Specifically, Utah County. Our latest batch of appraisals in the Utah County area have come in about 10% lower than projected. Since we run all of our appraisals through the best AMC on earth, 1st Choice AMS, we know these are not appraiser-specific values. These are across the board, almost all properties, all appraisers and all loan types.
This is a warning for those of you that do business in Utah County. Expect your values to be low. We have not noted this problem in Salt Lake County, so at the moment we think it’s a phenomenon restricted to Utah County and southern environs.
Here’s our take on why this is: everyone knows that the $8000 first-time homebuyer credit is expiring in 90 days. In Utah County, with its two large universities spewing forth about 10,000 graduates a year, there is an abnormally large population of first-time homebuyers. That means that for the next little bit, that cohort, being especially active, is going to have disproportionate impact on home values. When shopping for the thousands of properties out there, which is going to be most attractive to you: $198,000 or $204,000? It’s human nature. If the houses are even reasonably similar, the lower price is going to win, but here you also have the famous $1.99 effect working against you.
One of our most recent appraisals reaffirms this rather directly. The house appraised for $203,000. There were two comps in the low $200k range, each had been on the market for 300 days or longer. There were 2 comps in the high $190k range, and their time on market was 42 days and SEVEN days. The stuff that’s selling, people, is the stuff right under the K, at $295k and $195k, so if your house wants to appraise at $310k or at $210k, you might find that you’re in trouble.
Just a word to the wise.