The Market Comparisons Appraisal Effect on the Housing Boom Cycles

Authors

  • Donald C. Keenan Université de Cergy Pontoise
  • Taewon Kim California State University, Los Angeles
  • Daniel C. Lee California State University, Los Angeles

DOI:

https://doi.org/10.33423/jabe.v23i7.4863

Keywords:

business, economics, appraised value, asymmetry, boom-bust cycle, contract price, effective demand, housing market

Abstract

There is a pattern of gradual price rises and noticeably more sudden price drops in the housing market. This is because, in an upmarket, the market comparisons approach of the standard real estate appraisal technique forces home loan underwriters to be reluctant to approve a bigger loan than what the contemporary market comparisons would indicate. On the other hand, in a down market, underwriters do not face any such restriction, and hence prices can drop to the level fully reflecting the declining market condition. The traditional extrapolation typically used to determine the “time” value adjustments needs to be used more cautiously.

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Published

2021-12-29

How to Cite

Keenan, D. C., Kim, T., & Lee, D. C. (2021). The Market Comparisons Appraisal Effect on the Housing Boom Cycles. Journal of Applied Business and Economics, 23(7). https://doi.org/10.33423/jabe.v23i7.4863

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Section

Articles