The Federal Housing Finance Agency has published two appraisal-related blog posts in recent weeks. The first, titled “Underutilization of Appraisal Time Adjustments,” describes appraisers’ underuse of time adjustments for local house price growth, notwithstanding their important effect on valuations. Blog authors noted that even when made, the adjustments are typically smaller than house price indexes would suggest. The blog does not seek to determine the cause or propose potential solutions, though FHFA states that future blogs may address factors that determine when appraisers choose to time adjust and examine whether these are done equitably across neighborhoods.
The second blog, titled “Underappraisal Disparities and Time Adjustments,” follows up on the first. FHFA concludes that after adjusting for key market factors, “appraisals in white tracts are more likely to be increased above the contract price by time adjustments than those in Black and Hispanic tracts, by 24 and 16 percentage points, respectively, a difference of 83% and 44% in relative terms.” FHFA observes that for these borrowers, “time adjustments could make the difference between an appraisal that allows a home purchase to move forward and one that does not.”