April 23, 2016 – I write this in a purple-tinted world. Prince music playing in the background….
This past week I ‘celebrated’ my 30th year as an appraiser. Time flies and it certainly has been an interesting career. It has taken this long to finally get to my ultimate goal – reviewing appraisals worldwide. I recently started performing reviews in South America and hopefully Africa is next. Talk about interesting appraisal reports!
I would imagine that some people would ask what I have observed over the decades. A few things come to mind…
First, the trend for appraisal fees was down when I started in 1986 and has continued in that regard. I recall in the late 1980’s we never bid less than $10,000 for a hotel appraisal. By 1992, when I started working at a bank and ordering appraisals I was able to get hotel appraisals for under $5000. The trend has been the same for other property types. The exception being residential appraisal fees that have increased from around $150 to over $400 in general. Funny how it is the residential industry that cries the most about fees!
Regarding appraisal quality that has also been in the same direction as fees. I recall in 1992 and onward I would publicly say that 95% of appraisers were incompetent. That held until 2008 when that increased to 99%+ of appraisers currently being incompetent. The main cause was the crisis resulted in significant Highest & Best Use issues for problem properties and this generation of appraisers was not taught how to think (sort of like The Stupidest, er Millennial Generation). As a result, the quality of work declined significantly from 2008 thru today. I have yet to run into a fee appraiser who has become a review appraiser who doesn’t agree that the quality of work in the industry is pathetic. And that is being generous.
I haven’t observed much else. In the past few years, I have seen more good appraisers get out of the industry than ever before. This past week it was good to hear from a friend that he has totally exited the industry and moved on to a new career. And another long-time friend is actively transitioning over to brokerage. I am seriously thinking about starting a business to assist appraisers in transitioning out of this industry and into something new that they will enjoy. Life is too short to be miserable.
As for the talk about there being a shortage of appraisers – it is total BS! This is simply propaganda by the ‘establishment’ (i.e. NAR and Banks) to get standards for becoming an appraiser lowered. They know they can better control stupid and incompetent people than smart and competent people. My measurement of a shortage of appraisers is when commercial appraisals take 60-90+ days to complete – like in the RTC days. And when residential appraisals take 3-4 weeks. Until that occurs, there is no shortage of appraisers.
An update on my market projections…..
GOLD – The metal is up 23% from its low and mining stocks are up 122%. Gold hit the $1285 area I projected and declined to the low $1200’s as forecast, too. It has been bouncing around and wasting time, as is often needed. I think there is still a chance to see $1190-$1200 again. But, I believe the $1380-$1500 range is still very likely. I have not sold any of my gold or gold stocks. This bull market is still young. Silver has finally exploded to catch up with gold.
STOCKS – I’m looking for a 1500-2000 point decline in the DOW from here. I did get out of my dividend stocks (T and DUK) as they were up 10% this year and that sector was the best performer in the first quarter. I am hoping for 10% declines in each stock so I can get back in them.
OIL – I initially was expecting a 50% rally from around $35 to over $50 by June. However, oil went down to around $26-$30 first before rallying to near $44 this past week. The 50% rally has occurred. I think the rally is limited now to $2-$8 more – so $50 can happen, but heck the projection is close enough to being complete. My Exxon investment is up over 15%, but I am not cashing that in. I am still an oil and gold bull for a long period of time.
SOYBEANS – New crazy prediction (similar to my oil one in January). Beans got above 10 cents (per bushel) this past week for the first time in a year. I see 12 cents and maybe 13 cents this Summer – not a great forecast as they could hit that next week if they wanted to. But, still if it comes true it is better than those who expect the price to decline:) The bigger prediction is for Beans to hit 20 cents for the first time in history next Summer. For that to occur, we would likely have one of the worst droughts in Midwest history – like the Dust Bowl. I doubt rain and flooding could do enough damage to send prices to all-time highs, but that is an alternative. I admit I won’t be playing this forecast. If it happens, I’ll probably quit forecasting and kick myself for missing out on the greatest bull market in Bean history.
Enough for now….
Prince, we all now know what it sounds like when doves cry….R.I.P.