Real Estate Valuations and Appraisals


With all the screams about taxing the rich, the middle class and whoever else has a dollar, there’s an up and coming tax by the FHA. Since the FHA has received so much business by in- suring so many loans over the past couple of years, it only makes sense to use their position to tax the pub- lic…..again. The Mortgage Insurance Premium is going to be raised. The House has already passed the bill and the Senate may by the time you read this have already passed its version. The MI will go up by about 1.75% but that’s not all. It will remain in place for as long as the mortgage is in effect, unlike before. So, if this isn’t a tax then what is??? So much for let’s make a deal in Washington. The attention is brought from all the less visible tax capabilities the government has by focusing through the media the income tax for the rich. Will the American public ever get it. It’s the old story, the fool is watching his pennies as the dollars go flying out the window.

Ask this question. When the state or some agency raises the use or entrance fee to something is that a tax in- crease? You bet it is. When the access to NYC is further encumbered by bridge, tunnel and ferry fees, isn’t that a tax? The worst of it is the money the commuter needs is from net income after all other taxes are paid. So, add the increases to the other taxes and one will realize that the general public, rich, middle and poor are all paying dramatic increases in tax. Remember when you didn’t pay for your luggage to accompany you on a flight to wherever? Now you pay extra for baggage, isn’t that a tax. For those who travel for business those increased costs need to be defrayed but how? Yes, by raising the cost for the goods and or services. I bet you all can come up with “costs that aren’t a tax”…really!!

I’d like to hear from some of you about the fiscal cliff. What is interesting is this cliff has existed since the U.S. economy has been in debt which seems like forever. Where was the concern when the last four years re- flected over 6 trillion of new debt. So, it wasn’t a concern for four years, but it is now. Let’s face it our debt is not solvable. We can’t earn enough or save enough to bring us to zero debt. OK, geniuses, now what???

WHAT IS COMING- This is not the time for us to preach about real estate hap- penings and before the storm there was a list of what we wanted to discuss. But this is not the time.

ANNOUNCEMENT- I recently had a 4 hour seminar, “How To Do An Appraisal and Sleep At Night” approved by the NJ Real Estate Appraisal Board. Watch for announcements as to where it will be given. I promise it is timely, very informa- tive and advanced for serious appraisers. It is not the same format or information which I will be providing for the NAIFA in April which I urge you also to attend. If you are interested, please contact me. We will keep you posted as to dates, places and times.

NEW HOME SALES UP… AGAIN!- November was another banner month for new home sales in the U. S. The rise was 4.4% from October to a seasonally adjusted rate of 377,000 according to the Commerce Depart- ment. That’s the steepest rise since April 2010 when the federal tax credit was credited with the boost in sales. For YTY the increase is 15.3 percent however the initial time period is considered a depressed one. Economist seek over 700,000 sales per annum as evidence of an improvement.

Credit for the positive housing movement is predicated on two major factors, one being job gains and the other record low mortgage rates. Here’s a surprise, sales in the Northeast rebounded in November based on the af- termath of Hurricane Sandy. The increase was 12.5 % after the October decline of 27.3% due to Sandy. So, all you naysayers, believer it when we say that this devastation will begin the real estate boom. So, stop the crying about how depressed housing prices will be and realize you will be made whole and more. Now, I’m referring to real estate value loss not the horrible personal loss so many have experienced.

According to Standard Poor’s / Case-Shiller national home price index, housing prices increased 4.3 percent in October compared with a year ago. That apparently represents the largest year over year increase in 2 and a half years. Prices rose in 18 of the 20 cities tracked for this study.

What does all this data indicate for 2013? It’s pure conjecture on anyone’s part. All the indicators are show- ing for a strong 2013 real estate recovery which we’ve been predicting for the past 18 months. What are the pitfalls for being overly optimistic? Congress and the administration and world economics. At this juncture, all of which are totally unpredictable. A substantial unknown in this writer’s opinion is the employment sector and the continuance of extended unemployment benefits. There will be serious consequences if millions are deprived of unemployment assistance. To what degree, I have no idea. It’s often thought that there is so little that can truly affect the U. S. economy because of its size. Maybe that’s true, but in each locale most hurt by a loss of income there will be a dramatic effect. Will the rest of the country hear about it, probably not. I can tell you that southern California is coming back very nicely, Florida is also experiencing a very strong and pro- longed return in real estate values. Vegas also is doing very well. So, the first to go down the tubes are the first to return which is the historical occurrence for many years. What about the northeast? It will also come back after the dust settles with the Sandy aftermath.

There was some good news for factory activity in the mid-Atlantic region. December saw a good bounce back from the previous month. New orders were substantial. Also, a survey of new home builders reflected confi- dence in early 2013 for increased demand. That measured the greatest confidence in the past 6 years. Now, that’s impressive.