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Many of my client have called recently to ask me where their property value has landed amidst the recent economic turmoil.  With indications that mortgage rates will soon be favorable for many to refinance, the question arises - do I still have equity in my house?  While having an appraisal completed is absolutely the best choice,  I can and will assist the property owner to perform a quick assessment of their property.
 
Overall the property owner should look at what is on the market in their neighborhood.  While it is important to note the listing prices, it is equally as telling to look at how long the properties have been on the market and how many price reductions have occurred.  They should be reminded that just because the neighbor is asking for a certain amount for their property,  it does not mean they are going to get it. The listings in the neighborhood set the high mark for what their property is reasonably worth and are not a true indication of the owner's home value until these listings actually sell.
 
Though the property owner may have been diligent about paying towards their mortgage "on time, as agreed" others in the neighborhood may have not.  Foreclosure activity does impact property values, even of those properties that are not in threat of foreclosure.  Property owners should be aware that while these foreclosure properties may be "blemished", or outright trashed, potential buyers are still considering them as possible substitutes even with the cost of clean- up and renovation.  Because many foreclosed properties are marketed with the intent to sell quickly and cut losses due to holding costs (without benefit of homeownership) these properties tend to depress values in a neighborhood.
 
Some of my clients have indicated that they are confident in their property value estimate because "I just had an appraisal done six months ago" or "I've just received my property tax assessment from the municipality".  Because the current market remains tremendously volitil, opinions of value made in the past are not necessarily reliable indicators in today's environment.  The large number of properties continuing to come on the market (high supply) and the still tight credit market and rising unemployment (low demand) continues to have an adverse impact on home values in many areas as we will see more properties available for sale then buyers able and willing to buy.  As interest rates fall and credit availability becomes more available, this will have a positive impact and values will stabilize and possibly start to increase. Home values are changing more quickly now than any other time in history. Therefore, previous tax assessments and appraisals have a very short shelf life as to how accurate they are as to the value of the property today.
 
Residential real estate has long been, and is expected to long be, a good investment for shelter and long term economic growth.  But like any commodity, it is subject to the whims and forces of the economy - and will have volatility in its value.  As such, property owners should be advised that like other investments, their home's value will rise and fall with economic changes - and the only certainty that is almost guaranteed is that property values rarely remain static.

Please feel free to call me if you need help assessing the value of your home!

Dan Latimer