As the country continues to move through the pandemic and its lingering conditions and changes to businesses, appraisers really need to understand the current real estate market conditions.
“I believe prospective buyers get educated quickly about the current real estate market. Full cash offers and a prospective bidding war have made this sellers’ market,” ForbesBooks author and CapWealth founder, Chairman and Chief Investment Officer Tim Pagliara told Valuation Review. “Appraisers do what they can, but most contracts waive appraisals now, and instead rely on financing contingencies. Sales can still go through based upon appraised value provided down payments are high enough. But even a financing contingency is difficult as more buyers show up with all cash offers.”
As to technology accelerating and playing an innovative role regarding to market conditions and its effects on the real estate industry, Pagliara said homes are now viewed as workspaces and a place of refuge. Work from home has been accelerated by technology, he noted, and home theatres and wide scale broadband have increased the entertainment-at-home quality of life, as well.
In real estate, where methods such as digital documentation, virtual tours, and video chats enable agents to connect with clients, we asked Pagliara how these options are ideal for prospective buyers and sellers who aren’t local to the area or those that need the added flexibility signing documents online or doing virtual tours provide.
“The digitization of the real estate sales process has helped out-of-state buyers move quickly on purchases in hot markets,” he said. Unquestionable, within the last year and beyond, working from home became the norm for many individuals during the pandemic, but just how important of an influence on the real estate market has that method become?”
Pagliara referenced Faith Popcorn, a futurist, author, and founder and CEO of the marketing consulting firm BrainReserve, who identified this phenomenon in her 1991 book as “cocooning.” “The trend re-emerged with the pandemic as homes became a place of refuge,” he said. “Some have noted that the pandemic universally caused a movement away from urban cores, particularly for those with higher incomes who could afford to move and for lower-income individuals seeking lower costs of living.”
Pagliara said confinement effect of the pandemic created the need for more distancing as people wanted more space.
According to the National Association of Realtors (NAR), “the state of America’s housing inventory is dire, with a chronic shortage of affordable and available homes needed to support the nation’s population.”
Pagliara said: “The CEO of Freddie Mac has a data driven estimate of a shortfall of 3.7 million homes. NAR estimates this to be 6.8 million. Historically we have had a static demand of 1.6 new housing units per year. It is hard to catch up given the supply chain obstacles we face today.”