There are three factors that contribute to the high demand for appraisers, that will exceed the supply of appraisers.
Factor 1. Job growth needed to sustain demand.
As we noted in our post titled Job Outlook for Real Estate Appraisers, the Bureau of Labor Statistics expects a job growth of 8% for the appraisal industry from 2014 to 2024, which is higher than the average of the combination of all other occupations.
Factor 2. Age of appraisers approaching retirement age.
In that same post, we also showed a statistic that 11% of appraisers are over the age of 65, and a staggering 62% are over the age of 50, according the 2014 study by the Appraisal Institute. Considering the typical age of retirement in the United States is 65, many appraisers are approaching, or even older, than the retirement age.
Factor 3. The strict requirements to become an appraiser.
The barrier to entry into an appraisal career has recently increased. The requirements to enter the field have become tougher due to the Dodd-Frank Wall Street Reform and Consumer Protection Act (aka Dodd-Frank for short).
Dodd-Frank was passed after the crash of the housing bubble of the mid-2000s. It was an Act that encompasses many industries. However, its desired affect on the appraisal industry was that it would result in more reliable appraisals.
In order to achieve this, Dodd-Frank not only made some changes to how the industry operated, but also increased the requirements to become an appraiser. Some of those increased requirements include:
- Adding an educational requirement of Associates Degree for Licensed appraisers, and a increasing the education requirement of Certified appraisers from Associates Degree to Bachelors Degree.
- Requires two years as a Trainee appraiser working under a supervisor. Unfortunately, part of Dodd-Frank also dis-incentivized appraisers to take on Trainees.
- Encouraged states to accept courses approved by Appraisal Qualification Board (AQB) Course Approval Program, which requires a significant investment in time and money to become a Trainee. It then requires additional investment in time and money to become Licensed or Certified after the Trainee period.
The appraisal industry is losing experienced appraisers due to attrition, while at the same time Dodd-Frank has made it more difficult for new appraisers to enter the industry.
There is inevitably going to be a lower supply of appraisers, coupled with a higher demand for appraisal services. Economic models for any other industry, product, or service suggest that prices will go up when the demand outweighs supply. If that holds true for the appraisal industry, the there is an opportunity for appraisers to earn significantly more money than they do today.
For people considering a new career in real estate appraisals, these new requirements should not discourage you. In fact, after dedicating the time to become Licensed or Certified, you will be part of a safely regulated industry with a great earning potential.
Still interested in pursuing a career in real estate appraisals? Check out the online appraisal courses available in your state from our partner at Mbition.