In the original script for Groundhog Day, the character played by Bill Murray was supposed to be an FHA appraiser, not a weatherman. The studios, however, felt it would be difficult for the public to relate to the all-too-real scenario of an FHA appraiser trapped forever in the past.
Think it’s just fiction? Ask anyone trying to purchase a home in the Phoenix real estate market by using FHA financing whether the appraiser for their loan has any idea what year this is.
From the Phoenix Business Journal this week …
Median single-family home prices in May for Maricopa and Pinal counties were up 32.4 percent from a year earlier. Median prices of townhouses and condos last month spiked 37.3 percent year-over-year, the report said.
(As an aside, the Business Journal article also quotes Arizona State’s real estate guru Michael Orr as saying the current surge in prices is unsustainable. Readers of this site already knew this, since I wrote the same thing back on June 8. The lesson? Clearly, I’m brilliant and should be the lone real estate source for the local media. * cough *)
And from a recent FHA appraisal …
According to the data collected the subject market area is experiencing a stabilization in market values.
Experiencing a stabilization? Really?
Or this one from January, when it already was clear the market was changing and inventory was shrinking severely …
Property values appear to be declining based on data from the most recent year.
Declining? And while that was from January, the same word appeared on an FHA appraisal conducted within the last month for one of my buyers’ agents clients.
The ill-formed opinions of market conditions are damaging enough; add in the near-guarantee that an FHA appraisal will have the subject property’s value at about 90 percent of true market value, and FHA buyers don’t stand a chance.
I talked briefly of this week’s Channel 3 story where we saw a buyer talking about how he kept losing homes to cash offers and/or investors. The reality is, as a seller, accepting an FHA offer nearly guarantees that the offer price on the executed contract isn’t going to be the final sales price.
It’s not cash buyers preventing FHA buyers from purchasing. It’s not investors. It’s not those maniacal Canadians coming across the border in friendly hoards.
It’s the FHA appraisers. Blame starts and stops there.
Until the spell is broken, until the FHA appraisers wake up and realize we’re in June 2012 and not June 2010, for FHA buyers this market is all but closed.