What Does the Relocation Appraisal Industry Look Like in 2023?Emily Lombardo - May 22 2023
Two relocation appraisal experts share trends and current issues.
The relocation appraisal industry has been through some tumultuous times over the past few years. First dealing with industrywide freezes during the beginning of 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 change very quickly. So, what issues have come out of this for relocation appraisers working in the field, and how will these issues change over the coming year?
In this article, two relocation appraisal experts share their insights on the relocation appraisal industry in 2023: Lisa M. Meinczinger, SRA, AI-RRS, ASA, CRP, RAA, CDEI, owner of Advance Appraiser Service in the Indianapolis area and member of Worldwide ERC®’s Real Estate and Mortgage Policy Forum, and Mark Gronke, GMS, CRP, president of Fidelity Residential Solutions, a firm that offers relocation real estate title services across the U.S.
Transferee Needs Have Changed
COVID-19 temporarily froze the relocation market as people were sheltering in place around the world. Many ended up taking on remote work, childcare, and elder care, or sometimes all three simultaneously. In 2020, almost 40 million people identified as unpaid caregivers in the U.S. People scrambled to provide support for loved ones as schools and nursing homes shut down, And as people took on new family roles, their housing needs also changed significantly.
“The pandemic has changed the state of the relocation industry, as during the pandemic, we became teachers, co-workers, chefs, caretakers, etc.,” Meincziner says. “The needs and desires of the transferees have changed, where they are relocating to has changed, and whom exactly the employer will move in the transfer is something that needs to be considered. There are a lot more individuals at home who need their space to work, to do schoolwork, and more.”
Relocation Appraisal Forecasting in 2023 Is Still a Challenge
With COVID-19-related restrictions worldwide now almost completely gone, and a new interest in sustained hybrid work, relocation appraisers are facing a tumultuous market. Research by Stanford University in 12 major U.S. cities found the strongest changes in residential housing demand were within-city reallocation as people moved from dense areas of their cities to less dense neighborhoods. With local housing markets still in flux, this has made it difficult for appraisers to assess housing volume accurately.
“The biggest issue we are facing is determining the forecasting of the anticipated sale price for the clients,” Meincziner says. “Some markets are still very ‘hot’ and are accepting offers within 10 business days, hence making it difficult to determine the forecasting for the clients’ requirements of 90-120 days.”
Interest Rates Have Damaged an Already Deflated Market
Both Meincziner and Gronke agree that high-interest rates have affected the market over the last year and will continue to do so. Meincziner points to the “ongoing increasing interest rates and the increase of distressed sales (foreclosure)” as issues that will face the industry for the rest of the year and further into the future. “Post-pandemic monetary decisions by the Federal Reserve and interest-rate based move resistance are only just beginning to truly manifest themselves as relocation barriers,” Gronke says.
Meincziner says that the increased interest rates have slowed down refinancing. “There will always be purchase transactions; however, the purchasing power has decreased, hence the market participants that are refinancing to consolidate their debt will be hit with lower market values due to the prior hot markets and the lack of desire to sell or buy.”
Relocation Appraisers Are Focused on the Future
While there are certainly some problems affecting the relocation appraisal industry, industry experts are remaining positive. Gronke and his team are focusing on upskilling, outreach, and partnerships to strengthen their business. “We recognize our network appraisers as partners and have re-invigorated our education and recognition programs. We are actively engaged with Worldwide ERC and its various member types, as well as various appraisal industry organizations to address these relocation challenges head-on,” Gronke says. “There is much work to do.”