Conference ReCap
Seventy-five members of the appraisal community came together April 19 at the 2018 Metro DC Appraisal Conference in Washington D.C.
Renowned area economist, Dr. Stephen S. Fuller, Director, The Stephen S. Fuller Institute and Dwight Schar Faculty Chair and University Professor, The Schar School of Policy and Government at George Mason University opened the event with a number of observations and predictions for the area. They included:

  • The outlook for the Washington region’s economy in 2018 is for accelerating economic growth (2.3%). The burden that the Washington region’s economy is carrying in 2018 and beyond is the likelihood of flat or declining federal spending. If this proves to be the case, then the region’s economic growth will fully depend on the growth of its non-federally dependent export-based sectors and local-serving sectors that also serve non-local markets.

  • Between 2000 and 2016, the population in the Washington region increased from 4.86 million people to 6.13 million people. This change was the result of three factors: the natural increase (births minus deaths), net domestic migration, and net foreign migration. During this period, population gains occurred from the natural increase and net foreign migration while the region lost population from net domestic migration.

  • As technology enables more non-traditional forms of work, it seems likely that growth in nonemployer establishments will continue to outpace traditional wage and salary employment. The traditional measure of jobs will increasingly undercount the economic activity in the Washington region, and in the nation, and may mask shifts in the economic base.

Many of Fuller’s reports can be found on his website.

Robert L. Parson, Former Senior Appraisal Policy Advisor, Office of the Comptroller of the Currency, followed Fuller with an update on the regulatory environment for the appraisal community and spent a good deal of time examining the evolution of Title XI – FIRREA, as well as methods of valuation and the appraisal review process. Along the way, he offered two maxims:

  • In a bank appraisal and evaluation program, nothing is more important than the selection and engagement process
  • Review is a process, not a form, not a checklist, not a score

Julie Jones from Fannie Mae and Scott Reuter from Freddie Mac brought attendees up-to-date on recent changes in PIW eligibility parameters, appraiser page enhancements, FHFA scorecard assessment criteria, use of appraiser trainees, comparable sales selection and more. Martha Heric, CRE, MAI, Managing Director, Integra Realty Resources explored trends on the commercial side of “Sustainable” including:

  • Growth rate of green building certification is slowing down
  • Energy efficiency leads the way
  • Competition among green building rating systems will step up.
  • Cloud computing/big data will provide much-needed direction
  • The debate over healthy materials will become even more vexatious
  • Expect heightened emphasis on water conservation.
  • Solar power will break through

After lunch, Ryan McCormick, Senior Vice President & Counsel, Real Estate Roundtable brought everyone up-to-date on the impact of the recently passed tax reform. A few of his key observations included:

  • Tax rules remained aligned with real estate economics
  • For commercial real estate -- minimal direct impact on rates of return
  • But real estate values and markets benefit from stronger economic growth, job creation
  • 2018-19 theme - taxpayer focus on tax planning, restructuring to comply with new rules
  • CBO: tax bill boosting nonresidential investment by $9 billion in 2018, $23 billion/year over next 10 years

Then Cynthia Adams, Don Boucher, SRA, Woody Fincham, SRA, and Martha Heric, CRE, MAI looked at the impact of sustainability initiatives on valuation for residential and commercial buildings. They noted that:

  • 50M homes have qualifiable energy assets
  • 3M homes with “certifiable” assets sold in 2017
  • $3.24B projected spend in 2018 home improvements

There are over 30,000 searches a month in the MRIS database for different eco-friendly features and an ongoing study…consistently finds that eco-friendly homes sell more quickly at higher prices.Bottom line, they estimate that there was $12.5 billion in uncaptured home value for sellers that never made it to the closing.

Jerry Harvey MAI, MRICS, CCIM, Managing Director at CBRE then led a panel of developers through an in-depth discussion around area developments including:

  • The Boro at Tysons - Thomas P. Boylan, Vice President, The Meridian Group
  • DC Wharf - Jon McAvoy, Vice President & Director of Finance, PN Hoffman
  • Suitland Town Center - Stephen J. Paul, Associate Director, Redevelopment Authority of Prince George's County
  • Metro DC Transportation - Steven A. Teitelbaum, Senior Real Estate Advisor - Office of Real Estate and Parking Washington Metropolitan Area Transit Authority

Mark R. Linné, MAI, SRA, AI-GRS wrapped up the day with a thought-provoking look at the future of appraisal and the “Other AI” – artificial intelligence. He suggested that while AI may be intimidating, it offers opportunities for appraisers as well. Among them, AI can be leveraged to perform:

  • Market demographic studies
  • Patterns into Data
  • Spotting Trends
  • Environmental research
  • Financial analysis.

The result could include

  • Real-time understanding of market trends
  • Understanding data aggregated, summarized, analyzed and specifically applied for our subject property
  • A series of “what if” analyses
  • Beginning the move to predictive valuation-what will the value of my property be?

He closed by noting that AI is no longer a science fiction topic. Prudently applied, it presents an horizon of unquestionable abundance and opportunity.

Missed it? Keep an eye out for the 2019 Metro DC Appraisal Conference. Details coming soon!


 

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