During congressional testimony, a representative for the Appraisal Institute handed down a very unfavorable appraisal of industry regulation.
Alan Eugene Hummel, immediate past president of the Appraisal Institute, told members of the Senate Committee on Banking, Housing and Urban Affairs that the industry lacks regulatory direction, disclosure and discipline. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), which was supposed to improve the regulation of the industry, is itself in a sorry state of disrepair, Hummel reported to committee members.
In a survey conducted by the Appraisal Institute, an international membership association of professional real estate appraisers with more than 18,000 members and 99 chapters in the U.S., Canada and abroad, about half of the respondents said appraisal quality has declined since the passage of FIRREA, while 28 percent said they saw improvement since the act.
While the act was intended to guard against corruption in the industry, Hummel said, “Without effective enforcement, financiers still pressure appraisers to come up with the ‘right numbers for their deals – just as they did in the freewheeling ’80s.” He said the provisions of FIRREA discriminate against seasoned professionals in the industry while favoring newcomers, and noted that less than 40 percent of appraisers now belong to professional organizations. “Our system is floundering. Discipline and direction can help it make the grade,” he said.
Weather cools housing starts in February
Pace Still Ahead of 2003 Annual Total
Unusually cold and wet weather in the South and West helped cool the national pace of new-home construction for February. Housing starts slipped to the seasonably adjusted annual rate of 1.855 million units, as reported by the Commerce Depart-ment. Even so, the starts pace remain-ed well above the 2003 annual total of 1.848 million, which was the highest in 26 years.
Overall, the February construction pace was 4.0 percent below January’s upwardly revised rate of 1.932 million and 13.1 percent above the February 2003 pace.
“Builders continued to adjust their new production to a more sustainable level after the surge of late 2003,” said Bobby Rayburn, president of the National Association of Home Builders (NAHB) and a home and apartment builder from Jackson, Miss.
“But builders remain very confident about the market, and we expect to maintain a very healthy pace through the coming months.”
For the month, single-family housing starts were down 4.1 percent to a pace of 1.489 million. This was a 13.5 percent increase over the February 2003 pace.
The pace of multifamily housing starts decreased 3.4 percent from January to a seasonally adjusted rate of 366,000 units. This was 11.6 percent above the pace of a year ago.
Construction of new homes and apartments decreased in the South by 10.6 percent and in the West by 7.5 percent from January’s rate, while the Northeast and Midwest posted increases of 25.3 percent and 7.1 percent, respectively.
CA governor to join plastic pipe fight
California Governor Arnold Schwarzenegger has placed the issue of whether builders should be allowed to use plastic pipe for plumbing as No. 5 on his list of ways to improve the state’s economy, according to the Los Angeles Times.
“Schwarzenegger is embracing plastic construction piping, sharing the view of his building-industry patrons that plastic should be permitted as a less-expensive alternative to copper,” the paper wrote.
The Plastic Pipe & Fittings Association filed a lawsuit in late 2002 on behalf of PEX pipe manufacturers against the California Building Standards Commission
for excluding PEX plastic pipe from the California Plumbing Code. In January 2003, a Los Angeles superior judge ruled in favor of the association. That ruling is now under appeal.