Real estate appraisal is a solid, middle class profession—one that requires a four-year degree and extensive on-the-job education, but also pays 40% more per hour than the median job. But appraisal licenser Brian Weaver wrote in an industry newsletter that "The future for appraisers specializing in residential mortgage work is coming to an end... No bang. Not even a whimper."
Algorithms deployed by firms like Zillow are getting better at analyzing characteristics of a home and its neighborhood to determine its value. The firm says that it on average predicts a home's value within 5% of its sale price, down from 14% a decade ago. Meanwhile, home-finance giant Freddie Mac recently began using automated appraisal for a small fraction of transactions.
Government to the rescue? Would-be automators will have to change government regulation if they want to cut human appraisers out of the picture. The industry says handing this important pillar in housing finance's architecture over to computers is dangerous, and important players like Freddie say that they plan to rely on human appraisers for the foreseeable future. But as computerized appraisal methods improve, potential savings could become irresistible.