to combat the fiscal mess we are in. “There has not been one discussion on the national debt since I left office.” We are currently spending more in interest payments on the debt than on the annual defense budget. He finished the session by saying, “Let me end with this, no matter who wins, the economy, and society, are all pretty good. The political system is the most screwed-up part of it. It matters a little who gets elected but our checks and balances allow us to survive because America is the greatest country on earth.”
It will be interesting to see how our country moves forward with the coming election and what and how the appraisal industry will change with these new policies. The industry should see a volume improvement with the lowering of rates as well as a refinance spike. That is something appraisers should be looking forward to. Once again, the MBA annual event was a great session with breaking news and the industry getting together to collaborate on how to improve. Let us know how you think the new interest rates and regulations will affect appraisers and the industry in the comments below.
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