Printer Friendly

Cause for concern.

Appraisers continue to express frustration about excessive and confusing local, state and federal government regulations, which cumulatively account for the plurality of their liability concerns, according to the 2017 Voice of the Appraiser report released Oct. 25 by October Research. The report asked appraisers to rate issues that most concern them.

Caption: Download the 2017 Voice of the Appraiser report at bit.ly/voice-of-the-appraiser-2017.
Economic Indicators | PwC Real Estate Investor Survey, Q3 2017

                   Regional Mall              CBD Office

                Q3 2017      Q2 2017      Q3 2017     Q22017

Discount Rate (IRR) (a)

Range(%)       5.00-11.50   5.00-11.50   5.50-9.50   5.50-9.50
Average (%)       7.60         7.60        7.13        7.05
Change (bps)                    0                       +8

Overall Cap Rate (OAR) (a)

Range(%)       4.00-10.00   4.00-10.00   3.50-7.50   3.50-7.50
Average (%)       6.23         6.20        5.66        5.68
Change (bps)                    +3                      -2

Residual Cap Rate

Range(%)       4.00-10.00   4.00-10.00   4.75-7.50   4.75-7.50
Average (%)       6.70         6.70        6.11        6.13
Change (bps)                    0                       -2

                     Warehouse               Apartment

                Q32017      Q22017       Q32017      Q2 2017

Discount Rate (IRR) (a)

Range(%)       5.50-9.00   5.50-9.00   5.50-10.00   5.50-10.00
Average (%)      6.65        6.66         7.28         7.28
Change (bps)                  -1                        0

Overall Cap Rate (OAR) (a)

Range(%)       4.00-6.90   4.00-6.90   3.50-7.50    3.50-8.00
Average (%)      5.22        5.27         5.35         5.40
Change (bps)                  -5                        -5

Residual Cap Rate

Range(%)       5.00-7.00   5.00-7.00   4.25-7.75    4.50-8.00
Average (%)      5.96        5.95         5.79         5.82
Change (bps)                  +1                        -3

(a) Rate on unleveraged, all-cash transactions. Definitions: bps,
basis points. Discount Rate (IRR), internal rate of return in an
all-cash transaction, based on annual year-end compounding. Overall
Cap Rate (OAR), initial rate of return in an all-cash transaction.
Residual Cap Rate, overall capitalization rate used in calculation of
residual price; typically applied to the NOI in the year following the
forecast. Survey involves institutional-grade properties. Source: PwC
Real Estate Investor Survey; Personal survey conducted by PwC during
July 2017. For subscription information, please visit
http://bit.ly/pwc_real_estate_survey or call 1-800-654-3387.

Conventional home mortgage terms, US averages

New homes

                     Sep 2014   Sep 2015   Mar 2016

Interest rate (%)      4.44       4.23       3.93
Term (years)           28.3       28.7       29.2
Loan ratio (%)         77.5       77.6       78.2
Price ($ thousand)    388.5      422.3      445.7

Existing homes

                     Sep 2014   Sep 2015   Mar 2016

Interest rate (%)      4.53       4.21       3.95
Term (years)           27.4       28.1       28.2
Loan ratio (%)         78.0       78.0       76.9
Price ($ thousand)    358.3      361.6      419.3

New homes

                     Sep 2016   Mar 2017   Sep 2017

Interest rate (%)      3.56       3.73       3.98
Term (years)           28.8       28.6       28.8
Loan ratio (%)         78.1       79.6       78.1
Price ($ thousand)    460.7      411.7      456.7

Existing homes

                     Sep 2016   Mar 2017   Sep 2017

Interest rate (%)      3.61       3.61       4.00
Term (years)           28.6       28.6       28.5
Loan ratio (%)         80.4       80.0       79.4
Price ($ thousand)    377.4      388.3      369.7

> For continuously updated economic indicators, visit
www.appraisalinstitute.org/news/market-data (login required).

Economic Indicators | Market rates,
bond yields and other benchmarks

Market rates and bond yields

                                Sep 2014   Sep 2015

Reserve bank discount rate        0.75       0.75
Prime rate (monthly average)      3.25       3.25
Federal funds rate                0.09       0.14
3-month Treasury bills            0.02       0.02
6-month Treasury bills            0.04       0.18
LIBOR 3-month rate                0.24       0.33
U.S. 5-year bond                  1.77       1.49
U.S. 10-year bond                 2.53       2.17
U.S. 30-year bond                 3.26       2.95
Municipal tax exempts (Aaa) *     3.18       3.42
Municipal tax exempts (A) *       3.78       4.05
Corporate bonds (Aaa) *           4.11       4.07
Corporate bonds (A) *             4.30       4.43
Corporate bonds (Baa) *           4.80       5.34

Market rates and bond yields

                                Mar 2016   Sep 2016

Reserve bank discount rate        1.00       1.00
Prime rate (monthly average)      3.50       3.50
Federal funds rate                0.36       0.41
3-month Treasury bills            0.29       0.35
6-month Treasury bills            0.46       0.47
LIBOR 3-month rate                0.65       0.84
U.S. 5-year bond                  1.38       1.30
U.S. 10-year bond                 1.89       1.77
U.S. 30-year bond                 2.68       2.50
Municipal tax exempts (Aaa) *     3.10       2.47
Municipal tax exempts (A) *       3.67       3.02
Corporate bonds (Aaa) *           3.82       3.41
Corporate bonds (A) *             4.16       3.68
Corporate bonds (Baa) *           5.13       4.31

Market rates and bond yields

                                Mar 2017   Sep 2017

Reserve bank discount rate        1.50       1.75
Prime rate (monthly average)      4.00       4.25
Federal funds rate                0.82       1.16
3-month Treasury bills            0.75       1.06
6-month Treasury bills            0.89       1.24
LIBOR 3-month rate                1.14       1.33
U.S. 5-year bond                  1.93       1.95
U.S. 10-year bond                 2.40       2.35
U.S. 30-year bond                 3.02       2.88
Municipal tax exempts (Aaa) *     3.30       2.91
Municipal tax exempts (A) *       3.96       3.44
Corporate bonds (Aaa) *           4.01       3.63
Corporate bonds (A) *             4.23       3.88
Corporate bonds (Baa) *           4.68       4.30

Stock dividend yields

             Sep 2014   Sep 2015   Mar 2016

Common         2.01       2.01       2.23
Stocks-500

Industrial Production Index ([dagger]), ([double dagger])

             Sep 2014   Sep 2015   Mar 2016

               78.8       76.5       75.4

Unemployment rate (%) ([double dagger])

             Sep 2014   Sep 2015   Mar 2016

               5.9        5.1        5.0

Consumer Price Index

             Sep 2014   Sep 2015   Mar 2016

              238.0      237.9      238.1

Stock dividend yields

             Sep 2016   Mar 2017   Sep 2017

Common         2.23       2.02       n/a
Stocks-500

Industrial Production Index ([dagger]), ([double dagger])

             Sep 2016   Mar 2017   Sep 2017

               75.6       75.9       76.0

Unemployment rate (%) ([double dagger])

             Sep 2016   Mar 2017   Sep 2017

               5.0        4.5        4.2

Consumer Price Index

             Sep 2016   Mar 2017   Sep 2017

              241.4      243.8      246.8

Abbreviation: LIBOR, London Interbank Offered Rate.

* Source: Federal Reserve Bank of St. Louis.

([dagger]) On June 25, 2010, the Federal Reserve Board advanced
to 2007 the base year for the indexes of industrial production,
capacity and electric power use. This follows the Nov. 7, 2005,
change to a 2002 baseline, from the previous 1997 baseline.
Historical data has also been updated.

([double dagger]) Seasonally adjusted.

Economic Indicators | Conventional home mortgage
rates by metropolitan area

                                    Q3 2014   Q3 2015

Atlanta                              4.35      4.18
Boston-Lawrence-NH-ME-CT *           4.20      4.07
Chicago-Gary-IN-WI *                 4.34      4.27
Cleveland-Akron *                    4.45      4.36
Dallas-Fort Worth *                  4.34      4.11
Denver-Boulder-Greeley *             3.50      4.24
Detroit-Ann Arbor-Flint *            4.14      4.15
Houston-Galveston-Brazoria *         4.30      4.18
Indianapolis                         4.45      4.33
Kansas City, MO-KS                   4.20      4.22
Los Angeles-Riverside *              4.33      4.18
Miami-Fort Lauderdale *              4.34      4.26
Milwaukee-Racine *                   4.39      4.41
Minneapolis-St. Paul-WI              4.38      4.29
New York-Long Island-N. NJ-CT *      4.12      4.10
Philadelphia-Wilmington-NJ *         4.36      4.30
Phoenix-Mesa                         4.41      4.29
Pittsburgh                           4.36      4.30
Portland-Salem *                     4.37      4.20
St. Louis-IL                         4.36      4.09
San Diego                            4.29      4.05
San Francisco-Oakland-San Jose *     4.26      3.99
Seattle-Tacoma-Bremerton             4.24      4.06
Tampa-St. Petersburg-Clearwater      4.39      4.45
Washington, DC-Baltimore-VA *        4.38      4.21

                                    Q32016    Q3 2017

Atlanta                              3.61      4.18
Boston-Lawrence-NH-ME-CT *           3.49      3.79
Chicago-Gary-IN-WI *                 3.62      4.15
Cleveland-Akron *                    3.71      3.69
Dallas-Fort Worth *                  3.55      4.09
Denver-Boulder-Greeley *             3.52      4.09
Detroit-Ann Arbor-Flint *            3.55      4.35
Houston-Galveston-Brazoria *         3.52      4.11
Indianapolis                         3.72      4.13
Kansas City, MO-KS                   3.64      4.16
Los Angeles-Riverside *              3.67      4.22
Miami-Fort Lauderdale *              3.60      4.27
Milwaukee-Racine *                   3.60      4.15
Minneapolis-St. Paul-WI              3.56      4.16
New York-Long Island-N. NJ-CT *      3.52      3.94
Philadelphia-Wilmington-NJ *         3.61      3.98
Phoenix-Mesa                         3.59      4.15
Pittsburgh                           3.68      3.96
Portland-Salem *                     3.54      3.99
St. Louis-IL                         3.57      3.95
San Diego                            3.50      3.93
San Francisco-Oakland-San Jose *     3.39      3.86
Seattle-Tacoma-Bremerton             3.50      4.03
Tampa-St. Petersburg-Clearwater      3.73      4.30
Washington, DC-Baltimore-VA *        3.67      3.97

* Consolidated Metropolitan Statistical Area.

Highest and lowest rates, Q3 2017

Highest
  Detroit-Ann Arbor-Flint   4.35

Lowest
  Cleveland-Akron           3.69

Biggest worries

Aggressive state and local
disciplinary boards          13.2%

Actions brought against
appraisers by federal
regulatory bodies            7.2%

Other concerns               4.7%

Excessive or unattainable
demands from AMCs            36.1%

Pressure from
lenders and real
estate agents                19.8%

Confusing
Regulations                  19.0%

Note: Table made from the pie chart.
COPYRIGHT 2017 The Appraisal Institute
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2017 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:The News in Numbers
Publication:Valuation Magazine
Date:Sep 22, 2017
Words:1461
Previous Article:Use Free Map Tools to calculate area, analyze drive time.
Next Article:Amy McClellan on review appraisal, AMC regulation and financial safeguards.
Topics:

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |