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Expect Surge in Housing Inventory; FHA Appraisal Issues at Banks

We frequently point out how “positive” economic news, like improving industrial production or improving employment statistics, usually pushes interest rates higher. Positive reports send signals to the market that the economy is improving and that the Fed may back off from its support of the bond market. Our point is to remind everyone that when they see positive reports, they can expect interest rates to rise in most cases.

There is one positive report, however, that does not send rates upward, and that is what we received today. Inflation appears to remain under control. CPI (Consumer Price Index) numbers came in today, indicating prices were flat in July. In addition, the CPI has dropped almost 2% over the last year – the most since 1950.

Expect surges in Housing Inventory. With the foreclosure moratorium finally lifted, Notices of Default are up, and Notices of Trustee Sales are WAY up. For example, Notices of Trustee Sales were up over 300% in Contra Costa County in July (compared to last year), and they were up almost 200% in Alameda County. This should result in a sizable increase in the number of listings coming to market this fall.

Finally, we just received an FHA purchase that had fallen out at B of A because of an appraisal issue. Even though B of A’s appraiser came in at value, the value was outside the neighborhood mean according to B of A’s computerized “AVM Analysis”. As a result, the value was cut significantly and the deal died.

We simply do not have FHA Appraisal issues of that nature. We order our own appraisals from our own pool of exceptionally talented and accountable FHA appraisers. In addition, we have wholesale access to approximately 40 FHA lenders, so we can not only get the best pricing, we can easily circumvent many of the issues that kill deals at some of the major banks.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167