In Focus / Commentary

FOCUS Valuation Advisors presents commentaries dealing with a wide variety of relevant issues. Topics range from economic analysis and forecasting to contemporary real estate valuation and bank regulatory issues. We also invite your comments and suggestions for future issues.

Appraiser Independence
June 13th, 2013 – No one commissions an appraisal for personal enjoyment, amusement or just mere curiosity. There is always an agenda. Some transaction participants are better served when the value estimate is high and others when it is low. Still others believe they are better served when the appraiser omits adverse information from the appraisal report. Appraisers face these competing agendas every day. READ MORE…
 
Memo to Appraisers

June 13th, 2013 – In a departure from the real estate and economic topics I usually explore in this forum, this article is about neither. It is a message to my appraiser friends and colleagues with a few tips for writing more useful and client specific appraisal reports. READ MORE…

 
Chained CPI: What Is It & How Does It Work?
April 24, 2013 – You’ve likely heard or read about the debate surrounding measurement of the Consumer Price Index (CPI). There have been calls to change the way it is measured in the United States by moving from the current method to an alternative method known as the Chained Consumer Price Index. The debate whether to change the method or not has become highly politicized and emotionally charged. READ MORE…
 
Economic Recovery Takes a Spring Break
April 19, 2013 – The U.S. economy appears headed for its fourth consecutive midyear slowdown. For reasons that are not entirely clear, the U.S. has developed a pattern of strengthening in the winter months and weakening in the summer.  READ MORE…
 
Why Government Programs Grow But Never Go Away
April 12, 2013 – Pittenger: I began my career as a real estate appraiser in the private sector. Later I plied my trade at a federal government agency. After 20 or so years of combined private-public experience, I migrated back to the private sector where I have been ever since. READ MORE…
 
Never Underestimate the Housing Multiplier Effect
April 3, 2013 – Simply stated, a multiplier effect occurs when one person’s spending becomes another person’s income. That income is subsequently spent becoming the income of a third person and so on. Multiplier effects are created at virtually every level in the economy. READ MORE…
 
Current Housing Recovery Is The Real Deal
March 30, 2013 – Each new monthly data release tells us that housing recovery has finally taken root. After several false starts over the last few years, what we are witnessing today appears to be the real thing. Home prices have been rising for at least the last six months. READ MORE…
 
Case-Shiller: Home Prices Accelerated Year Over Year
March 28, 2013 – Existing home prices rose strongly in the three month period ending in January according to the recent S&P/Case-Shiller Home Price Indices. The indices are highly regarded and widely watched largely because they track repeat sales over a fairly lengthy time period. READ MORE…
 
Existing Home Sales Flat New Home Sales Surge
March 14, 2013 – All widely watched housing indicators suggest that the long awaited housing recovery is solidly in place and is gaining momentum. Existing home sales are approaching the 5.0 million mark (SAAR) while new home sales which had declined to an all time low have begun to rebound. READ MORE…
 
Employment Book
March 6, 2013 – The Great Recession as it has come to be known was declared ended in June 2009. Nevertheless, the economy is still in the throes of a recovery that is the slowest of the 11 recessions since World War II and possibly the slowest since The Great Depression of the 1930’s. Attached is a short e-book compiled from several of our employment commentaries. In it we describe the current employment situation and explore several employment dynamics worth watching. READ MORE…
 
Who Will Create the Jobs?
February 12, 2013 – Employment has improved since the depths of the recession. Indeed, in January 2009, the nation’s economy lost an astounding 820,000 jobs. After annual benchmark revisions and large upward monthly revisions to last November and December job numbers, the economy added 181,000 per month on average throughout 2012. READ MORE…
 
More Employment Trends Worth Watching
February 7th, 2013 – As we’ve written previously, The Great Recession as it has come to be known profoundly changed the nation’s employment dynamics. Today, nearly four years after the recession was declared over, employment and the broader economy still struggle to recover. READ MORE…
 
Employment Dynamics To Watch
February 6th, 2013 – The Great Recession, as it has come to be known, profoundly changed the nation’s employment sector. Today, nearly four years after the recession was declared over, employment and the broader economy still struggle to recover. READ MORE…
 
January Employment Report – A Mixed Story
February 5th, 2013 – The January 2013 employment situation report offered up a mixed view of the U.S. labor market. Payroll employment grew by 157,000 jobs over the month. The private sector added 166,000 jobs while state and federal government shed 9,000. At first blush, January looks like another in a long line of mediocre job reports. The bigger story, however, is READ MORE…
 
Existing Home Sales Dip Seasonally In December
January 23rd, 2013 – Existing home sales dipped slightly in December to 4.94 million units from a downwardly revised 4.99 million units a month earlier. Data are from the National Association of Realtors (NAR) and are at a seasonally adjusted annual rate (SAAR). READ MORE…
 
Fiscal Cliff & Affordable Healthcare Laws
January 10th, 2013 – The combination of the newly enacted fiscal cliff legislation, formally known as “The Tax Payer Relief Act of 2012” and “The Patient Protection and Affordable Care Act” known commonly and perhaps pejoratively as Obamacare has triggered a tsunami of new taxes. READ MORE
 
The Economic Impact of the U.S. Birth Dearth
January 8th, 2013 – According to the Census Bureau , the U.S. birth rate declined in 2011 to the lowest level ever recorded. It was led by a steep decline in births to immigrant women since the beginning of The Great Recession in late 2007. READ MORE…
 
The Economics of the Flu
January 7th, 2013 – The flu season is once again in full bloom. According to the Centers for Disease Control & Prevention, it arrived earlier than normal this year. It is also more widespread and promises to be among the worst seasonal flu outbreaks in recent history. Some sources opine that it could be the worst ever recorded. READ MORE…
 
New Home Sales Rise While Construction Declines
January 3rd, 2012 – Sales of newly constructed homes rose 4.4% to 377,000 units in November from the revised October rate of 361,000 units. That is the greatest number of sales since early 2010 when sales activity was being fueled by tax credits. READ MORE…
 
Back from the Fiscal Cliff – Sort Of
January 3rd, 2012 – Both the House and the Senate have now passed Fiscal Cliff legislation which will become law with the President’s signature. The Senate passed it 89-8 New Years Eve and the House passed the same version 257-167 late last night. Both versions of the bill were passed with virtually no open debate. READ MORE…
 
Existing Home Sales & Price Rise In November
December 20th, 2012 – Existing home sales in November rose solidly to 5.04 million units from the downwardly revised October total of 4.76 million units. Data are from the National Association of Realtors (NAR) and totals are at a seasonally adjusted annual rate. The November increase represents a 5.09% gain or 264,000 more sales. READ MORE…
 
Case-Shiller: Home Prices Rise But Growth Rate Slowed
December 18th, 2012 – The Case-Shiller national composite home price index, which covers all nine U.S. census regions, increased 3.6% in the third quarter of 2012 as compared to the same period in 2011. That is the strongest growth rate in over six years. It is also the sixth consecutive month of rising prices. READ MORE…
 
Social Impacts of Long Term Unemployment
December 14, 2012 – The Great Recession technically ended in mid-2009. Recovery since then has been slow, uneven and oftentimes painful. The recession and slow recovery have ravaged the nation’s labor force. Over 12 million Americans were unemployed in November 2012. READ MORE…
 
November Employment Summary
December 13, 2012 – The nation’s labor market absorbed the impact of super storm Sandy much better than had been expected. Indeed, any adverse effect on job totals was negligible overall. READ MORE…
 
Who Is Really Creating the Jobs this Recovery & Why?
December 7, 2012 – The Great Recession as it has come to be known was declared over at the end of June 2009. The economy has therefore been “recovering” for over three years. By historical standards, employment should have recovered and the economy should be robust or at least performing nearer its potential. READ MORE…
 
CMBS Problems Slow – More Leave Special Servicing
December 5, 2012 – As CMBS delinquencies decline and more assets leave special servicing, investor interest in CMBS bonds has grown. Investors are once again taking on more risk in search of yield. READ MORE…
 
New Home Sales Up Solidly Year Over Year
November 29, 2012 – Sales of new homes in the U.S. were little changed at 368,000 units (SAAR) in October after having risen in September by 5.7%; the fastest pace since April 2010. Sales increased 17.2% over the 314,000 recorded a year ago. READ MORE…
 
An Appraisal Policy Blueprint
November 28, 2012 – Many bank appraisal policies in use today were crafted a decade or more ago. Some were created under regulatory pressure to do so following the thrift crisis and real estate meltdown of the late 1980s and early 1990s. Many bank appraisal policies in use today were crafted a decade or more ago. Some were created under regulatory pressure to do so following the thrift crisis and real estate meltdown of the late 1980s and early 1990s. READ MORE…
 
Existing Home Sales Rise In October & Over the Year
November 19, 2012 – Existing home sales in October rose modestly (+40,000 SAAR) to 4.79 million units despite some modest regional impact from Super Storm Sandy. Sales of all housing types (single family detached, condo and coop units as well as townhouse units rose 2.1% over the month from a downwardly revised 4.69 million units in September. READ MORE…
 
Commercial Real Estate: Macro Condition & Outlook
November 16, 2012 – The U.S. economy continues to limp along in an environment shrouded by uncertainty as it performs far below its potential. While still in positive territory, second quarter GDP growth was a paltry 1.3% annualized. The recently announced first estimate of third quarter growth was not much better at 2.0%. READ MORE…
 
Some Things Never Change

November 13, 2012 – While sorting through some old books and articles, I came across an article entitled “The Residential Appraiser / Underwriter Relationship: A Deregulation Casualty.” It was published in the professional journal of the former Society of Real Estate Appraisers (now part of the Appraisal Institute) in early 1985. READ MORE…

 
The Appraisal & Effective CRE Loan Underwriting

November 13, 2012 – A reliable appraisal report is an important piece of information that a bank should use when evaluating a prospective borrower’s ability and willingness to repay a loan. In today’s troubled real estate markets, where distress transactions often outnumber new originations, the appraisal is also an essential tool in loss mitigation, workout or asset disposition. READ MORE…

 
Why Our View Of Housing Still Remains “Guarded”
October 26, 2012 – The housing free fall has ended. After six long years, including a double dip housing recession, the market (perhaps arguably) hit bottom a few months ago. It is now showing signs of slow but meaningful recovery. Nearly every recent housing report has contained at least some positive news. READ MORE…
 
Existing Home Sales Down In September Up for the Year

October 24, 2012 – Existing home sales in September once again confirmed our view that the free fall in existing home sales is over but both sales and prices would continue to fluctuate within a fairly narrow range and probably for a rather lengthy period of time. READ MORE…

 
September Employment Story Mixed + Surprises
October 8, 2012 – The much anticipated September jobs report was mixed. Payroll employment rose by a net 114,000 jobs which was in line with expectations. Private sector payrolls increased by  104,000 jobs and government rose by 10,000. There was job growth in the state and federal government sectors but more decline in local government. READ MORE…
 
CMBS 60 Day Plus Delinquencies Decline

October 1, 2012 – The 60 day plus delinquency rate for commercial mortgage backed securities decreased to 9.7% in August from 10.06% a month earlier. Delinquency rates decreased for retail, hotel and multifamily but rose for industrial and office. READ MORE…

 
A Final Word About August Housing

September 30, 2012 – Last week we wrote about existing home sales in this space. The news was generally positive. Sales volume was 9.3% higher than a year ago at 4.82 million units. That was the highest volume of sales since May 2010. Inventories have returned to a relatively normal level and distressed sales are down slightly. READ MORE…

 
GDP Declines Again In Second Quarter
September 28, 2012 – The U.S. economy remains dangerously close to stall speed as evidenced by the third estimate of second quarter 2012 Gross Domestic Product. The estimate showed growth at a very slow and disappointing 1.3% seasonally adjusted annual rate (SAAR). READ MORE…
 
Housing Records Strong Performance In August

September 24, 2012 – Existing home sales volume increased 7.8% in August as compared to July. Sales volume was 9.3% higher than a year ago. At 4.82 million units on a seasonally adjusted annual basis (SAAR), August volume was the highest since May 2010 during the latter stages of the second stimulus program. READ MORE…

 
Appraisal Profession Ages and Population Shrink

September 12, 2012 – The appraisal profession as a whole has been aging at least since the 1980’s. Practitioners have grown older and new entrants to the profession have slowed, with the exception of a brief period during the housing bubble. Today, 58% of practicing appraisers are age 51 or older followed by 31% in the 36 to 50 age cohort. READ MORE…

 
August Employment Weaker Than Expected

September 10, 2012 – The much anticipated August jobs report proved to be weaker than expected. The report fell short of expectations with only 96,000 new payroll jobs having been created. In addition, June and July estimates were revised down. READ MORE…

 
Real Estate & Economic Roundup
September 7, 2012 – Each week the Mortgage Bankers Association (MBA) surveys the largest mortgage lending firms to gain an understanding of how many mortgage loan applications are received for both purchase and refinance as well as on a composite basis. The survey is published each Wednesday morning and captures an estimated 40% of mortgage loan applications received the previous week. The survey is important as it signals the degree of confidence in residential real estate and the general direction of the market. Viewed weekly, the results can be volatile and the MBA makes no revisions. Over time, however, the surveys tend to reveal meaningful trends. READ MORE…
 
Behind the Numbers On New Home Sales

September 6, 2012 – Recently in this space we reported on new home sales during July 2012. Sales totaled 372,000 at a seasonally adjusted annual rate. As new home construction is so important to the nation’s economy, it seems as though the subject deserves a bit more than a passing glance. READ MORE…

 
CMBS 60 Day Plus Delinquencies Rise

August 30, 2012 – The 60 day delinquency rate for commercial mortgage backed securities moved up to 10.06% in July from 9.93% a month earlier. At the end of 2011, delinquencies stood at 9.32% overall. Delinquencies were relatively flat in 2011 but began inching up again in early 2012 with renewed weakening of the broader economy and brisk European headwinds. READ MORE…

 
Real Estate and Economic Roundup

August 30, 2012 – In its second estimate of Q2 2012 Gross Domestic Product (GDP) the Bureau of Economic Analysis reported that the economy expanded at a 1.7% seasonally adjusted annual rate. That is down from 2.0% in the first quarter and down from 2.3% in all of 2011. READ MORE…

 
Confidence Weighs Negatively On Broader Economy
August 29, 2012 – According to the Conference Board (August 28th), consumer confidence took an unexpected and large dip in August. The index measures both present and expected conditions around employment, income, purchasing plans and inflation expectations. The index has now declined for five of the last six months and is at its lowest level since November 2011. READ MORE…
 
Residential Sales Volume Up But Prices Down
August 27, 2012 – Existing home sales volume increased 2.3% in July as compared to June according to the National Association of Realtors (NAR). Total volume at a seasonally adjusted annual rate (SAAR) was 4.47 million units. READ MORE…
 
Apartment Sector Soars – Banks Manage Expenses
August 22, 2012 – The rental apartment market has roared back to life despite widespread weakness in the broader economy. Indeed, the sector has become the post crash darling as fundamentals strengthen. READ MORE…
 
Federal Budget Deficit, Debt Limit & Spending
August 20, 2012 – The Federal Budget Deficit for July, the tenth month of the fiscal year was about $70 billion, down from $129 billion a year ago. This was roughly one-billion less than the Congressional Budget Office projected deficit for the month. The July improvement however, may be a bit deceiving as a $36 billion payment was shifted from July to June due to July 1st falling on a Sunday. READ MORE…
 
Weekly Real Estate & Economic Roundup

August 8, 2012 – Bankruptcy Filings Down Year Over Year. According to the U.S. Bankruptcy Courts, personal bankruptcies rose 1.1% from the first quarter to the second quarter of 2012 but declined in the second quarter as measured year over year. There were 1.3 million petitions (down 14.2%) in the second quarter as compared to the same period last year. There have been year over year declines now for seven consecutive quarters. READ MORE

 
CMBS Delinquencies Rise Again In June
August 3, 2012 – The 60 day delinquency rate for commercial mortgage backed securities moved up fractionally to 9.93% in June from 9.83% a month earlier. At the end of 2011, delinquencies stood at 9.32% overall. Delinquencies were relatively flat in 2011 but began inching up again in early 2012 with renewed weakening of the broader economy and brisk European headwinds. READ MORE…
 
Weekly Real Estate & Economic Roundup
August 1, 2012 – Employment: The Bureau of Labor Statistics (BLS) will release the all important payroll jobs report for July on Friday, August 3rd at 8:30AM. That is very early in the new month so there may be a lot left to the imagination and a lot of room for revision later in the month. Nevertheless, the consensus among economists is for 100,000 new payroll jobs having been created in July. READ MORE…
 
Case-Shiller: Home Prices Firming?
July 31, 2012 – Median existing home prices reported by S&P Case-Shiller were mixed this month and suggest different directions depending on whether one looks at month over month numbers or year over year and whether one seasonally adjusts the numbers or does not. READ MORE…
 
Home Sales Results Mixed in June
June 26, 2012 – According to the National Association of Realtors, existing home sales in June fell 5.4 % to a seasonally adjusted annual rate of 4.37 million units. That is down from an upwardly revised total of 4.62 million a month earlier but still 4.5% higher than the year ago level of 4.18 million units. READ MORE…
 
Understanding the Fiscal Cliff
July 25, 2012 – The “Fiscal Cliff” is a popular term used to describe the financial conundrum the federal government will face beginning at year end. The situation was created by law in the summer of 2011 following the failure of the presidentially appointed bi-partisan Super Committee to agree on a deficit reduction plan. READ MORE…
 
The FOCUS Quarterly
July 13, 2012 – FOCUS Valuation Advisors is pleased to present the Summer 2012 issue of The FOCUS Quarterly in which we present a contemporary look at real estate markets and the economy. In this issue, we take a comprehensive look at many of the issues driving our economy and its recovery from The Great Recession; the broadest, deepest and most severe downturn since The Great Depression of the 1930s.

We will explore a few important macro issues such as the gross domestic product, the probability of renewed recession, consumer and business confidence, employment trends and more. We’ll examine some of the legacy effects of The Great Recession including structural employment issues and changing labor dynamics.

From there, we will turn to real estate markets. We’ll take an in depth look at housing as well as a variety of commercial real estate product types and more. Finally, we will turn to financing, including capital markets for real estate finance and the outlook for community banking and real estate lending.

We’ve also included a couple of original feature articles that we hope you’ll find instructive and enjoy reading. One is intended for our residential readers and the other for commercial. READ MORE…

Employment Redux
June 15, 2012 – Various thoughts have been advanced about why employment growth seems to have lost traction. Some believe the dismal numbers were simply an aberration. Others advance the notion that it was payback for unseasonably warm temperatures which led to surprisingly robust winter job creation. READ MORE…
 
U.S. Job Creation Took a Big Step Back in May
June 8, 2012 – The U.S. labor market disappointed in May when payroll employment increased by only 69,000 jobs. The previous two months were also revised downward by a net total of 49,000 jobs. READ MORE…
 
Recession Risk Rising As Economy Loses Momentum
May 18, 2012 – Questions many business people and professionals have about the probability of recession are first, whether it will happen and second, how does one estimate the probability before it occurs. They wonder too if a forecast is just a wild guess, an educated guess or whether there is actually some science behind it. READ MORE…
 
Have We Reached a Definitive Housing Bottom?
May 15, 2012 – Opinions are mixed about whether or not the housing market has found a definitive bottom. Buyers, sellers, agents and builders anxiously await some sort of “all clear” signal to be sounded before they jump back into the market. READ MORE…
 
CMBS Delinquencies
April 25, 2012 – Commercial mortgage backed securities are the product of commercial real estate loans which are bundled into securities and sold to investors. Like residential mortgage backed securities, they have proven to be a double edged sword. While they made the commercial mortgage market more liquid, like their residential siblings, many were packaged, sold in whole or in tranches – some with questionable ratings and due diligence. READ MORE
 
The Economics of Vacant Land and Its Valuation
April 6, 2012 – Land is a commodity whose value lies in its contribution to a finished product. In real estate, that finished product may be a shopping center, office building, a subdivision or any other type of development. For a component part of any product to have value, there must be demand for the finished product. READ MORE…
 
Residential Sales Volume and Prices Take Another Dip
April 1, 2012 – Despite widespread wishful thinking about housing having reached a bottom, most recent housing reports suggest otherwise. Even as some broader economic indicators look modestly stronger, house prices have continued to decline and sales volumes have remained flat for the last few months. READ MORE…
The Cost of Dodd-Frank Implementation
March 26, 2012 – Congress left a lot to the imagination when it finalized The Dodd-Frank Wall Street Reform and Consumer Protection Act in December 2009. It was the most sweeping piece of financial legislation to be proposed since the Great Depression of the 1930s, some seventy or more years earlier. Despite its length, at around 2,000 pages and inclusion of 16 titles, the Act left gaping holes and created enormous uncertainty throughout the financial services industry. READ MORE…