BANK APPRAISALS GAP NARROWS TO LOWEST IN 2 YEARS

One of the challenges of a rapidly rising market is the sometime disparity between what houses sell for and what the bank is willing to say it’s worth for the purposes of making that home loan. Many times there is a gap between them, as banks are anxious not to have homeowners get upside down, if there were a downturn in the market. The appraisers are constantly trying to balance demand/supply with true economic reality. And frequently, that line is quite blurred by market pressures. However, right now, the gap is less than 1%, indicating a solid market and true values for home prices. That home price should reflect everything from current market factors, to population, both potential gains and losses, jobs and hiring and incomes, and other driving forces such as interest rates. Southern California is proving some true endurance in the current housing market with no bubble in sight. Borrowers continue to be properly vetted, appraisers are doing their job, and down payments remain strong with conventional loans being predominant, with stated loans no longer available and FHA and VA not the dominating factors they once were.