Trends and current issues are discussed by two relocation appraisal experts.
Over the past few years, the relocation appraisal industry has experienced some turmoil. Following an industry-wide freeze during the COVID-19 pandemic, and now with high interest rates and a potential recession looming over the U.S. economy, the industry has had to adapt very quickly. What are the implications of this for relocation appraisers working in the field, and how will they change in the coming year?
Lisa M. Meinczinger, AI-RRS, ASA, CRP, RAA, CDEI, owner of Advance Appraiser Service in Indianapolis and member of Worldwide ERC®’s Real Estate and Mortgage Policy Forum, shares her insights into the relocation appraisal industry in 2023. A firm that offers relocation real estate title services across the United States, Fidelity Residential Solutions, is owned by Mark Gronke, GMS, CRP.
The needs of transferees have changed
People around the world were sheltering in place as a result of COVID-19. Many people ended up taking on remote work, childcare, and elder care at the same time. There were almost 40 million unpaid caregivers in the U.S. in 2020. As schools and nursing homes closed, people scrambled to provide support for their loved ones, and their housing needs also changed.
“The pandemic has changed the relocation industry as we have become teachers, co-workers, chefs, caregivers, etc.” Meincziner says. Transferees’ needs and desires have changed, the location they are moving to has changed, and who exactly the employer will move during the transfer needs to be considered. Increasingly, people are working, doing schoolwork, and living at home.
Forecasting relocation appraisals in 2023 remains challenging
With COVID-19-related restrictions worldwide almost gone, and a new interest in sustained hybrid work, relocation appraisers are in a tumultuous market. According to a Stanford University study of 12 major U.S. cities, the most significant changes in residential housing demand were within-city reallocations from dense areas to less dense ones. Currently, local housing markets are in flux, making it difficult for appraisers to accurately estimate housing volumes.
Meincziner says the biggest challenge is forecasting the anticipated sale price for clients. “Some markets are still very hot and are accepting offers within 10 business days, making forecasting difficult for clients’ 90-120 day requirements.”
An already deflated market has been harmed by rising interest rates
Meincziner and Gronke agree that high interest rates have affected the market over the past year and will continue to do so. For the remainder of the year and into the future, Meincziner sees “ongoing increases in interest rates and a rise in distressed sales (foreclosures)” as issues facing the industry. The Federal Reserve’s post-pandemic monetary decisions and interest rate-based move resistance have only recently become real relocation barriers, Gronke says.
According to Meincziner, the increased interest rates have slowed down refinancing. Due to the prior hot markets and the lack of desire to sell or buy, market participants refinancing to consolidate their debt will be hit with lower market values. There will always be purchase transactions, but purchasing power has decreased.
Appraisers are focused on the future of relocation
Despite some problems affecting the relocation appraisal industry, industry experts remain optimistic. To strengthen their business, Gronke and his team focus on upskilling, outreach, and partnerships. Our education and recognition programs have been re-energized to recognize our network appraisers as partners. “We are actively engaged with Worldwide ERC and its various members, as well as various appraisal organizations, to address these relocation challenges,” Gronke says. “There is a lot of work to be done.”
