Despite the looming threat of big data and automation on the future of appraisers, experts believe that the next few years will be stable ones for the industry. However, analysts say that appraisers should still prepare for automation, as it will have significant long-term constraints on the industry.
To stay afloat in the appraisal business, it is always wise to stay updated on the trends and events that impact home values, the appraisal process, and appraisal costs. Below, we list some current or upcoming events that could impact the potential paths the appraisal business might take in the coming year.
Heavier reliance on technology
We’ve all heard how computers will someday replace knowledge-based professions, including those of appraisers. It’s true that the industry could soon be driven to rely mainly on non-human valuation tools to save time and lower costs. It could lead to a significant market imbalance.
Of course, automation cannot eliminate the need for appraisers, but appraisers will need to embrace technology to stay ahead.
The popularity of smart homes
The rising popularity of smart homes will have a significant effect on property values. Today, more and more customers are seeking smart home features like automated lighting, security, and climate control.
Federal income tax revisions
The new federal income tax revisions could create some imbalance in the coming year. Appraisers may have to deal with softer pricing on the costlier homes due to the cap on deductible mortgage interest. The oversupply could compound that in expensive housing in certain markets.
Still, experts say that this trend probably won’t make that much of an impact on the industry and that it could correct itself within a few years.
Increase in the number of real estate agents
In recent years, there has been an increase in the number of people seeking professions in real estate. Some are seeking jobs as loan officers. There also seems to be a trend in real estate agents looking to shift to the appraisal business.
It is something that could significantly affect the industry, and current appraisers should prepare for it. Interestingly, this could be offset by the number of baby-boomer appraisers who are exiting the industry and entering retirement. If not balanced, the industry could have a problem training the next generation of appraisers.
The housing bubble
As housing shortages make prices rise, people start talking about a “bubble.” If interest rates continue to climb, this could result in a dampening effect on housing values. Lending companies may begin to offer more creative loan types to keep customers buying.
Buyers will understandably worry about values reaching a peak and a housing bubble occurring. Experts say that appraisers need to prepare to explain what this means and why it is happening. They also say that the housing situation is nowhere as bad as it was a decade ago, but that we shouldn’t be complacent.
Despite the various challenges coming from all directions, there will continue to be a strong demand for appraisers. It should offset the strain caused by automation on the industry.