The real estate industry is a vast and complex field that encompasses various professions, including appraisers. These professionals play a crucial role in determining the value of properties, which is essential for buyers, sellers, lenders, and investors. As of 2019, the appraiser industry in the US was experiencing significant changes due to regulatory updates, technological advancements, and shifting market trends. In this article, we will delve into the world of appraisers in the US, exploring the number of appraisers, their roles, and the challenges they faced in 2019.
Introduction to Appraisers and Their Role
Appraisers are licensed professionals who specialize in assessing the value of properties, including residential and commercial buildings, land, and other types of real estate. Their primary function is to provide an unbiased opinion of a property’s value, taking into account various factors such as the property’s condition, location, and market trends. The appraiser’s report is used by lenders to determine the amount of a mortgage, by sellers to set a fair asking price, and by buyers to ensure they are paying a reasonable price for a property. In addition to real estate transactions, appraisers may also be involved in tax assessments, insurance claims, and property development projects.
The Appraiser Industry in 2019: An Overview
As of 2019, the appraiser industry in the US was facing numerous challenges, including a decline in the number of licensed appraisers and an increase in regulatory requirements. According to the Appraisal Institute, the number of licensed appraisers in the US had decreased by approximately 20% since 2007, with around 78,000 licensed appraisers remaining in the industry. This decline was largely due to retiring appraisers and a lack of new entrants to the profession. The Appraisal Institute also reported that the average age of appraisers was increasing, with many appraisers approaching retirement age.
Factors Contributing to the Decline of Appraisers
Several factors contributed to the decline in the number of appraisers in the US. One of the primary reasons was the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which introduced stricter regulatory requirements for appraisers. These regulations, including the requirement for appraisers to be licensed and certified, may have discouraged some individuals from pursuing a career in appraising. Additionally, the rise of automated valuation models (AVMs) and other technological advancements may have reduced the demand for traditional appraisers, as some lenders and financial institutions began to rely on these alternative valuation methods.
The Number of Appraisers in the US: A State-by-State Breakdown
The number of appraisers in the US varied significantly from state to state in 2019. According to the Appraisal Subcommittee, the top five states with the highest number of licensed appraisers were California, Texas, Florida, New York, and Illinois. These states accounted for approximately 40% of all licensed appraisers in the US. On the other hand, some states, such as Wyoming and Vermont, had fewer than 100 licensed appraisers.
| State | Number of Licensed Appraisers |
|---|---|
| California | 8,311 |
| Texas | 6,444 |
| Florida | 5,651 |
| New York | 4,335 |
| Illinois | 3,844 |
Challenges Faced by Appraisers in 2019
Appraisers in the US faced numerous challenges in 2019, including increased regulatory requirements, a shortage of new entrants to the profession, and the rise of alternative valuation methods. The Appraisal Institute reported that many appraisers were struggling to maintain their licenses and certifications due to the high cost and time commitment required. Additionally, the lack of diversity in the appraiser profession was a significant concern, with many appraisers being older, white males. This lack of diversity may have limited the perspective and expertise of appraisers, potentially leading to inaccurate or biased valuations.
The Future of Appraisers in the US
Despite the challenges faced by appraisers in 2019, the profession is likely to continue playing a vital role in the real estate industry. The increasing demand for accurate and reliable property valuations, driven by technological advancements and regulatory requirements, will likely drive the need for skilled and licensed appraisers. To address the decline in the number of appraisers, the Appraisal Institute and other industry organizations are working to attract new entrants to the profession and promote diversity and inclusion. Furthermore, the development of new technologies, such as artificial intelligence and machine learning, may enhance the efficiency and accuracy of appraisals, potentially increasing the demand for appraisers with specialized skills and expertise.
Conclusion
In conclusion, the appraiser industry in the US in 2019 was characterized by a decline in the number of licensed appraisers, increased regulatory requirements, and the rise of alternative valuation methods. Despite these challenges, appraisers continued to play a crucial role in the real estate industry, providing essential services to buyers, sellers, lenders, and investors. The future of appraisers in the US will likely be shaped by technological advancements, regulatory requirements, and the need for diversity and inclusion in the profession. As the real estate industry continues to evolve, it is essential for appraisers, industry organizations, and regulatory bodies to work together to address the challenges faced by appraisers and ensure that the profession remains relevant and effective in meeting the needs of stakeholders.
What is the current state of the appraisal industry in the US?
The appraisal industry in the US is facing significant challenges in 2019. The number of licensed appraisers has been declining steadily over the past few years, with many experienced appraisers retiring or leaving the profession. This has resulted in a shortage of qualified appraisers, particularly in rural areas where the demand for appraisal services is high. Furthermore, the industry is also struggling to attract new talent, as the profession is often perceived as being staid and unglamorous. As a result, many lenders and financial institutions are finding it difficult to obtain timely and accurate appraisals, which is essential for mortgage lending and other financial transactions.
The decline of the appraisal industry has significant implications for the US economy. Appraisals play a critical role in ensuring that lenders and investors have an accurate assessment of the value of properties, which helps to mitigate the risk of default and foreclosure. Without a sufficient number of qualified appraisers, the risk of inaccurate appraisals increases, which can lead to financial instability and even crises. Therefore, it is essential to address the challenges facing the appraisal industry, including the shortage of qualified appraisers, to ensure that the US economy remains stable and grows. This can be achieved by promoting the profession, providing training and development opportunities, and implementing policies that support the growth and development of the industry.
What are the main challenges facing the appraisal industry in 2019?
The appraisal industry in 2019 is facing several challenges, including a shortage of qualified appraisers, increasing regulatory requirements, and technological disruptions. The shortage of qualified appraisers is one of the most significant challenges facing the industry, as it has resulted in delays and backlogs in the appraisal process. Additionally, the increasing regulatory requirements, such as the Dodd-Frank Act, have imposed significant burdens on appraisers, including higher education and training requirements, and stricter standards for appraisal reports. These requirements have increased the cost and complexity of the appraisal process, making it more difficult for appraisers to operate profitably.
The technological disruptions in the appraisal industry are also significant, as they are changing the way appraisals are performed and delivered. The use of automated valuation models (AVMs) and other digital tools is becoming more widespread, which is reducing the need for human appraisers in some cases. While these tools can increase efficiency and reduce costs, they also pose a threat to the traditional appraisal model, as they can provide faster and cheaper alternatives to traditional appraisals. To remain relevant, appraisers must adapt to these changes by developing new skills and offerings, such as consulting and advisory services, which can provide additional value to clients and differentiate them from automated tools.
How is the shortage of appraisers affecting the mortgage industry?
The shortage of appraisers is having a significant impact on the mortgage industry, as it is causing delays and backlogs in the appraisal process. This is resulting in longer processing times for mortgage applications, which can be frustrating for borrowers and lenders alike. Additionally, the shortage of appraisers is also leading to higher costs, as lenders are having to pay premium fees to attract appraisers to perform appraisals. This can increase the overall cost of mortgage lending, which can be passed on to borrowers in the form of higher interest rates or fees. Furthermore, the shortage of appraisers is also affecting the quality of appraisals, as some lenders are being forced to use less experienced appraisers or automated tools to perform appraisals.
The impact of the appraisal shortage on the mortgage industry is also being felt in terms of reduced originations and slower economic growth. The delays and backlogs in the appraisal process are reducing the number of mortgage originations, which can slow down economic growth and reduce the availability of credit. To address this issue, lenders and regulators must work together to develop solutions, such as recruiting and training new appraisers, and implementing more efficient appraisal processes. Additionally, lenders must also consider alternative valuation methods, such as desktop appraisals or hybrid appraisals, which can provide faster and more cost-effective alternatives to traditional appraisals.
What is being done to address the shortage of appraisers?
To address the shortage of appraisers, several initiatives are being implemented, including training and development programs, recruitment campaigns, and regulatory reforms. Professional associations, such as the Appraisal Institute, are offering training and development programs to help new appraisers enter the profession and to provide ongoing education and training to existing appraisers. Additionally, regulatory agencies, such as the Appraisal Subcommittee, are implementing reforms to simplify the appraisal process and reduce the regulatory burden on appraisers. These reforms include streamlining the appraisal reporting process and reducing the requirements for appraisal licenses.
The recruitment campaigns are also being implemented to attract new talent to the profession, including advertising campaigns, career fairs, and outreach programs to universities and colleges. These campaigns are designed to promote the appraisal profession and to attract individuals who are interested in a career in real estate or finance. Furthermore, some lenders and financial institutions are also offering incentives, such as scholarships and internships, to attract new appraisers to the profession. These initiatives are essential to addressing the shortage of appraisers and ensuring that the appraisal industry remains vibrant and sustainable.
How is technology changing the appraisal industry?
Technology is changing the appraisal industry in several ways, including the use of automated valuation models (AVMs), digital tools, and data analytics. AVMs are computer programs that use algorithms and data to estimate the value of properties, and they are becoming increasingly popular as a faster and cheaper alternative to traditional appraisals. Digital tools, such as mobile apps and online platforms, are also being used to streamline the appraisal process and improve communication between appraisers, lenders, and borrowers. Data analytics is also being used to analyze large datasets and identify trends and patterns in property values, which can help appraisers to make more accurate and informed decisions.
The use of technology in the appraisal industry is also changing the role of appraisers, as they are increasingly being required to have technical skills and knowledge to use digital tools and data analytics. This requires appraisers to be more adaptable and flexible, and to be willing to learn new skills and technologies. Additionally, technology is also enabling appraisers to provide more specialized and niche services, such as consulting and advisory services, which can provide additional value to clients and differentiate them from automated tools. As technology continues to evolve and improve, it is likely to have a significant impact on the appraisal industry, and appraisers must be prepared to adapt and evolve to remain relevant.
What are the implications of the appraisal industry trends for lenders and financial institutions?
The trends in the appraisal industry have significant implications for lenders and financial institutions, as they must adapt to the changing landscape and find ways to manage the risks associated with appraisals. The shortage of appraisers and the increasing use of technology are requiring lenders to be more flexible and innovative in their approach to appraisals, and to consider alternative valuation methods and tools. Additionally, lenders must also ensure that they are complying with regulatory requirements and guidelines, which can be complex and time-consuming. The use of technology is also requiring lenders to invest in new systems and infrastructure, and to develop new skills and expertise to manage and analyze large datasets.
The implications of the appraisal industry trends for lenders and financial institutions are also significant in terms of risk management and compliance. The accuracy and reliability of appraisals are critical to managing risk and ensuring compliance with regulatory requirements. Therefore, lenders must ensure that they are using qualified and competent appraisers, and that they are implementing robust quality control processes to manage the risks associated with appraisals. Additionally, lenders must also be aware of the potential biases and limitations of automated valuation models and other digital tools, and must take steps to mitigate these risks and ensure that appraisals are accurate and reliable. By adapting to the changing landscape and managing the risks associated with appraisals, lenders and financial institutions can minimize the implications of the appraisal industry trends and ensure that they remain competitive and compliant.