January 19, 2018

Fishing For Housing Trouble

There remains large dose of uncertainty in the housing market, despite having the terms of the new tax law readily available. This week I explore this and conclude that the impact is probably not as bad as it seems. But we are driven to fish (admittedly I hate fishing but hey, this is a metaphor) and seem to be looking and expecting to reel in more bad news these days. Admittedly after I watched this clip, I felt the urge to put on a life vest.

Let’s cast our lures and snare some information in these Housing Notes now (sorry).

Market Report Gauntlet Q4-2017 Week 3: South Florida & Connecticut

It’s week 4 of our quarterly market report gauntlet with Douglas Elliman Real Estate. I’ve been authoring this expanding report series for 23 years and it’s been a fascinating process.

Greenwich, CT
One of my favorite markets to cover over the past year has been Greenwich, Connecticut. It’s not because I live nearby, have relatives who live there or love the beautiful parks and nice downtown it contains. No. It has been my observation of the disconnect between high-end sellers and actual market conditions. A small contingency of brokers there took a defensive posture a little over a year ago with a comment by resident Barry Sternlicht, CEO of Starwood who said: “You can’t give away a house in Greenwich.” This brought outrage from a small group of high-end brokers that didn’t seem to understand the rules of housing supply and demand. They interpreted Sternlicht’s comments as a personal attack.

I found the whole thing bizarre after I learned that the brokers and community leaders hired a PR firm to tell the world how amazing the town is. The thing is, Greenwich is amazing and that fact had nothing to do with why these huge homes weren’t selling. The high-end homes, especially in Backcountry weren’t selling because they were highly overpriced “because that’s the price the seller wanted.” I thought that the Sternlicht comments did the market a favor by enabling a conversation about accurate pricing.

Fast forward to today, our research showed that those homes are selling because sellers are willing to meet the buyer at market value rather than demand the seller climb up to the price the seller wants. Here’s the proof – listing discount (percentage difference between the asking price at the time of contract and the contract price) were at their widest level since Lehman. Yet days on market remained very high, indicating that buyers have held firm – to force the proper pricing issue to daylight and so a lot of older listings were either cleared by selling at market value or letting the listing expire.

The forces of supply and demand set prices. Not sellers in a vacuum or certain brokers that continue to enable sellers to be disconnected from the market in order to get the listing (then they’ll not be able to sell). Sternlicht was one of those sellers in a vaccuum and felt forced to blame the market instead of taking responsibility for his pricing.

This evolution in the market has helped make the market stronger and this clearly resonated with Wall Street, a key driver of the Greenwich market. The article that featured our findings was the number 1 emailed story world wide across the 350,000± Bloomberg Terminal subscribers. And this improving luxury market condition as a result of more realistic sellers was seen across Fairfield County where Greenwich is located.

Here are a couple of Greenwich charts from our gallery:

South Florida
For nearly all the South Florida markets in the Elliman Report series, the final quarter of 2017 proved to be the best performing of the year. The Palm Beach single-family market was a standout in particular. You can see all the results for Miami Beach/Barrier Island, Miami Mainland, Fort Lauderdale, Boca Raton, Palm Beach, Wellington, Jupiter and Palm Beach Gardens as well as submarkets such as Juno Beach, Tequesta, and Summit Island at Elliman.com/marketreports.

Here are a couple of charts from our South Florida gallery:

Brooklyn Rents: Cooling Faster Than Green Matcha on a Winter Morning

The Wall Street Journal ran a piece this week using the Elliman Report: Manhattan, Brooklyn & Queens Rentals 12-2017 delving into the Brooklyn rental market but admittedly, as a wanna be hipster, I had to look up what “Matcha” was in the opening quote:

Brooklyn’s apartment market is cooling faster than a cup of green matcha on a winter morning.

Heavy rental development skewed to luxury is the key reason.

How Greenspace Continues to Expand in Detroit

I’ve shared this @DetroitStreetVu Twitter account before but I continue to be obsessed with it. Since the Detroit bankruptcy, the deterioration of the outlying housing stock continues. These google pics illustrate just how much. Click to expand each for full the impact.

Tax Law Talk With A 2-4 Year Federal Extraction

I have provided is a round-up of some old and new reads on the implications of the new federal tax law on the real estate market (and other assets). As I’ve said many times, the impact ranges from neutral to modestly negative, but not catastrophic. And I am very comfortable with my belief that the new tax law will in no way help the cause of homeownership as a general concept. I believe the first impact will be a modest slow down in sales as buyers and sellers look to find the new equilibrium on price. But its all relative. The law’s impact may be felt as a slow down in the rate of rising sales or may cause sales to go negative. The impact towards pricing should result in varying degrees of downward pressure depending on the tightness of existing supply.

I believe one of the more important ways to look at this is federal government extraction from supporting homeownership is that it is probably a 2-4 year process. In other words, once price discovery has been completed between buyers and sellers, that’s probably it. I don’t think it is reasonable to project out this new market condition as an unending process and I don’t see the impact as severe.

  • Tax Overhaul Is a Blow to Affordable Housing Efforts [NYT]
  • How the Tax Code Rewrite Favors Real Estate Over Art [NYT]
  • The Tax Cuts and Jobs Act – What it Means for Homeowners and Real Estate Professionals [NAR]
  • How the New U.S. Tax Law Impacts Property Owners [Mansion Global]
  • Realtors, Licking Their Wounds, Get Ready for Their Next Battle [WSJ]
  • Opinion: Owning a home can give you a place to hide from a bear market for stocks [Marketwatch]

Daniel Gershburg Podcast: Hey, what’s the market like John?

I’ve been following Dan’s Twitter handle and found it to be a great resource for pretty much everything. He’s a real estate attorney and we got to know each other a little bit over the ultraweb and he then invited me to join him on his podcast. I got to talk with him about a few things outside my usual discourse: my concept of “neutrality” and how I got started (and who doesn’t want to wax on poetic about themselves for 45 minutes?) I enjoyed the discussion and I think you will too.

This Week in Aspirational Pricing

Here’s a rental apartment for you. It’s asking a $100,000 per month but here’s the obvious clincher- It’s got three outdoor showers.

The Fed Beige Book is Actually Gold

The Beige Book is a resource produced by the 12 member banks of the Federal Reserve is invaluable because it provides a real time collection of anectodal feedback on the economy. There is no data. It comes out 8 times a year and is worth a regular read.

Planet Money’s new podcast know as “The Indicator” is a new regular listen to me. This episode briefly explains the Beige Book.


I should change the name of Appraiserville this week to Announcementville. Here are two big announcements so break out your calendars right now and write this down.

RAC 2018 Conference Announced, Frisco, TX September 13, 14

As the president of RAC and am excited to announce our 2018 conference will be held in Frisco on September 13th and 14th. It promises to be a productive, relevant and fun event.

Founded in 1990, RAC continues to be the premier appraisal organization whose members focus on complex residential properties for relocation, litigation support, testimony and reviews.

Appraiserfest, San Antonio, TX November 1, 2, 3

Well my friends, there is a new appraiser-centric conference in town, and it’s called AppraiserFest. Why would you want to attend AMC-centric conferences that selfishly predict your demise based on the advertisers that have paid to play. Lead by Phil Crawford and Mark Skapinetz, Appraiserfest is going to be a happening, not just a conference. More details to come.

I’ll be joining other thought leaders in our industry to talk about our part of the mortgage process that has been under seige since the financial crisis. We haven’t been speaking on our behalf until the past year and our influence is only going to scale higher.

Give Phil Crawford a video editor and he’s soon competing for page views with the new Star Wars trailer. Here’s the Crawfordized announcement:

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll go fishing;
  • You’ll get interviewed for a podcast;
  • And I’ll write more market reports.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Appraisal Related Reads

Extra Curricular Reads

January 12, 2018

Fear The Tree! (stuff happens and markets adapt)

I have often said that my favorite college mascot slogan in college sports is Stanford’s unofficial mascot – their marching band’s tongue in cheek “Fear the Tree.” Words to live by.

In many ways, the new federal tax law is the proverbial tree. As we look at its impact on housing, it is not falling on the roof. I believe there has been a broad overreaction. I’ll explain further in the notes.

Most housing market participants probably feel like this:

Market Report Gauntlet Q4-2017 Week 2

This week Douglas Elliman Real Estate, the firm for whom I have authored their expanding market report series since 1994, has published a slew of reports this week:

  • Manhattan, Brooklyn & Queens Rentals
  • Brooklyn Sales
  • Queens Sales
  • Riverdale (Bronx) Sales
  • Westchester Sales
  • Putnam & Dutchess Sales

The rental report results attracted the most attention, as we saw record concessions this month across the three boroughs. Westchester County continued to see a brisk market but some softness in trends fostered some interest.

On Bloomberg news, the stories covering these market reports were the number 1 and 2 most emailed stories across Bloomberg Terminals yesterday.

But what is better than a list? Charts, obviously.

Bloomberg News: Manhattan Apartment Rents Fall the Most Since 2014

Bloomberg News: Westchester, Home of America’s Highest Property Taxes, Braces for a Hit

Wall Street Journal: Manhattan Rents Fell 2.7% in December to Median of $3,295

Bloomberg Markets Interview January 11, 2018

So I was walking down Fifth Avenue in Midtown Manhattan in the late morning yesterday after a meeting and got a call from Bloomberg TV. Apparently, two different stories that featured two of the market reports I author – published by Douglas Elliman – were the number one and two most emailed on the Bloomberg Terminals worldwide.  They wanted to talk about the results.

So I took a left and walked over Bloomberg HQ.  Got to speak with Vonnie Quinn and Shery Ahn on set – who knew how to make an interview go well.

This is a 2-minute clip of the 5-minute interview, but you’ll get the gist. I’ll expand on this discussion tomorrow at 2 pm when my weekly Housing Note is released.

[click to view video]

Tax Law Ramblings AMT+MID-Style

Over the past few weeks, I’ve spoken with many people about the new tax law. I have fought the urge to let my eyes glaze over and dream of watching paint dry.

The impact to housing is a combination of price, mortgage amount and SALT on top of local market conditions and personal financial situations. One of my biggest epiphanies has been the interaction with the Alternative Minimum Tax (AMT). It was basically designed pre-new-tax law to require those who took too many deductions to pay more tax. So when pundits try to explain the impact to homeowners, it tends to be overstated because they tend to look at deductions without any context (me included). For example, the average property tax in Westchester County, New York is the highest in the U.S. according to ATTOM. With the $10,000 cap on property taxes (set aside SALT for a second), that infers that the average homeowner just incurred a $10,000 increase in tax exposure at whatever bracket they are in because their total property tax bill was $20,000. But before the new law, their $20,000 real estate bill may only provide $12,000 after the AMT calculation. Going from an adjusted $12,000 deduction to a $10,000 is much less severe than going from $20,000 to $10,000. That’s the general idea.

Also, in the case of co-ops, I’m being told that the pro rata share of underlying mortgage interest of the corporation, plus a shareholders own mortgage interest combined are subject to the $750,000 MID cap.

Admittedly I’m still struggling with the aftermath of the AMT implications. Shared insights are appreciated.

Ken Griffin loves real estate

Ken Griffin just bought the highest priced condo in Chicago for $58.75 million, he is reportedly under contract for around a reported $250,000,000 in Manhattan at 220 Central Park South and he has been assembling Palm Beach oceanfront parcels well in excess of $100,000,000.

Denver: Housing Glut of High-End Rentals

The Denver housing market has been booming. But like most urban markets, there has been way too much product constructed in recent years that has been skewed to luxury. You can thank the flood of low-cost capital from a low interest rate world. The push towards additional supply did not appear to factor in the new product being created.

This chart is a little scary.

Upcoming Speaking Events

January 24, 2018 – Fordham Real Estate Institute at Lincoln Center: panel co-hosted by the Real Estate Services Alliance (RESA), “Tax Reform’s Impact on the Real Estate Market.” Keynote presenter Richard Shapiro, Director at Eisner Amper, will demystify the new tax bill, reviewing the changes that individuals and businesses will face starting this year. From there, a panel of market leaders will discuss the impact on both the residential and commercial real estate markets and share insights on what to expect in 2018. The panel will feature:

James Nelson, Vice Chairman at Cushman Wakefield (moderator)
Brad Klatt, Co-founder, Roseland Property Company, Canoe Brook Partners
Jimmy Hinton, Managing Director of Research, HFF
Jonathan Miller, CEO, Miller Samuel Inc.
Mike Stattery, SVP Research, Real Estate Board of New York

Wed, 24 January 2018, 8:00 AM – 10:00 AM EST
Fordham Law School, 150 West 62nd Street, 2nd Floor, New York, NY 10023

The event is free – but you need to register.


Lots of things starting to brew in the new year so lets recap last year’s roller coaster ride.

REALITY DISTORTION FIELD: Guess the year the AI National new president’s interview was written?

That all caps phrase is a marketing technique mastered by Steve Jobs of Apple.

In appraiser speak, the effective date of the following press release is in 2018, but the actual age could be any time since AI’s inception with only slight modification. The new Appraisal Institute president Jim Murrett looks like yet another old guard inner circle executive as evidenced by this super generic press release-as-interview for Appraisal Buzz.

Reading the release, you’d never know that AI National had a terrible year in 2017 that began with their self-serving actions in late 2016.  To be fair, AI National was very good in leading the industry’s response to the Tristar Bank appraisal waiver request outcry. I would encourage them to do more to look out for their membership using that event as a template.

Here were the issues facing AI National in 2018 that the new president didn’t acknowledge in the slightest:

  • The “taking” of most chapter funds initiate and “pre-approved” by the board in late 2016 without vetting to membership or chapter leadership.  This action was merely paused but is still alive and was set to begin January 1, 2018.  No word on this but I do believe that is AI National’s poison pill.  If they go forward with their plans, that will be the end of AI National.

  • AI National now has a big competitor with the merger of NAIFA and ASA who lobby and work hard for their members.

  • Ignoring chapter boards when aggressively courting state legislators in 2017 to embed anti-USPAP regulations that would severely damage the residential profession by providing confusion to the marketplace – incredibly, claiming it was great to enable appraisers to turn off their certification at will in order to do $25 evaluations.  And all along I thought certifications were in place to protect the public trust?

  • A misleading congressional testimony in late 2016 that falsely characterized the fake “appraisal shortage” as the fault of USPAP and TAF when this was really an attempt to embed their own standards.  Ironically AI National gave their standards to TAF as the platform to build USPAP (how quickly they forget).  AI National aggressively lobbied individual financial committee members with this misleading narrative to make this hearing happen – I saw this firsthand.

  • Given the accelerated rate of membership decline last year, possibly triple the decline of the previous years, I don’t see how 2017 was a good year unless their goal was to shrink the organization?

  • After fleeing from the Appraisal Foundation a decade ago (and the reason I quit as an affiliate after their non-credible reasons by then president Leslie Sellers), AI National tried to re-join TAFAC but was rejected by a 2:1.  The reason I believe they were rejected was that they would not agree to the stated goal of the organization.  Some council members blindly loyal to AI National actually said not agreeing to the goal was the same as not agreeing to check a “little box” on an application.  Since there have been exciting developments in the industry, it was great to see an organization like TAFAC have a backbone and stop putting up with prima donnas.  As someone told me – “I’m sick of their crap, we’ve wasted enough time on them.”

  • And after the “middle of the night departure” of CEO Fred Grubbe, last August for no stated reason – although many tell me he has been a large part of the culture problem at AI National and many have told me what they thought the actual reason was. There has been no word on the nominating process for a replacement. I’m betting it is Jim Amorin.

  • 2017 marked the first year that AI National was recognized by the industry and their membership as a detriment to the future of the appraisal industry, taking actions that they themselves have been unable to explain to their membership. Who doesn’t find this bizarre? The reasons for their contrarian behavior are only understood by the inner circle of executives. Perhaps 2018 will be the year where membership is able to crack their code to understand why they are so eager to work against the industry i.e. USPAP, evaluations, promoting AMCs, the “taking” debacle, which is still alive, and more. Whether or not we ultimately learn what is going on internally, it matters less in 2018 since they have lost their actual leadership role and are essentially irrelevant.

Now please re-read the press release and tell me how 2017 was a good year for AI National – our industry’s largest trade group and whether they as an organization learned ANYTHING from their recent mistakes, included a massive, unheard of, membership uproar. Former CEO Fred Grubbe may have been the only one to understand that after than a decade of leading the organization and its culture into irrelevancy, it was time to leave.

View the press release on Appraisal Buzz

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll write a market report;
  • You’ll develop sea legs;
  • And I’ll continue to fear the tree.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Appraisal Related Reads

Extra Curricular Reads

January 5, 2018

Getting Housing Into A Tight Jam During 2018

This is my first Housing Note of 2018. Yay me! There is something uplifting and optimistic and about starting off a new year, although the impact of the new tax law of December 22, 2017, challenges my ongoing naivete. While the new law has the potential to put the housing market in a jam as the federal government pulls its century-old endorsement through deductions, this is how you get out of one:

Clearly it is more fun to avoid getting into a jam by turning around.

So let’s look at empirical data on how the Manhattan market reacted to the uncertainty that permeated the housing zeitgeist in the fall of 2017 as both houses of Congress worked on the new tax law.

Market Report Gauntlet Q4 2017 Week 1: Manhattan Sales

Since it is the beginning of 2018, we need to close out the 2017 housing market. In the coming weeks, I’ll recap the results of the 4Q 2017 for the entire Elliman Report Series that I have been authoring for Douglas Elliman since 1994.

Here is some empirical evidence that Wall Street is very curious about the implications of the new tax law. The coverage of our Elliman market report for Manhattan Sales Q4 2017 was the number 1 most read article first thing in the morning and maintained #1 “most read” and number 1 “most emailed” status for the entire trading day (350,000 subscribers worldwide). I’m even going to go into discussions of my alma mater’s #1 men’s college hoop rating this week.

And some chart love (it strayed from the purple or gold color theme but given the article’s #1 status for a full day, black and white are clearly ok).

Here were some of my takeaways for the Q4 2017 Elliman Report: Manhattan Sales:

  • First time in 7 quarters the average sales price fell below $2 million as the legacy contract pipeline clears
  • Median sales price edged higher for third consecutive quarter, driven by re-sales
  • Sales activity for the Manhattan housing market was at the lowest fourth quarter total in six years
  • Pace of the fall market cooled as market participants awaited the housing-related terms of the new federal tax law
  • Buyers continued to hold firm, forcing sellers to meet them on price
  • Smaller apartments continued to see more bidding wars than larger apartments
  • 90% of sales at or above $5 million were “all cash”

I have provided a sampling of Manhattan-centric charts below that can also be found in our online Manhattan chart gallery.

Tax Law Insight On Twitter

Click on my retweet of Nick’s tweet for a fascinating thread.

Brick Underground Podcast January 2, 2018 – Jonathan Miller

Over at Matrix Blog

Just before the holidays, I got to join Alanna Schubach and Nathan Tomey on their Brick Underground podcast to talk about 2018.

This podcast will always have a special meaning to me as our late friend Jhoanna Robledo‘s passion project.

The Brick Underground Podcast: Talking 2018 with NYC real estate appraiser Jonathan Miller.

Click on the graphic below to listen to 30 minutes of Brick talk.

2017: The Year The 2015 Manhattan Market Shift Became Conventional Wisdom

Over at Matrix Blog

This was my favorite blog post title in years.

After controlling the Manhattan housing market for quite a while, sellers and landlords exchanged roles with buyers and tenants circa 2015.

After peaking in 3Q 2015, the market share of bidding wars fell by two thirds. Bidding wars remain more common at lower price points. After bottoming in the 3Q 2015, the market share of rentals with landlord concessions has expanded sharply due to high-end rental development over-building. But like the sales market, the oversupply remains at the upper end.


Sunday, December 31, 2017, was a trifecta of my New York Times Real Estate market insight goodness before the year ended:

Landlords and Sellers Adjust [New York Times: Calculator column]

Manhattan Prices Stable in 2017, Even as Luxury Takes a Breather [New York Times: Big Ticket column]

Ditching the Tub [New York Times]

New Manhattan Condos Got Really Big Over The Past Three Years

Over at Matrix Blog

Average sales size patterns for these two size sales categories split sharply three years ago.

[Click to expand]

Upcoming Speaking Events

January 24, 2018 – REI Breakfast Series – RESA Presents: Tax Reform’s Impact on the Real Estate Market. Fordham Law School (Lincoln Ctr). More details to come.


Happy New Year to readers of Appraiserville – wishing you a prosperous 2018. The 2017 appraisal year was a sea-change of events that gave many appraisers hope that sanity would return to our world. It was the first year of upside in probably a decade so we’ll gladly take it. I’ve just gone through the busiest year end of my career (it’s not over!) so I have a backlog of writings to share soon on Real Estate Industrial Complex. I just renewed the domain so this industry repository won’t be sitting dormant for long.

Looking back at the appraisal industry in 2017:

  • Appraisers became significantly more outspoken and legislatively active.
  • Longstanding chronic problems with the Appraisal Institute leadership and their disdain for residential appraisers was finally discussed openly.
  • A massive industry pushback of Appraisal Institute’s planned “taking” of most chapter funds was delayed (originally January 1, 2018).
  • The state coalitions expanded and continued to be more effective in their influence of policy.
  • Our industry learned that state level policy influence is effective thanks to the coalitions getting the word out.
  • A great sense of community working for a common cause (survival) has blossomed.
  • The AMC grip on our industry formed cracks after the misleading “appraisal shortage” narrative was crushed by our providing enlightened economic facts.

Just say NO

On a personal note, multiple Wall Street and other large financial institutions have approached my firm this year after they neutered their AMC vendors, requiring that they use our firm for high-end work. We are to be paid our fee and allowed to provide our reasonable turn times. I was told many horror stories by those institutions who came to realize we are not robots, nor are we widgets. By taking this step, they invested in risk management.

However, their initial stream of new business was met with 3-4 addendum requests per assignment that had nothing to do with any requirements, repeated prior requests or had no relationship to the credibility of the value. We nicely complained to the AMC and their institutional clients as to why this was a problem for us, indicating the relationship won’t work unless this is fixed – the idea that we are not to be treated as if we have no experience in our market. To their credit, they escalated the issues and responded with the utmost professionalism. Suddenly all those requests for clarifications stopped coming, but the new assignments didn’t stop. Win-win. We have one last new Wall Street client who is resolving their internal issues now and I am hopeful that they will make the necessary corrections. If they don’t, we’ll simply drop them.

I do understand the default thinking behind superfluous addenda requests – Typically, AMCs are forced to rely on appraisers with no local market knowledge because most of the better local talent has other clients paying full fees and demanding reasonable turn times. As a result, AMCs often lose their muscle memory to engage critical thinking in their reviews. The idea that my high-end Manhattan property appraisal can be reviewed by an appraiser in Kansas who has never been here, for a California bank and the AMC engages in scary big worded USPAP talk that isn’t accurate is completely inappropriate. I’m not saying pushback always works but AMCs seem to be recognizing that their time is up for business as usual and are bringing outsiders with actual valuation experience to fix what’s broken – at least in my small window of AMC interactions.

Life is too short. Don’t put up with what isn’t right. That’s how the appraisal industry killed the “appraisal shortage” lie in 2017. Do the best appraisal you can, operate with professionalism and integrity and know when to say “no.” After what happened in 2017, I think the few AMC clients we are engaged with are seeing a little bit of this light.

Dave Towne: Revision to GSE forms coming?

Most of my reports are narrative these days (unless you know of a form to appraise a “dumb-waiter airshaft.”)

But here’s something from Dave Towne (send him a note and get on his essential mailing list).

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll get out of that parking space without hitting your bumper;
  • You’ll watch old episodes of the Rockford Files and master a j-brake maneuver;
  • And I’ll buy a new snow plow.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

One more thing – Me in 40 years:

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Appraisal Related Reads

Extra Curricular Reads

December 29, 2017

It’s The End Of The Year As We Know It (And Housing Feels Fine)?

It’s 10 degrees in Connecticut right now (and I feel fine) and I’ve already had the pleasure of seeing social media photos from friends (and people I follow for no particular reason) in warm sunny places hanging out on beaches and sitting around swimming pools. But loyal readers of these Housing Notes know my contrarian ways too well. I’m headed to Michigan shortly where the temperature is below zero and there is a lot of snow on the ground, but I’ll feel warm visiting my family.

Aside from the weather, I have to say it has been a fun year (and very cathartic) writing these weekly Housing Notes – the third-anniversary of Housing Notes fast approaches in March. Readership keeps expanding and so does your valuable feedback and support. I still don’t quite know why I obsess about writing these every week but I do know it is fun and I’ve learned a lot in the process.

Best wishes to all of you and your families in 2018. May it be exciting, satisfying, productive, informative…and warm.

Happy New Year!

My New Year’s resolution is to think bigger, if not taller.

h/t Ritholtz, via SkyscraperPage.com

[click to expand]

See you next year – get it?

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog

December 22, 2017

Handling the Truth: Looking For A Few Good Houses With The New Tax Law

This is how the housing market story should be told (there is no sound).

Tax Bill Signed Into Law Today: Marks End of Federal Government’s Favored Nation Status of Homeownership

The president signed the tax bill into law today – it has been a primary driver of national news for most of the fall. It reverses nearly a full century of the favored status of the asset class by removing deductions that are long baked into housing values and buying decisions. The whole home buying process will be rethought going forward.

Generally speaking, the impact will be much more severe on the east and west coasts than it will in the middle of the country because housing prices are much higher. I covered the pros and cons of the tax bill in my 12/14/17 white paper last week: House & Senate Tax Bills: Issues Related to Housing.

President Trump pushed for law’s title to be the “Cut Cut Cut Act” as a branding mechanism but the name didn’t stick. Because the tax bill was not publicly vetted and on adoption, few congressional members had actually read it, the implications are not yet fully understood so I expect more issues relating to housing will be discovered in the coming months.

If there is one thing the housing market doesn’t like, it is uncertainty. As it relates to housing, this new law is an “uncertainty casserole” and homebuyers and sellers will take a while, probably 1-2 years to adapt to the new world order and sales will be tempered until there is equilibrium. Prices in high-cost housing markets will clearly slip, although I don’t anticipate a severity.

Here’s my interview on Bloomberg Radio concerning the new tax law’s impact on high-cost housing markets like NYC. I joined Pimm Fox on Bloomberg Radio this morning on Bloomberg Markets AM. It was prompted by Oshrat Carmiel’s article: Tax Overhaul May Mean Lower Prices for Manhattan Homebuyers.

Renters Are Less Mobile (So Will Homeowners)

One of the implications of the new tax law is the restriction on mobility for homeowners in high-cost markets who have to decide whether to give up their existing MID and bear more expenses on their home purchase. I suspect this will be more pronounced over the next 1-2 years as buyers and sellers get in sync with the ramifications of the new tax law.

This has already been the story in the rental market nationwide.

This Week in Aspirational Pricing

Here’s a fun article from the new Quartz site called “Quartzy” that proclaims THERE’S NEVER BEEN A BETTER TIME TO BUY A $50 MILLION NYC DREAM PAD.

And this week’s standouts:

Greenwich, CT 12,386 SqFt Mansion Dropped 61% from $25,000,000 2013 ask to a $9,650,000 sales price.

New York, NY 11,906 SqFt Condo Dropped 24% from $120,000,000 2013 ask to the $91,125,497 sales price. Oh, and the buyer still has to combine and renovate the 3 units into one unit.

Introduction of High-End Condos in the Suburbs

As a reader of Housing Notes, you know that I refer to 2014 as “Peak Luxury” and I was largely referring to U.S. urban markets. However, in 2014, we began to see luxury condo development in suburban markets as the urban markets heated up. The luxury product seemed targeted at high-end housing empty-nesters who were downsizing or urban trade-up buyers who were priced out. While these luxury condos were significantly more expensive than existing condo housing stock, urban buyers were already conditioned to multi-family living and existing luxury single-family homeowners didn’t have to worry about mowing the lawn or painting the house.

There’s a good read in Newsday today on this phenomenon occurring in Long Island: Super deluxe condominiums are on the rise on Long Island. This includes all of Nassau and Suffolk counties (ie includes Hamptons/North Fork out east).

The following chart clearly shows the 2015 spike, but the contract groundswell began in 2014 and closed in 2015. The 2017 sales volume, while off the pace of 2015, is substantially above prior peak levels.



My dear Appraiserville readers. If you can do one important thing for your appraisal profession, this is your opportunity and it doesn’t cost you anything but a few minutes of your time (and at AMC appraiser rates, it’s virtually free). Please provide feedback immediately to “two banking institutions have requested that the Appraisal Subcommittee temporarily waive the requirement for use of state licensed or certified appraisers” based on the fake claim of an appraisal shortage. I wrote about Tristar Bank in Appraiserville a few weeks ago. It is worth re-visiting since I translate the Tristar request into my interpretation of what they are really saying.

It is recommended to send your responses ASAP to webmaster@asc.gov rather than to Jim Park directly although either way is fine.

The Appraisal Foundation will be responding to this issue. Here is an email I just received on this issue:
Dear Council Members:

We wanted you to be aware that two banking institutions have requested that the Appraisal Subcommittee temporarily waive the requirement for use of state licensed or certified appraisers as authorized under Title XI. For background information and copies of the letters, please visit: https://www.asc.gov/Temporary-Waiver-Requests/TWAP.aspx

The ASC is encouraging input from the appraiser community as they consider these requests. As the first request came from a bank in the metropolitan Nashville area, an area with a large number of appraisers, an approval would certainly create a ripple effect across the country. Please submit your comments to:

Jim Park
Executive Director
Appraisal Subcommittee
1401 H Street, Suite 760
Washington, DC 20005

The Appraisal Foundation intends to provide comment and will provide you with a copy of our letter. Thank you for your attention to this critical matter.

David S. Bunton
The Appraisal Foundation
direct phone 202.624.3040


Please take a few minutes and respond to this critical issue.

Appraisers Pushing Back Against AMC Bad Behavior!

The Virginia Coalition of Appraisers (VaCAP) shares a Solidifi (an AMC) email blast to its appraiser panel and the subsequent response by the appraiser (not from Virginia). The following AMC letter is tone deaf and Grinch-Like, showing how Solidifi feels about their valuation professionals (bold emphasis mine).

”Hello Everyone,

Just a few reminders about the holidays and order deliveries around this time of year:

1. If you have an order due on Christmas eve, Christmas or the day after, please make plans to meet the due date or turn reports in early. Turning reports in late due to a holiday is NOT ACCEPTABLE. Every effort should be made to set the right delivery expectations.

2. IF there are revisions on your file, please try your best to be available to address revisions on a rush if possible. Obviously, I don’t expect you to take time away from your families, but I still do expect an ETA from you, as we are paying you for a product and expect the product to be delivered in a timely fashion.

3. UPDATE. UPDATE. UPDATE. Please make sure orders are notated properly, especially if there is borrower delay. I have been reaching out to borrowers on files who have confirmed they have been able to meet sooner than the appraiser has in the system. Please note, I can and will check with borrowers, so please ensure notes are kept.

4. Lastly, please double check lender requirements on orders, and please note that ALL COMP PHOTOS ARE TO BE ORIGINAL ON ALMOST EVERY ORDER. If there is a comparable that cannot have a photo taken for whatever reason, take the best photo possible (i.e. road closed sign, construction) and include an MLS photo with commentary outlining why the photo could not be taken.

I should not have to call the same people on the exact same revisions that keep coming back. I have seen far too many people get dinged on original photos, so if this continues, the workload with drop until these problems are fixed. Volume is down across the country, so there should be no reason why original photos cannot be taken in a timely manner. If there are any problems, please let me know!

If you read this entire thing, please acknowledge and tell me your favorite Christmas movie. Thanks!


That grade school closing sentence is especially insulting to any professional that works for them. It clearly demonstrates that Solodifi bombards their appraisers with such a high volume of CYA emails for policy statements and status checks that the appraisers can’t possibly keep up. So to test how many appraisers read their email, they inserted a silly question into it. Here is how the appraiser responded to this email.


Solidifi management,

The following e-mail is being sent to all of the lenders who use you as an AMC. You have crossed a line and the continued deterioration of the respect to appraisers has got to come to a stop. It is no longer acceptable.

To whom it may concern:

Appraisal management companies most likely sell their services to lenders with the idea that appraisers actually like to work with them and that appraisers are “partners”. The truth is a vast majority of appraisers would love to never have to work for an AMC again. AMCs do not treat appraisers like professionals and the actions of AMCs have only gotten worse over time. The AMC model is based on lies and deceit and constant unneeded added requirements of the appraisers.

AMCs harass appraisers with constant update e-mails, phone calls, engagement letters that are 20 pages in length and requirements to use smart phone aps that track the progress of the appraiser. Mass e-mails to 10, 30 or 50 appraisers looking for the cheapest and fastest appraiser became more common in 2017 with one company (Appraisal Nation) sending mass e-mails to over 200 appraisers at a time multiple times.

The AMC model is selling their services based on providing you a good product with local appraisers that they are their “partners”. Appraisers have gotten used to the disrespect and they work for AMCs out of need as they slowly try to find direct lenders and sources of revenue other than the corrupt AMC model that shows no respect to the appraisal profession.

While disrespect has long been a part of the AMC model the AMC you use, Solidifi, has taken the disrespect to another level by sending the following e-mail to appraisers this holiday season. As you can see there is no respect and it appears it is acceptable to be completely condescending to the point of communicating to professional appraisers like they are in the sixth grade.

If this offends you as much as it did the appraisers who received this e-mail you might want to consider getting away from the AMC model and going with a portal such as Appraisalport, Mercury Network or AppraisalScope as appraisers would much rather work in the portal environment rather than for the AMC model that has continued to disrespect the professional appraiser.

Over the past year, appraisers are beginning to stand up publicly and challenge those who have been speaking on our behalf without our permission. It’s an exciting period of change for us. Let’s keep it going! This Monty Python “Black Knight” skit provides the perfect analogy:

And if you’re an Appraiser but NOT a Monty Python fan (seems impossible), then this should serve as a useful analogy too.

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be more mobile;
  • You’ll be more aspirational;
  • And I’ll name my favorite Christmas song (White Christmas – Bing Crosby version).

See you next week (in limited but not Santa Clause fashion),

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

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December 15, 2017

Solving The Housing Crisis With A Wonderful Idea

Unfortunately, I don’t have one. More ideas later, so for now I’ll simply digress.

One of my guilty pleasures has been the band OK Go. It started when my oldest son left the band’s first CD in my car in the mid-1990s and I was hooked. Then this and they morphed into incredible video-makers. And I wondered…how do they come up this stuff? Or better yet, how can I creatively address a challenge.

Here’s a fun TED talk that explains how. OK, go!


But sometimes coaches just need to go full matrix and get out of the way.

Either way, there is a lot to cover today so let’s get to it.

November 2017 Elliman Report: Manhattan, Brooklyn & Queens Rentals

As my Housing Note readers know, I’ve been authoring an expanding Douglas Elliman market report series since 1994. One of the reports is a monthly take on the rental markets of Manhattan, Brooklyn and Northwest Queens. Douglas Elliman published my research on those markets for November this week.

Heavy concession usage remains, shifting of housing stock towards luxury skewed (kept overall) prices from falling. The market remains soft towards the top and tighter in the middle and bottom price bands. But a lot of larger units are entering the mix. For example, the average square foot of a Manhattan rental at or above $10,000 per month was 2,426, up 13.7% year over year (3.1% of overall new leases). And for apartments above $15,000 per month, the average size was 3,075 square feet, 19.8% larger over the same period, accounting for 1.4% of overall leases. Yet the non-luxury or first 90% of the market average square footage was 835, down 2.2% over the same period. There is simply too much luxury rental product coming online.

Here are the matrix tables and some charts outside of the report for the three rental markets covered in the November 2017 Elliman rental report:

Talking The Federal Tax Bills With NY1’s Pat Kiernan

Last Wednesday morning I joined Pat Kiernan on NY1’s Mornings on 1 show to talk about the proposed tax GOP tax bills agree to by the House and the Senate. Pat is a local broadcasting legend so it was great to actually meet him in person.

Later that day a couple of sticking points separating the two versions of the bills were addressed in the congressional committee. Once they agree to the terms, they’ll probably hold a vote next week and then send to the president for signature.

How the GOP Tax Bill Might Impact U.S. Residential Real Estate

(Breaking:…now there is some concern that a sure thing is being disrupted right now.)

Both houses of Congress have passed far-reaching tax bills with a lot of common ground between them. The U.S. Senate and U.S. House of Representatives are in the process of merging their versions into a single bill that will be voted on, and if it gets out of committee, it will be submitted to the president for signing.

Unlike the 1986 tax reform bill, which took six months of public hearings and discussion on both sides of the aisle, this tax bill was worked on for a year by the GOP and was passed very quickly without most of the signers knowing what was actually in it. Therefore I anticipate an ongoing procession of additional insights that impact the housing market as more people read the bills or the eventual law.

This lack of transparency and vetting alone is not great news for housing, which is very dependant on an “uncertainty-free” environment. In addition, there is a “get it done before Christmas” deadline.

Here is what I mapped out but this is only what we think we know by reading many interpretations with source links presented at the bottom of the table below. Here’s the pdf version of the table.

Luxury Housing Market Update Around The U.S.

Here are a bunch of charts that I created to identify interesting housing metrics across markets I cover for Douglas Elliman. The pages below (click on image to expand) can also be found in the Winder edition of Elliman Magazine.

Is There A Retail Apocalypse Or Not?

Here are points of view from two different columnists on Bloomberg View (both were guests on my old “The Housing Helix Podcast” a while back).

Justin Fox (short podcast): Justin Fox on Why the Retail Job Apocalypse Has Been Postponed

Barry Ritholtz (column): Retailers Still Haven’t Caught Up to Millennials

Oh, Canada, It’s The Third Consecutive Monthly Price Decline. A Trend?

Canada never saw the housing price collapse that the U.S. did a decade ago. Sure they saw a short-term drop in sales, but not prices. As many wise journalists have told me, it takes three data points to make a trend and now we have one. The Teranet–National Bank National Composite House Price Index showed a 3-month decline.

In November the Teranet–National Bank National Composite House Price IndexTM was down 0.5% from the previous month, the third consecutive monthly decline and the largest for a month of November outside of a recession. Indexes were down for four of the 11 metropolitan areas surveyed: Toronto (−1.4%), Hamilton (−1.6%), Ottawa-Gatineau (−0.8%) and Edmonton (−0.7%).

Bitcoin, etc. Has Exploded Onto The Scene And May Be Here To Stay

When it comes to the concept of Bitcoin and other crypto-currencies (see Phil C., I actually used that word), it is all about blockchain. If I was in the title insurance business, I might be worried. Here’s a great explanation of Blockchain by Bloomberg:

I’ve provided a bunch of links on the topic in the links below. It’s time to at least be aware of crypto-currencies, of which Bitcoin is the most well-known. Oh yeah, a Miami condo unit is for sale only to buyers using Bitcoin (a super gimmicky marketing angle but worth watching).

Assessed value vs. market value

My friend and colleague Constantine Valhouli, founder of NeighborhoodX pens a mini-tome on two different types of value that often confuses real estate market participants.

Many real estate listings breathless announce that a particular property is “priced well below it’s assessed value!” as if this were a bargain not to be missed. This made us realize that most people seemed to misunderstand the difference between ‘assessed value’ and ‘market value’ – and why this is very significant for buyers.


AMC Is Broadcasting Orders But They’re The One Without Expertise

I was listing to the December 13, 2017 Voice of Appraisal podcast this morning and heard the “Skap Report” with Mark Skapinetz – an appraiser out of Georgia who manages the 100% Real Estate Appraiser Group on Facebook. He and Phil Crawford were talking about an AMC in Colorado that was broadcasting an appraisal order to many hundreds of Colorado appraisers but forgot to blind copy the appraisers’ email addresses. This is the same AMC that complained of an “appraisal shortage.”

Three key points come out of this event:

  • There is no “appraisal shortage” in Colorado as this AMC claims.
  • The role of AMC’s is to carefully match appraisers that are best suited as experts for that particular assignment.
  • For the AMC to exhibit this skill (as noted above), they are paid 50% or more of the appraisal fee paid by the applicant who thinks it is all going to the appraiser who is valuing their home. As an added bonus, the mortgage process intentionally hides this fact from the borrower. REVAA lobbies heavily against this. That way the appraiser, not only isn’t paid customary and reasonable market-based fees from an institution that may have a monopoly on their market, the appraiser gets to be blamed by the borrowers as being very expensive. This, in turn, enables further discussion by banks and AMCs saving the borrowers money from high-cost appraisals by trying to substitute other products such as AVMs.

More on Section 103. Access to Affordable Mortgages.

Dave Towne addresses another part of Section 103 I discussed in the prior issue of Appraiserville:

From Dave Towne:

This section provides a tailored exemption from appraisal requirements under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for certain mortgage loans with a balance of less than $400,000 if the originator is unable to find a State certified or State licensed appraiser to perform an appraisal after a good faith effort to do so.

This is a way for the de minimus to be raised, from its current $250,000, without having to go through the normal hearings process to make that change.

But the difficulty of the wording is ‘balance of less than $400,000.’ We, appraisers, are not privy to that figure as it relates to a loan balance. Dumb wording.

The Appraisal Industry Responds to the Tristar Bank Appraisal Waiver Letter

The Appraisal Institute and American Society of Appraisers spearheaded a response letter to the Tristar bank letter sent to the ASC. The letter is a sharp and well-written response.

Looks like Jim Park from ASC, just got another waiver request letter.

Firefighting Looks Different When Its Your Son

Note top photo with “Miller” on fireman second from left – that’s our son. He was up in the bucket in the bottom photo for 3 hours. He saw the 3rd floor collapse on the 2nd floor and then instantly on the 1st floor. The guy on the controls swung the bucket away immediately in case the facade collapsed on them. Click to expand both images. Its incredible.

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them. They’ll play a music video, you’ll leap over danger and I’ll put out another year end appraisal fire.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

Reads, Listens and Visuals I Enjoyed

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December 8, 2017

Taxing Our Housing Patience When Pigs Fly

Because I am always confident that human beings are capable of screwing things up…eventually, I believe we should always try to right our wrongs…even if it involved blowing things up. I saw at least one Detroit Lions game there when I was in college so I was trying to imagine what the ride in the seat would be like after the second explosion:

But we can’t overlook things we don’t screw up. I spent a lot of time looking at this album in college when I wasn’t in stadiums that were going to be blown up in the future. The Battersea Powerstation where the iconic pig flew overhead has been converted into a cultural center.

This Pink Floyd album confirmed to me long ago that pigs can fly. “When pigs fly” is one of those phrases that applied to the mortgage interest deduction as part of the “American Dream” analogy. In other words, it is sacred and will never be touched. Wrong. I’ll discuss later. Now that it the “pigs” phrase is no longer an accurate inference in our literary lexicon, here’s another: “When trains do stunts” is the new “When pigs fly.”

Taxes, taxes, taxes, blah, blah, blah

I’ll be posting my views on the tax bill over on my Matrix Blog this weekend. Lots of moving parts made me rethink some of my views I established earlier this week. I’ll include in next week’s Housing Notes and if you are on my email list, you get it this weekend. Doing 2 TV appearances on Tuesday on the topic as well. Fun!

What’s 3 times $40 million at 432 Park?

While the Manhattan super lux market remains soft, we continue to see random sales occur after the price has been adjusted to current conditions to show there is still life in it. We’ve seen this in Greenwich Connecticut this fall. Now Mansion Global reports three half floor units on the 92nd and 93rd floors (96 is the top floor) that went to contract seemingly at the same time asking a combined $120,750,000. The actual contract prices are not available, nor is confirmation whether these three sales were made with a single buyer. This project was one of the first high profile developments to work with buyers as the market cooled in 2014. Like I have been saying for 3 years, the buyers remain in the market but the price needs to reflect 2017.

My appraisal firm, self-included, has inspected a number of high floor units in this building and the views are incredible.

[Mansion Global]

What is it about the 1970s that shaped New York City?

A few years ago I wrote a piece for Elliman Magazine that was covered in Curbed that tracked 100 years of New York real estate. This was more of an anecdotal effort since I searched the New York Times archives for real estate stories for each decade to extract what rental and sales prices were going for.

Here was the 2011 article I wrote:

You can see a massive course correction in the 1970s.

I think it had a lot to do with land use policy. A reader chimed in, sharing his thoughts on an article he wrote a few years ago about LA and a recommendation of this book, which I just bought: Zoning Rules!: The Economics of Land Use Regulation. My reader writes: Fischel argues that high inflation and weak growth (stagflation) cause property owners to work harder to increase property values through zoning limits..

This topic has been widely covered by noted researchers like Ed Glaeser who coauthored this paper in 2003 and included some of my data: Why is Manhattan So Expensive? Regulation and the Rise in House Prices.

When I think of New York City in the 1970s, I was growing up in Washington, D.C. thinking all of New York was like the movie Fort Apache, the Bronx. It makes one appreciate how far (and how much more expensive) New York City has come.

Exploring the Malaise at the Upper End of the Manhattan Housing Market

My friend and appraiser colleague Larry Sicular, MAI, RM of Sicular & Associates, who is also a broker at BHS, wrote an article on the softness at the Manhattan high end: Exploring the Malaise at the Upper End of the Manhattan Housing Market. He uses our data to tell the story – here are just a couple of his conclusions:

-On average, recent price performance, for many of the most expensive apartments, has been uneven, and it has also been unimpressive during this past real estate cycle.
-The condominium market now overshadows the cooperative market in both price and sale volume.

Flattening Yield Curve Makes Mortgage Risk Aversion Worse

It makes it tougher for lenders to lend when the rate they borrow approaches the rate they lend at. Regulators are working hard to encourage banks to lend more but big banks remain fairly resolute not to lose their shirt again.


The Appraisal Industry Needs Better PR

  • No one knows what we do.
  • No one appreciates what we do.
  • We don’t have the resources to tell people what we do
  • AMCs survive by taking the majority of our fee to “manage us” with 19-year-olds chewing gum
  • Taxpayers don’t realize that many federal agencies and institutions, as well as trade groups, work hard to undermine us
  • Loan volume remains down despite low mortgage rates and apparently, it is all our fault.
  • We are a bunch of incompetent old people set in our ways and can’t grasp technology.

Mortgage volume keeps falling, placing the blame on us?

This all goes away if taxpayers and mortgage applicants understand what service we actually provide: neutral market insight so that others can make informed business decisions. The 100% Appraiser Movement is the first step in getting the word out – no more letting others speak for us.

My friend Nathan does a better job explaining this than I can.

good question rachel

A post shared by Nathan W Pyle (@nathanwpyle) on

More on Tristar Bank in TN (you know, the one that shouldn’t be in the mortgage business)

There has been a lot of outrage about the letter they wrote to the ASC so get a waiver on appraisals to save their customers time and money. It was a tone-deaf letter that was so embarrassing I’m surprised that FDIC or other banking regulators aren’t concerned about their risk management. I addressed this letter in last week’s Appraiserville in my Housing Notes called: The Appraisal Waiver “Slippery Slope” Becomes A “Cliff”.

I heard that Tennessee appraisers have flooded the bank with calls and in-person visits to try to get on the list. This has been the rep of the bank – they rely on their AMC which they touted as performing “evaluations” and then have their senior officer evaluate it. Although I heard AI is working hard to get the word out on this, their hard push to legitimize evaluations as an alternative to appraisals is a direct consequence of their anti-residential appraiser efforts by Scott DiBiasio at the state legislature level.

I thought I would look at what kind of bank Tristar is:

  • Founded in 2000
  • Five offices, plus ATM locations inside Kroger, J-Mart, Horizon Medical Center
  • Doesn’t make Advisory HQ’s top 20 “Top Banks in Tennessee” List in 2017 or 2016.

It’s a small bank located in and around the booming Nashville market and they are the first in the country to submit a request to ASC for an appraisal waiver. Joan Trice of AppraisalBuzz wrote a good breakdown of this on her blog with information on how to get on the approved appraiser list.

The Next Appraisal Bombshell: Economic Growth Regulatory Reduction and Consumer Protection Act

This is something that slipped under our radar. This bill reflects the basic problem with DC economic policy right now as it relates to mortgages. The regulators and the federal government are working hard to get mortgage volume to rise – they don’t understand how that is possible since mortgage rates are so low. Appraisers, without real representation, have no voice so we are getting run over because by doing our jobs, we don’t always agree with the value of the collateral and by cutting by 50% to 70% they have created a shortage of appraisers willing to work for substandard fees. I’d be scared about the bond market in a few years.

Section 103 is most relevant to mortgage appraisers.

Section 103. Access to Affordable Mortgages.
This section provides a tailored exemption from appraisal requirements under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for certain mortgage loans with a balance of less than $400,000 if the originator is unable to find a State certified or State licensed appraiser to perform an appraisal after a good faith effort to do so.

My question is this: How is good faith effort measured? Didn’t everyone assume that in 2002-2008? Those are just words.

Over time, the banks can easily game the system: Drop apprasial fees by 99% and then say there is an appraisal shortage. That’s effectively what is happening now.

Voice of Appraisal with Phil Crawford ‘New World Appraisal Order’

I join Phil on his always must-listen podcast. We talk hybrid appraisals and our screwed up appraisal world. Listen here.

Always fun to join Phil and Kevin on the show (I think this was my 4th time).

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them. They’ll get you on that appraiser list, you’ll do train tricks and I’ll get more PR.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

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December 1, 2017

When The Housing Market Doesn’t Defy Gravity

There will be a lot of foot shuffling and blank stares when real estate professionals are asked about the impact of last night’s proposed tax cut plans from the House and the Senate. I’ve always found the topic of taxes as interesting as watching paint dry. But this time it’s a little more important. You see, housing doesn’t defy gravity.

In a general sense, the tax plans from the House and Senate will disproportionally impact high-cost housing markets on the east and west coasts. The cuts as proposed will add $1 trillion in debt to the U.S. after considering economic growth as presented. The Penn Wharton School of Business indicated:

the House plan would boost growth by 0.4 percent and 0.9 percent in its first 10 years. But it might not improve growth at all in the subsequent 10 years.

There are many issues in play in this rush to ram this bill through both houses such as the mortgage interest rate deductions, state and local tax deductions (SALT) and gutting affordable housing funding which I won’t go into here – but my larger concern is the high cost of nominal GDP growth (that won’t drive salaries higher, which is the real issue for housing. Lackluster growth at significant expense will probably keep mortgage rates low which will then keep credit conditions tight. This also could set us up for another housing crisis as regulators loosen the oversight on mortgage lending to goose mortgage volume higher. There is plenty of that type of behavior occurring right now behind the scenes.

Remember that banking regulators are dependent on income from large banks, much like credit rating agencies are dependent on Wall Street and appraisers were dependant on mortgage brokers during the housing bubble. Conflicts of interest become critical problems over time.

Completely redrawing tax rules isn’t always a good thing – it creates many unforeseen problems.

How Much Salary Do You Need to Buy a Home? (Manhattan requires about $225,000.)

HSH Associates published a widely referenced study looking at the median home price of the 50 largest U.S. cities to determine what your salary would have to be to qualify.

New York City is about $100,000 but Manhattan’s median sales price was $1,170,000 in Q3-10217. This was similar to San Jose’s $1,165,000 median sales price that required a salary of $216,181.25.


When 3,000 Square Feet of Sidewalk is Worth More Than Hop-Skotch

What is property value? Is it today’s value influenced by the future use of the property? Absolutely. There is no better example of this than the 3,000 feet of Boston sidewalk that was originally valued at $55,000, based on unusable slivers of land. In 2016, the Boston Globe uncovered this situation when a developer submitted a proposal to acquire city land to enhance his development site. After a public outcry, the developer agreed to pay $1,950,000. Why? Because now that sidewalk was in the context of the $260 million luxury development. In other words, this land wasn’t “unusable.”

The Economics of Building Super Talls

Jason Barr, a Professor at Rutgers University, Newark in the Department of Economics, calls them “Superslims.” His blog, “Building the Skyline” has a 2 part post the economics of building them.

Part 1 | Part II

Revenues are not “superslim.”

Two Real Estate Brokerage Leaders of Note

Dottie Herman and Elizabeth Stribling are friends of mine and have been strong leaders within the real estate brokerage industry. I have had the pleasure of knowing them for much of my career. Elizabeth Stribling is being honored by REBNY for a lifetime of leadership. Dottie Herman provided the vision to develop the largest firm on Long Island and then with her partner Howard Lorber, built the fourth largest brokerage in the U.S. Saw this quote by her on Forbes.com.


The Appraisal Waiver “Slippery Slope” Becomes A “Cliff”

TriStar Bank is the test case for the appraisal waiver concept. Read the letter to Jim Park at ASC. By the way, this is made possible by the U.S. taxpayer backstop to banks proven by bailouts during the financial crisis a decade ago. Moral hazard, baby.

I’ll translate the TriStar letter for you.

Mr. Park,

Because we have no concerns about the risk to U.S. taxpayer and feel there is no incentive for due diligence in lending, it is much more beneficial to our bottom line in a booming real estate market like Nashville – prices are rising at an alarmingly fast rate – that we don’t worry about the value of the collateral. We’ll let the U.S. taxpayer worry about that. And just because real estate prices there are exploding, it’s not fair that appraisers can charge more for their services when market forces dictate it – but we have no problem when their fees collapse when the market isn’t booming. We don’t think it is fair for appraisers to participate in our economic system and provide a valuation benchmark so lenders can make an informed lending decision, because, hey, we want our customers to be happy.

We think it is better for people with conflicting interests, like one of our senior officers to search the MLS because even though his compensation is dependent on bank performance, we feel it is ok. And a realtor, who is in the business of helping buyers and sellers and who may do work for us if there is a foreclosure, can give us the value even though most court systems won’t allow them to opine of value in place of an appraiser. And we also like the idea of an AMC doing an evaluation for $20 in 24 hours because, other than it not being a credible valuation, it’s cheap and super fast.

Remember, it’s not about understanding the value of the collateral, it’s about setting reasonable expectations based on nothing but our gut.

We have some thoughts on eliminating our underwriting department because it is so unnecessary but I don’t want to confuse the reason for the letter.

We don’t need to get a value from a neutral market expert because everyone knows its all about making our customers happy. Those are our truths.

What could go wrong? Is it not like we didn’t learn our lessons from the financial crisis.

Here’s the actual letter. It’s mind-boggling. There is a hearing in Tennessee that is making the rounds. I’ll share more thoughts on that video next week.

Appraising for AMCs Can Be Like Delivering Pizza

Here’s a 2012 blog post I wrote from the archives – it still holds up.

The result has been the crushing of appraisal quality because trained, experienced professionals are opting out of this madness because time = money. Cut the fees 50% and then waste another 30% of an appraiser’s time with this meaningless activity and you don’t end up with a more reliable valuation opinion.

Voice of Appraisal E182 Do we have an “Appraisalgate” Scandal?!?!

This is a fun listen.

Phil and Kevin welcome Ron Stickelman to the show. Are AMC’s keeping appraiser trainees from inspecting properties? Are they hiding something from the big banks?!?

Appraisers raise $12K for the 100% Appraisers Hurricane Relief Fund and the Voice of Appraisal Cancer Relief Fund

The 100% Appraiser Movement has tapped into the collective energy of independent appraisers nationwide, demonstrating that our industry voice remains strong and our concern for our peers is even stronger. Appraisers Mark Skapinetz of the 100% Real Estate Appraisers Facebook Group, Lori Noble of the West Virginia Council of Appraiser Professionals, Phil Crawford of the Voice of Appraisal Podcast and I got together to ask our colleagues for help. And appraisers responded immediately!!!!

There’s a lot more to it than that – Lori Noble tells the story.

When the collective efforts of a larger pool of professionals come together to uplift the moral of others, the results are significant and powerful. We’ve seen the graciousness of appraisers throughout the year with more involvement on the front lines of the business than ever before and state and national collaboration. One stands out that showed the gift the 100% Appraiser movement brings to the market. A series of text messages between appraisers who’ve experienced a natural disaster and a common goal to help any appraisers damaged by incumbering tropical storms Harvey and Irma get ahead of their recovery. The 100% Appraisers Hurricane Relief Fund was created in a matter of minutes; there was no red tape or big to do, just a voluntary act of honest service and kindness that we knew was needed. We didn’t know how many or who would experience loss and damages from the storms but knew there would be someone.

The responsiveness of appraisers was astounding. To see appraiser’s leverage their nationwide social media network in a united effort. Through thoughtful sharing, the crowdfunding campaign gained enough awareness to raise $12,000 over only a few short weeks. Appraisers were ahead of the curve and showed how small contributions from a large pool brought the fund raiser to a meaningful level. Meanwhile, appraiser networks coordinated and used social media to get the word out so appraisers knew funds were available for any who experienced loss from the storms. Fortunately, it seemed appraisers skirted big damage until a very sincere email from an appraiser in Houston Texas was received.

“One never knows when one may be on the receiving end of compassion.” That’s how Zolee Thomas, an appraiser transplant to Houston who relocated from New Orleans after Katrina described it in our conversations. “Life can turn upside down in the blink of an eye.” Zolee’s home is not located in a flood zone yet she was seriously flooded during the storms. When I asked how she found out about the 100% Appraiser’s Hurricane Relief Fund, she explained through one of the industry related newsletter subscriptions she receives. Ultimately, the power of social media brought the right people together at the right time. Zolee sent a great progress report and thank you to all appraisers who donated to the fund.

During this season of expressing gratitude, I recognize each contributor of the 100% Appraisers Hurricane Relief Fund. Your generous rebuild donation was used to build walls (of love and not division though)!! Not only was your donation put to good use, it was received right at the time I needed it most. It invigorates me as I realize the good in this world does outweigh the bad.

Thanks, is really not enough in this case. But from the bottom of my heart I’m appreciative….see Attached.

Since the catastrophic event and after rigorous outreach, we are happy to report our colleagues were mostly spared from serious damages from Harvey and Irma. We’re very lucky in that respect considering the amount of devastation that occurred. That said, with holidays here and funds remaining, a poll was taken to a predominant representation of relief fund contributors and a unanimous vote to transfer remaining contributions to the Voice of Appraisal Cancer Relief Fund was made. There was no debate to transfer the remaining funds to Appraisers fighting the good fight as soon as possible. This is where the magic is; appraisers engaging in strength in numbers that make a difference when it’s needed most. There’s no doubt, the little things add up and one never knows when they might be on the receiving end of this graciousness.

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them. They’ll paint new lines, you’ll discover gravity and I’ll buy a sidewalk.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Appraisal Related Reads

Extra Curricular Reads

November 24, 2017

Thanksgiving’s Housing Tryptophan + Side Dishes

My wife and I hosted a Thanksgiving get together with our family and friends like most did yesterday – and tryptophan aside – we all agreed that this holiday celebration is our favorite of the year. Many on social media overuse words like #blessed, #thankful and #grateful to express their thoughts on a meaningful event. Yet those words seem inadequate to express how wonderful it is to bring many together you love at a social gathering and everyone actually wants to be there.

Of course we went through 3 different refrigerators in the prior 7 days to make the gathering possible. I used that un “cool” experience to illustrate Twitter’s new 280 character maximum.

Some people were actually hesitant about going home for Thanksgiving (to Staten Island):

And like our efforts to buy a new refrigerator, there are always daily items to file in the ‘Things Don’t Always Go As Planned’ department (even in stadium demolition).

And what about this mind-blowing Thanksgiving Survey from 538?…

Salad? These side-dish survey results were enough to force me to declare I’ll never spend the holiday on the west coast:

And let’s soak up the here and now because life seems to move faster as you age. I always reflect on this when a celebrity of my childhood passes away such as David Cassidy.

I loved watching the Partridge Family TV show circa 5th grade. It didn’t hold up well over time but the happy memories of watching it as a young kid was seared into my brain. David Cassidy’s passing was one of those reminders of my childhood. So c’mon, get happy as time passes by very quickly. A long time ago, my wife and I went with some friends to see David Cassidy and Sean Cassidy star in the play Blood Brothers on Broadway. It was awesome.

but I digress…

Hashtag ‘Thankful’: Greenwich scores its highest sale YTD and 3rd Sale ≥ $20 million YTD

A $31.5 million Greenwich listing sold at a 21% discount for $25 million and Wall Streeters were riveted to the story as it went to the #1 spot on the Bloomberg Terminals worldwide.

If you love drone video and cheesy ‘pull at the heartstrings’ music, then watch the listing broker video of this $25 million property. It seems like there isn’t enough privacy from neighboring properties, doesn’t it?

Bloomberg TV’s What’d You Miss: Talking tax impact to housing and $25 million homes

At the 53:50 mark of the show, I joined Julia Chatterley, Scarlet Fu and Joe Weisenthal on their great What’d You Miss to talk about the impact of the proposed tax bill. Before we went on camera, we talked about how the house and senate bills would probably change radically before they passed, if they actually would. All such discussions require disclaimers since no one had any idea what final form these bills will take.

What Does The Proposed Tax Reform Do To The Economy?

Here are survey results from Chicago Booth’s panel of economists on the impact of the proposed tax changes proposed in Washington, D.C.

It looks like only 2% think the economy will be better off in a decade and 100% think debt will grow faster than the economy. I’m not quite sure how interest rates can rise much at all if these survey results turn out to be right. They suggest that credit conditions can’t normalize with a weaker economy so lenders could remain in the fetal position on lending standards for a decade.

Here’s a good summary piece on Curbed: The House tax reform bill just passed—here’s what it means for housing

Potentially more impactful to the mortgage interest deduction is the bill’s proposal to double the standard deduction from $6,350 for individuals and $12,700 for married couples to $12,000 for individuals and $24,000 for joint filers.

The Tax Policy Center estimates this would cause the number of taxpayers who itemize their taxes to drop from 45 million to 18 million because millions would take the newly raised standard deduction instead, thus keeping untold millions from foregoing the mortgage interest deduction.

Pouring SALT into the housing market’s wounds…NAR isn’t happy about the Senate’s take on tax reform. It makes it harder for the middle class to buy a home.

Unlike the House bill, the Senate chose to eliminate all state and local taxes (SALT) including state and local income and sales taxes as well as state and local real estate taxes. This change will make it more difficult for homeowners to itemize their mortgage interest and when they do, they will face a much lower benefit from homeownership. In a perverse way, only those who can afford very expensive homes will be able to benefit from the real estate provisions of the tax code.

Highest Credit Scores in Weakest Rental Markets

According to Rent Cafe, rental applications submitted nationwide from landlords to a screening service known as RentGrow show that the average credit scores of approved renters up 12 points from 638 in 2014. Credit scores skew higher for more expensive apartments which is the softest segment of the residential rental market.

The NYC Economy is Slowing

Since the Financial Crisis, one thing the New York City housing market could count on was an expanding city economy to drive it. Now it looks like that may not be the case yet government spending is expanding rapidly. There’s a great read in Bloomberg about the state of the economy and a possible recession in 2020. Oh, and the ‘retail apocalypse’ I’ve been writing about here isn’t helping per this New York Times editorial board piece.

Private jobs in the biggest U.S. city grew by 56,000 last year after gaining more than 100,000 annually since 2012. Tax revenue also climbed at a slower pace. Budget monitors and credit analysts expect a deeper slowdown in 2020, with increasing risks of recession. At the same time, the city’s four-year budget calls for spending to rise 13 percent by then to $96 billion.

China’s 50-Lane Commute

While I realize that we are seeing a migration pattern from the city to the suburbs as the population seeks out great affordability, imagine contending with this. Citylab has the story – notice the smog in some of the images. I can attest as a visitor to Beijing and Shanghai that it is smog, not fog.

Janet Yellin wears a Fitbit

Finally, we learn how the Fed Chair kept inflation in check.


Hybrid Appraisals

Dave Towne is an appraiser in Washington State that gave me carte blanche to share his handiwork. He has a private list that he shares his thoughts on our profession. He’s a prolific writer and I encourage all readers of Appraiserville to sign up. Send a request to : dtowne@towneappraisals.com


You need to be extraordinarily cautious and ‘think twice’ about completing Hybrid Appraisals (HA’s) – the kind of reports being promoted by multiple suppliers who claim these are a way to make ‘easy money’ while doing them dressed in your bathrobe and bunny slippers. The primary selling point is you don’t need to leave your office.

YOUR Compliance with USPAP is a critical factor at play with these HA’s. No ‘form’ complies 100% with USPAP.

Compliance with USPAP is square on the back of the appraiser………no one else. So these new HA’s have been developed and promoted by lenders and their AMC’s as a way to ‘speed up the appraisal process and spend less money’ to arrive at an appraiser’s stated value conclusion for a certain property – without any real regard for the appraiser’s mandatory compliance with USPAP.

I’ve had the recent pleasure to ‘discuss’ these kinds of reports with a state regulator.

HA’s involve a two-step process. Step 1 is the subject inspection – done by someone other than the signing appraiser. (This is far different than the SoW on the GSE Exterior-only report forms where the appraiser does everything.) This “inspection” is done by an unidentified person called a ‘Field Inspector.’ Inspection info is uploaded to the client web site, and made available to the appraiser. Step 2 is the appraiser obtaining the subject inspection data (done by someone you don’t know), agreeing to the validity and accuracy of that data (per the SoW & EA on the form), then pulling comps from your local MLS, gridding those into the report, making adjustments (if required), stating a value, then signing and delivering the completed HA back to the client.

There are two principal USPAP compliance issues with these HA’s: 1) the person acting as the ‘field inspector’ is actually performing Appraisal Practice as defined by USPAP. Some may dispute that statement. But without the “field inspector’s’ inspection data, no actual Appraisal can be completed by the Appraiser – because the appraiser is not engaged as the ‘field inspector.’ It’s my guess that the majority of ‘field inspectors’ ARE NOT licensed appraisers. As such, an Appraiser who allows some un-identified person to perform Appraisal Practice in the preparation of a report is in violation of USPAP. (I know about an appraiser who had to forfeit his license back to the state for this very reason.)

2) Having someone besides the licensed appraiser contribute Significant Appraisal Assistance, without identifying that individual in the report, is also a USPAP violation charged back to the appraiser who signed the report. Significant Appraisal Assistance is discussed in FAQ #248 in USPAP ’16-‘17. INSPECTING the subject property IS considered to be an action that provides Significant Appraisal Assistance.

Don’t let the salespeople and others promoting these HA products try to persuade you otherwise…..just because you can do these in your bathrobe, bunny slippers, in your basement – for $50 – $75 a pop.

Your compliance with USPAP is absolutely paramount in YOUR conduct.

Followup email

It occurred to me while sending my last message that some appraisers have questioned the name ‘Hybrid Appraisal.’

That’s because the requesting client WON’T USE THAT NAME for the product.

When they call or email you, they’ll say something like “We have a really fast appraisal for you to do that you can do on your desktop without leaving your office.”, or “Can you do an exterior appraisal for us?” Or they might identify it by the ‘name’ that client uses for the product.

The FIRST question you need to ask is simple: WHO does the SUBJECT INSPECTION?

If they say ‘someone else does that’ …. then you need to “think twice” about doing the assignment.

Read my previous message thoroughly for the reasons why.

Changing the appraisal process still requires paying for the actual expertise.

The problem with hybrid appraisal products or the mantra of splitting expertise between inspectors and actual valuation analysis is the fact that the fees remain unsupportable for a valuation expert to survive by using them. That’s the Catch-22 with the valuation logic being hard-sold today by software vendors and AMCs. It all looks good on paper except for the “appraiser needs to make a living” part.

An appraiser I know recently forwarded me the new First American’s Solidifi Desktop Appraisal Report and he said:

Think about the title of this product and then tell me how the scope of work is different from a 2055 exterior fannie mae report? The answer is none, yet the fee is not $350 to $375 rather $50.

Also – note the “AI-Ready” branding and think hard about how the largest appraisal trade group has enabled this $50 product years ago.

Completing a review in 3-minutes to make a living

An appraiser sent me this recent request from an AMC.

Please confirm or decline your interest to complete approximately 30 compliance reviews by month end (10/31/2017). These are to be completed on the 2006RARS form. Fee offered is $30/each.

That’s a tough way to make a living. No time for actual review work. This is more like form-filling. Is that what lenders and regulators like FHFA really want?

AI National’s Sales Pitch on Finance and Governance

As I reported last week, the Appraisal Institute was not allowed to rejoin TAFAC (The Appraisal Foundation Advisory Council) by a 2 to 1 margin of votes, largely because of their adversarial posture towards The Appraisal Foundation and their refusal to agree to the organization’s mission statement. This adversary posture towards membership is also evidenced towards membership, especially residential, by past president Scott Robinson’s recent presentation to some of the regions. NOTHING that has been screamed by the membership over the past year in near anarchy, as well as a much overdue resignation of AI National CEO, has had any impact on AI National’s leadership path towards self-destruction. They really want to keep flying first class with their spouse all over the world as illustrated in AI National’s own words a few weeks ago. So for all of the AI members that read Appraiserville, it must be disappointing to have such an embedded and bankrupt national leadership. They appear to be inextractible – how much discussion is going on about a replacement for the empty CEO position. I’m betting it is president Jim Amorin who represents the past that got the organization into such dire trouble. Thoughts?

Here are two key documents that were shared with me from an MAI:

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them. They’ll no longer need to change the date for Thanksgiving, you’ll stop your neighbor from stealing your newspaper, and I’ll admit that rock and roll ain’t noise pollution.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Appraisal Related Reads

Extra Curricular Reads

November 17, 2017

The Housing Market Is No Place For Sheep

The U.S. housing market is at a crossroads. The mantra of the American Dream has been homeownership first. Our laws and financial incentives favor homeownership. Stalwarts of what we think made the dream occur seem to be slipping away. The mortgage interest rate deduction proposal in the tax cut bill is being reduced, and affordable housing in many cities are now financially further away for many. (We see the same issues in my appraisal profession as appraisers themselves have had a limited say in their future until recently).

So we can whine about it or work harder to understand what’s happening instead of relying on what other people tell us.

Solving the challenges of housing takes sheer will and often wooly solutions to avoid sheepish results (sorry).

but I digress…

Mortgage Interest Rate Deduction Drop Not So Bad For Most

Since the average (not median) sales price of a U.S. home is $287,700, only a small percentage of taxpayers will be impacted by the drop in the threshold to $500k from $1,000,000. Of course, it is reasonable to expect that the deduction will be an easy target for future tax cuts.

According to Brookings, it’s starting to look like it helped create the affordable housing crisis we have now, by encouraging luxury development because that target market tends to itemize their deductions. Honestly, I hadn’t thought of it this way.

First, let’s be clear: The mortgage interest deduction does not raise homeownership rates much, if at all. Countries like Canada, the United Kingdom, and Australia have no subsidies for mortgage debt yet their homeownership rates are slightly higher than ours. Many new U.S. homeowners do not itemize or are in the 15 percent bracket or lower, so the mortgage interest deduction provides little or no current benefit to them anyway.


Instead, the deduction encourages the construction of larger, more expensive houses, which, in turn, leads to higher energy costs, urban sprawl, and fewer investment funds available for business. By encouraging people to finance homes with too much debt, the deduction increased the likelihood of people defaulting when housing prices fell in the financial crisis, thus contributing to the depth of the Great Recession.

After Superstorm Sandy hit the northeast 5 years ago, it became apparent that FEMA was actually encouraging real estate development in low lying areas by offering below-market insurance rates that the public sector could not compete with. The problem with that example is that the federal government was unwilling to make rates competitive because it would impact all people living in these markets, unlike the proposed tax deductions.

Ok, now for something less heavy…

Super Luxury Manhattan Real Estate Already Corrected

I blogged about this already, but for those who missed it on Matrix: One57 Flip Analysis From Manhattan’s Peak New Development:

For those of you that read my weekly Housing Notes, you’ll know I refer to 2014 as “Peak New Development” for the Manhattan housing market. “Peak Luxury” works as a label too.

Bloomberg news broke the story that a $50M+ condo purchased in 2014 just sold at a foreclosure auction for $36,000,0000. There were five bidders. It’s been the fourth resale since the market peaked and the sixth overall – so I created a graphic of all the resales to show how they fared before and after the 2014 “peak.”

The Bloomberg story (that I got to chime in on) lays out the details of the One57 auction sale: One57 Foreclosure Shatters Price Dreams at Billionaires’ Tower

The story reached #1 as the most read on the 350k± Bloomberg Terminals worldwide yesterday.

It is important to remember that there are still a fair amount of units remaining that are priced at 2014 levels. Extell, the developer, has their work cut out for them to compete with current market conditions.

While One57 is a symbolic poster child for the new dev phenomenon, it is not a proxy for the entire new development market. Some projects were priced more reasonably at the peak, hence they haven’t fallen as much. In addition, the quality and design of each project can vary greatly. One thing is clear – since the 2014 peak, investors don’t have the same potential for big and fast returns on flips – their initial strategy was to buy early and realize instant equity as the sponsor increased the offering prices. That scenario no longer applies. Since the market has more choices for buyers now than it did back during peak, One57 is no longer seen as a “new” building like it was back then.

CNBC picked up the story – My firm and I get a shoutout during the conversation on Sqawkbox which was pretty cool.

Luxury condo in One57 tower sold in New York City’s biggest ever foreclosure auction from CNBC.

And here’s the transcript on yesterday’s PBS Nightly Business Report show (owned by CNBC) with the shoutout that is making the rounds.

Ride-sharing Apps Actually Cause More Traffic

Curbed San Francisco talks about How Uber’s new ad is contradictory (FYI I disliked Uber’s original leadership and became a loyal Lyft user.

It’s a thought-provoking ad. However, as StreetsBlog also points out, “Boxes” is a great advertisement against Uber. Why? Because Uber’s entire business relies on the very same car use the ad satirizes.

Although in Manhattan, public transportation is the only way to go.

Knight Frank / Douglas Elliman Super Prime Report

Knight Frank, the global real estate firm, has long partnered with Douglas Elliman, the firm I have been writing market research pieces for since 1994, just released a New York Super-Prime Report to explore the new development market. Douglas Elliman Development Marketing provided the data and I provided some sage advice. Here’s a chart from the report:

Upcoming Speaking Events

November 21, 2017 – Bloomberg Television 3:30 PM ET – We plan to discuss the Hamptons housing market and potential tax strategies in light of changes in the proposed tax cuts by the House of Representatives.


BREAKING…AI IS OUT AT TAFAC: Appraisal Institute’s re-application to TAFAC was overwhelmingly rejected

I am rushing out from TAFAC in D.C. to catch a train home to NYC so I will backfill with more detail and links over the weekend, but this is the gist and it starts with:

The Appraisal Institute left the Appraisal Foundation in September 2010 as one of the founding members after a weird unclear feud. It was an early public sign of AI’s toxic senior executive leadership that is no longer in touch with the needs of their membership.

Back then I spoke with David Wilkes of TAF who was a guest on my former podcast and I even offered Leslie Sellers, then president of AI, the opportunity to provide the AI counterpoint. Unfortunately, Sellers emailed me the always dishonest “I’m excited about our future” answer which is how the damaged leadership culture there thinks this is how you handle an unflattering event. Of course, if he answered “to spend more time with my family” I would have believed it (kidding).

After leaving TAF, AI and TAF tried to reconcile repeatedly but it provided to be a waste of time. And in my short time at TAFAC I have been amazed at how much of a distraction they have provided against solving real issues facing appraisers. The hangup was their refusal to agree to the mission statement of The Appraisal Foundation. How can a large trade group want to join an organization but not agree with the mission statement? Yet it makes sense for AI to refuse as they continue to work hard to undercut TAF by providing lobbying efforts and congressional testimony that appears intended to make AI the standard bearer of standards. The irony here is that TAF’s standards were based on AI’s standards back when AI was a founding member.

AI’s standing with their own membership deteriorated sharply in 2016 and 2017 resulting in the outrage expressed across the U.S. and likely had a hand in the resignation of their prior CEO Fred Grubbe when he sought an extension of his contract

In April 2016, TAF told AI that they needed to re-apply to TAFAC if they wanted to be a TAFAC member. Discussions went on and on. At the TAFAC meeting In June, the attendees voted 27-3 to give AI an extension to comply until November 13, 2017. With drama flair, AI sent their re-application which they referred to as an “amendment” on the final date it was due.

Like anyone else who is a member of TAFAC, AI would be required to agree to the vision and mission statement of TAF among other things. These items are spelled out on the TAF home page:

Vision Statement
To ensure public trust in the valuation profession.

Mission Statement

The Appraisal Foundation is dedicated to promoting professionalism and ensuring public trust in the valuation profession. This is accomplished through the promulgation of standards, appraiser qualifications, and guidance regarding valuation methods and techniques.

I assume AI doesn’t like the “standards” reference because they have been working so hard lobbying Congress and state legislatures to insert their standards including evaluation language that will confuse appraiser clients, doing further damage to the appraisal industry. Frankly, their behavior on these matters is against the residential appraisal industry’s best interest and strongly suggests their irrational behavior is caused by a backstory we know nothing about.

During today’s TAFAC meeting, Scott DeBiasio of AI asked a question to the board, referring passive-aggressively to the “bunch of little check boxes” inferring that anyone agreeing to the mission statement was just signing a little thing. Ugh.

Since AI did not agree with the mission and vision statement as was required for re-application, the TAFAC membership committee recommended to the board that the AI application be turned down and their exit date established as of December 31, 2017.

Interestingly, on the next day, that is the moment when AI can take nearly all of their chapters’ funds for no legitimate reason. Remember that the AI senior leadership continues to frequently fly first class with their wives to Europe, China and elsewhere for the international recruiting effort has yet to yield meaningful success.

Someone suggested the TAFAC membership vote should be made by paper ballot. When questioned why the requestor was concerned about using a paper ballot over raising hands, they were concerned that peer pressure would keep voters from providing their true feelings (inferring paper would yield a larger “reject” vote. DiBiasio voted against using paper ballots, obviously. So a paper ballot was taken and AI’s reapplication was overwhelmingly denied by a margin of 2 to 1 or 66% of the votes or 71% if the abstainers were omitted.

Vote to Reject Re-application of AI from TAFAC for incompleteness:

27 out
11 in
3 abstain

This overwhelming vote to essentially remove AI from the table changes nothing in TAFAC because of AI’s lack of contribution, but it changes everything in the context of moving forward and taking advantage of the current positive moment in the appraisal industry. This is our moment as appraisers to effect change. The ball’s in AI’s court so until their executive leadership changes, freeing up everyone else to focus on more pressing issues facing the appraisal community. Bluer skies ahead for appraisers.

Definition of a ‘Power Move’

As an appraiser, I aspire to be able to say this…

Acronyms Define Appraisal Standards (and D.C.)

As I write this, I am in D.C. for the TAF – TAFAC meeting including the ASB committee, representing RAC to discuss 2020 USPAP. A few weeks ago I also presented to IAC of TAF in D.C. If it helps, my initials are JJM but my sister and business partner is DAM, FYI.

When you’re more than a footnote…

A while back I was asked to provide insight into a complex litigation matter – what I would call a “logic piece.” This wasn’t a form appraisal or a valuation, rather it was market insights I have acquired as a real estate appraiser. After the judge’s decision was handed down and it was a favorable ruling, my client’s attorney happily sent it to me, pointing out this footnote and some other references to my work on the case. There are other issues to be resolved so I can’t give specifics.

Appraisers don’t get a lot of positive written (or any other) feedback – so when it takes an unusual form like a footnote, it makes it even more special.

Appraiser Forum & Festival 2018 Will Be In San Antonio Next Year

Phil Crawford (Voice of Appraisal) and Mark Skapinetz (Skap Report) claim their “for appraisers” won’t be the typical conference “Sausage Party.” I’ll be there and hope you will too. They’ll be teasing out more specifics in the coming weeks.

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them. They’ll love your favorite pie chart, you’ll discover a new pyramid and I’ll finally accept that pigs fly.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Appraisal Related Reads

Extra Curricular Reads

November 10, 2017

Rental Housing, Concession and Paired Sales Analysis Not Using PowerPoint

If you are a homeowner, what was the first thing you did to make the house yours? I put an old tennis ball on a string in my garage to mark how far I could go. Home Depot has a cooler version that I use in our current house. What did you do?

One other thing and then I’ll get to the good stuff. It falls under the category of “When you do something, why not give it your best effort?”

This is guy made a video to sell his girlfriend’s 1996 Honda Accord for $499. eBay bids got up to $150,000 until their fraud alerts kicked in. Still, it eventually sold for $5,100 or 10x what it was probably worth. Who says marketing isn’t effective? This comes from someone who is focused on numbers and logic when it comes to pricing real estate, not hopes, dreams, and viral videos. The lesson for me here is that marketing can go viral in real estate, but it’s nearly impossible to count on. I’m still sticking with setting a realistic price…but oh how that car looked good.

but I digress…

The “Elliman Report: Manhattan, Brooklyn & Queens Rentals, October 2017” was released

Our analysis of the October rental market in New York City was published by Douglas Elliman Real Estate this week, part of the expanding series I have been authoring since 1994.

As has become a monthly tradition, it’s always heartwarming to see that Wall Streeters love to read about the rental market, especially with all the multi-family development in the pipeline. This report was in the 5th most read story on the Bloomberg Terminals worldwide (±350K subscribers).

And a chart!

There was a lot of well-written coverage of the report results. One of the more challenging concepts was presented in the above chart. Even though the high end seemed to be rising (doorman) after 27 consecutive months with more year over year price growth in non-doorman buildings (the breakout is always roughly 50/50), it really was the result of a shift in the mix towards new development entering the market.

In addition, the market share of concessions broken out by existing and new development is quite interesting. The lower the market share of new development activity, the lower the share of concessions used.

And here are some of our favorite rental market charts:

Homeownership is Rising And It’s Real

Alongside the financial crisis and the subsequent decline in the homeownership rate, there has been the silly proclamation that the U.S. will become a nation of renters. Credit conditions have not normalized as evidenced by the mortgage rate decline of the past decade with the parallel fall in residential mortgage origination. I’ve written about this on Matrix quite a bit.

My friend and prolific columnist/radio host Barry Ritholtz writes a good piece today on Bloomberg View: Millennials Leave the Basement to Buy Homes.

Here’s the required chart.

That Sinking Feeling

As my loyal Housing Notes readers know, I have been obsessed with the tallest building west of the Mississippi that is sinking. A big 60 Minutes story last weekend covered the problems with the Millenium Tower in San Francisco. I’m sure appraisers in San Francisco asked to value units there for litigation say “why me” and have volumes of disclaimers in their reports.

The 60 Minutes story calls it The Leaning Tower of San Francisco with an opening comment from the narrative that says “When the zeal for development overtakes common sense.” Curbed San Francisco has a lot of great links on the topic.

PowerPoint is the enemy

Throughout my career, I’ve avoided using PowerPoint in my real estate presentations. While I often provide information that can be distributed to the audience afterward, I don’t want the audience distracted while I am speaking. It’s my job to enthrall you, not the software program I am using. A powerpoint presentation assumes you think in a linear way. I am anything but linear. I’m not saying it should never be used, but for many, I view it as being used as a crutch. I’ve long been a fan of Edward Tufte for various reasons but his view on PowerPoint is particularly insightful.

Here’s an old New York Times article on the topic: We Have Met the Enemy and He Is PowerPoint

Giving Post-War Apartments Credit For Affording Us The Manhattan Experience

The epic New York Times Real Estate cover story this weekend: The Plight of the Postwar Apartment was a joint effort based on my research. Unless I missed it, this analysis has not been done before and it shows just how critical the post-war construction stock was in the evolution of Manhattan and has fine-tuned my narrative history of Manhattan housing.

I’ll be blogging about this next week and will insert in the subsequent Housing Notes. In the meantime, here is a break down of a year’s worth of sales separated by each decade that the year built falls within and broken out by apartment size. Follow the peak of each unit size – notice how it keeps moving to later decades? This is analysis was based on sales that closed from July 1, 2016 through June 30, 2017.

The Biggest Mystery of Manhattan New Development Market Is Answered With Actual Data

One of the challenges of the new development space and the most asked question is: “How much has the high end of the new development market corrected since the 2014 peak?” As I spoke about in previous Housing Notes, this submarket corrected virtually overnight in 2014 which was measured by the lack of sales. I have endured watching housing pundits pontificate that it may crack soon. It was nearly impossible to confirm because super luxury sales virtually stopped (not the balance of the market). Since 2014 we have seen developers embrace negotiability but some simply can’t.

This week there was a foreclosure sale at the poster-child and most written about new development building known as One57. I thought I would use these sales as an opportunity to measure the shift in the market. There were 5 bidders at the auction and the property sold for $36 million. I presume that these bidders were fully informed so it is not reasonable to frame this sale as below market, especially when there have been others that resold for about the same drop from 2014 ie “Peak New Development” pricing. I whipped up a chart to illustrate all the resales that I could find in the building. There were two sales that flipped higher before the peak and 3 sales that flipped after the peak. The pattern shows you a market-based valuation of the difference in marketing periods. In appraisal vernacular, these are “paired sales” where everything is the same other than one amenity. In this case that amenity was “time.”

Phrase of the Decade: ‘Retail Apocalypse’

The term ‘Retail Apocalypse‘ is now official as The state of the retail market has lots of ramifications for the housing markets. Employment in particular and even the new urbanism craze where everyone wants to walk to their local stores to buy artisanal sandwiches with goat cheese, cranberries, and walnuts. Landlords are struggling to figure out what is happening.

Clearly Amazon and online shopping is a key element in the new math. Whatever is happening, the impact is nationwide and it is startling. Consumer patterns are changing radically that are sucking the blood out of the industry. Bloomberg has an amazing explainer page: America’s ‘Retail Apocalypse’ Is Really Just Beginning

Douglas Elliman’s Video on My South Florida Analysis

Jay Parker, CEO Florida Brokerage lays out a top-level overview of the market reports:

Useless But Somehow Vital Information

When I was in college in the late 1970s, we used punch cards for programming. You’d submit a huge pile of cards (each card was a line of code) to someone who’d drop it in a hopper, then sit in a waiting room and watch your number move through a list until it was complete and you’d be handed a printout of the results. If there was a mistake, you’d replace the bad code with a new punch card and submit the whole stack again. As tech-savvy as I think I am, I never enjoyed that era.

Incidentally, 4.5 megabytes of data in the photo below is about the same size as that 2-minute song on your iPhone right now. That’s some context, baby.



Academia Opines on Super Generic Random Number Generators

This week’s focus is on the need for neutral market valuation experts versus automated valuation models. Placing politics aside, I was trying to imagine the special prosecutor in the Manfort valuation dispute or an attorney in a matrimonial matter using an AVM to determine value and place it in public record. What would that say about our justice system by relying on a generic benchmark to search for the truth? What does that say about our banking system with Fannie Mae Appraisal Waivers and normalization of AVMs as some sort of obvious full and complete replacement for human expertise? Imagine what would happen if the federal backstop went away? Look, I’m not saying AVMs don’t have a role in the mortgage business, but I don’t like it when smart people talk so generically about our profession as “experts.” My problem with academics is that they can miss the nuances of real-world situations.

Last August I shared the Wharton white paper: Why Automation Is Killing the Property Appraisal Business that said appraisers were going to be replaced by AVMs. One of the Wharton authors had a discussion about it with Stan Humphries of Zillow who is a nice and very smart guy who helped mainstream automated valuation but has a vested interest in AVMs. Academic rule #1 from Warren Buffet “Never ask a barber if you need a haircut.”

What is missing from their white paper logic, is that data quality dramatically varies by municipality and housing prices are generally rising. Don’t get me wrong, I have guest lectured at Wharton and very much admire their real estate department.

At this moment, the level of value precision required from lenders seems to be low and tolerance high for stand-alone AVM drech. There was an interview with the same author with Valuation Review that dredged up more feelings of disbelief on the disconnect from real-world experience. The Open Door reference was particularly meaningful since I just saw a presentation by Open Door at our RAC conference in Dallas last month – Open Door themselves said their model only works in homogenous housing markets. These are the types of generic oversights made in the academic super generic macro analysis. Everything is in one bucket.

No, it’s not.

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them. They’ll buy a mini-keg of Hidden Valley Ranch Dressing, you’ll discover a creative way to paint the town with sex and I’ll feel hungry like the wolf.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

Reads, Listens and Visuals I Enjoyed

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November 3, 2017

Housing Wonks Need to Ask and Answer the Questions

Over the past month, I’ve traveled quite a bit, at least based on my history (remember that I’m an appraiser). Admittedly these Housing Notes have suffered from a lack of way too much content, so I am trying to remedy that starting now by playing a little catch-up. Trips included Boston, DC, Dallas, Chicago and last night; my plane landing felt something like this:

But its good to be home.

Following Other People’s Housing Lives

Many of my readers have been closely following the iconic real estate family’s very public divorce trial: Macklowe v. Macklowe chronicled with particular intensity by E.B. Solomont of The Real Deal where my name gets mentioned a time or two. It’s an epic read.

Last week the national residential appraisal organization that I am currently president met in Dallas for our annual conference – RAC– an organization of the best residential appraisers in the U.S. – had a guest speaker that specialized in expert witness testimony. The presenter gave us an example of a “Texas Style” deposition which was awesome. The lesson here: Just answer the question.

but I digress…

Data Wonks Ask The Best Real Estate Questions

Hiten Samtani, Editorial Director, Digital of The Real Deal Magazine does engaging interviews with a wide array of real estate industry notables. This one, with Ryan Serhant of Million Dollar Listing New York, opened with me playing the wonky heavy. It’s a great interview – although the theory shared about the 2012 $88M Weil sale as a trigger to the aspirational pricing era was, uh, mine. 😉

Be sure to subscribe to the series.

Housing and the Proposed Federal Tax Cuts

The House GOP has presented a new tax bill that seems to target the U.S. housing market. Although I expected a reduction of the mortgage interest tax deduction, the proposed bill targets high-cost cities in some other ways – perhaps these are merely unintended consequences.

Bloomberg says The GOP Tax Plan Could Hit the Country’s Most Expensive Housing Markets. Slate calls it The Republican Tax Plan Wages War on the Housing Industry

In Bloomberg…

About 7 million homes, including a third of homes in California and 19 percent in New York, would be affected by the mortgage-interest deduction cap if they were put on the market, according to a preliminary analysis by the National Association of Home Builders.

And this…

Mark Zandi, chief economist at Moody’s Analytics, said the tax changes could initially cut prices by 10 percent in expensive markets and 3 percent to 5 percent across the U.S.

“You can see why the industry is not too excited by all this,” Zandi said. “It’s not good for home sales, house prices or new housing construction.”

In Slate…

and it limits the property tax deduction for real estate taxes:

Finally, it caps the amount of property taxes that families can deduct at $10,000. This, too, mostly affects the wealthy; it’s sure to be felt in some tony New York, New Jersey, and California suburbs.

And this…

The bill undercuts the mortgage interest deduction in another, more subtle way, by doubling the standard deduction that all Americans can take, to $24,000 for couples. As a result, fewer taxpayers are likely to itemize, which will reduce the tax advantages of owning.

I’ll bet lobbyists for NAR, NAHB, and others are going to be working overtime through the end of the year because this will reduce affordability to the middle class, not just the wealthy. However, based on experience, this bill will probably see major modifications if it were to eventually pass.

Oh, Canada’s Foreign Buyer Tax and Interest Rate Rise

The average Canadian household takes 353.6 months to save for a downpayment in Vancouver, the city that began the foreign buyer tax remains quite the affordability outlier. I did the math – that’s a mere 29.5 years!

Luxury Housing Happenings Are Still Happening

Here are a bunch of new reads on the topic.

Michael Dell just bought a new Boston penthouse condo under construction for $40 million, breaking the existing record by $5 million. But that’s less than half the cost of the $96 million 4-parcel Manhattan assemblage by a Russian Oligarch – and that doesn’t include construction costs so this could very well exceed $200 million when it is all done. Now we’re talking London numbers in Manhattan. A Hong Kong home just sold for $140 million and a $52 million Manhattan townhouse just sold (2nd highest on record for a residential townhouse). Oh, and Palm Beach just gained a $105 million listing per WSJ:

Although Manhattan luxury brokers are fretting, I think in many cases, the pricing of their luxury listings came on too high because sellers took the good news about luxury earlier this year and opted for the aspirational pricing path. That’s a mistake.

So is living the housing life of a kleptocrat: How to Buy a $116 Million Mansion on $80,000 a Year

Let’s Have A Real Talk About Supply and Demand

Existing home sales stats were recently released and volume weaker on a year over year basis. Inventory scarcity is choking off sales and pushing affordability lower.

September’s existing-home sales fell 1.5% from the same month a year earlier, the National Association of Realtors said Friday, the third consecutive month of lackluster results.

“It was a continuation of this theme of low inventory really being the burr in the saddle of this housing market,” said Daren Blomquist, senior vice president of communications at ATTOM Data Solutions.

And the Pending Home Sale Index fell to its lowest in nearly 3 years…

Pending home sales unchanged in September from CNBC.

Part of the insanity is the rapid pace of sales, with the median days on market at a record 3 weeks, the fastest marketing time since the NAR survey began in 1987.

A Buyers Market?

Here’s a quick interview I did for Bloomberg Radio with Denise Pelligrini: Is Manhattan Becoming More of a Buyer’s Market (00.59)

Because Everyone Aspires To Buy Hallway Space

Our appraisal firm values common hallway space in co-ops and condos on a regular basis. Conceptually its a bit of a stretch for those outside of NYC to grasp how common these transactions are (pun intended). Here is an explainer and a semi-related discussion on what to do if the hallway smells.

Explainer: Overall Median Sales Price Submarket Changes May Not Fall In Range

From my Matrix Blog

This title is way too wonky but I found it hard to pare down. It’s easier to explain visually.

When I complete my research for Douglas Elliman in a particular housing market and the percent change in the overall median sales price doesn’t fall within the individual submarkets like averages do, I periodically receive inquiries from media outlets or real estate professionals to clarify. Many people see median sales price much like they see average sales price: proportional.

In this case, the median sales price change for resale to new development ranged from -23% to +1.9% yet the overall median increased 9.3…clearly outside of the range both submarkets established.

So I whipped up the following infographic with sample sales transactions and applied median and average sales price to illustrate how median sales price percent change for the overall market might not always fall within the individual submarket percent price changes. However, in an “average” analysis, the overall result will always fall within the range of the submarkets.

I hope the following color-coded breakdown below helps illustrate this clearly – be sure to click on the image once to expand or a second time for the extra large version.

[click to expand]

Pulling the Plug on Hyperlocal (Real Estate) News – DNAinfo and Gothamist Shuttered

Two important NYC hyperlocal news outlets were shut down by ownership after their journalists voted to unionize. I remember when AOL bought Huffington Post for $300M+, and much of the content was provided by writers for free. No-one shared in the big payday yet they created the content. This latest event is a big loss of information to the community and housing is just one piece of it. I am hoping this is just an attempt by ownership to stop the writer’s efforts to unionize, but that’s unlikely. The void in quality local news coverage is huge because the remaining news outlets seem to be aggregators, simply repurposing the news from other sources.

Chartfest November 2017

Here are some fun Crayola-inspired looks into markets we cover:


AI National Is Traveling Like There is No Tomorrow, But With 5 More German SRAs

The following text was sent to me from an AI member who received this in an AI newsletter. I have already been told much of national executive travel is typically done via first class with wives or colleagues accompanying. I’m sure all U.S. AI members are glad that 5 members in Germany earned their SRAs. If the visit entailed 6 (the 3 members listed as attending and their wives) first class tickets and more than one night for at least 3 rooms at a 5-star hotel, plus dinner, ground transportation, etc. it will take quite a while for the new membership dues from these 5 new German SRA members to cover the cost.  If there are 5 more SRA members from Germany added next year, it is reasonable to expect the same travel expenses to occur.

In earlier posts, a chart based on AI National data suggested there was a 3,000 member annual decline at mid-year 2017 to 15,000.  This announcement reflects little awareness of the troubling situation confronting the organization.  Why isn’t all international travel placed on hold for national executives until the drop in membership is stopped?  I don’t disagree that international discourse on valuation plays a role at some level, but maintaining priorities by fixing member criticisms are much more important and in fact, likely urgent.

The backslapping pride embedded in this letter for all the great stuff they are doing for their members reflects an insulation from the real world that their members face every day. The reality is that this propensity for travel looks a lot like self-dealing that continues to run unabated. Do you really think this type of travel volume hasn’t been in place for at least a decade?  Or did the national executives say to themselves “we’d better ramp up first-class travel for speeches around the globe to save our organization.”?  Unlikely.

Here is what the Jim Amorin newsletter said (the AI National execs and locations in bold are my emphasis):

In keeping with the Appraisal Institute’s commitment to convey its thought leadership to real estate professionals and others, Immediate Past President Scott Robinson, MAI, SRA, AI-GRS, presented at Valuation Expo, Oct. 2-4, in Las Vegas, on “Reconciliation of Value.” AI also exhibited at this event.

Additionally, I was joined by President-Elect Jim Murrett, MAI, SRA, and Vice President Stephen Wagner, MAI, SRA, AI-GRS, at Expo Real, Oct. 4-6, in Munich, Germany. We were able to extensively market our organization, and provide information to attendees at one of the world’s largest real estate conferences. Also, five German members received their SRA designations at an evening reception.

Scott also represented AI at the American Society of Appraisers’ International Appraisers Conference, Oct. 7-10, in Houston, and at the Federation of Valuers, AC (commonly known as FECOVAL) Congress, Oct. 10-13, in Tampico, Mexico. He also presented at The European Group of Valuers Association (commonly known as TEGoVA) Fall Conference, Oct. 26-28, in Marseilles, France, on “AVMs vs. Appraisals: A U.S. Perspective.”

Stephen joined me at the Association of Appraiser Regulatory Officials (commonly known as AARO) Fall Conference, Oct. 13-16, in Washington, D.C., where I participated on a panel discussing “Appraiser Independence and AMCs: Is It True Independence?” Stephen and Amy C. McClellan, SRA, presented on “Appraisal Review for Appraiser Regulators” at the AARO event. I also delivered a presentation at the American Bankers Association’s State Issues Summit, Oct. 27, in Chicago, on “The State of the Valuation Profession.” International Relations Committee Chair and AI past president Ken Wilson, MAI, SRA, spoke at the Union of Pan American Valuers (commonly known as UPAV) Conference, Oct. 24-27, in Punta de Este, Uruguay, on the “Appraisal Institute Body of Knowledge.”

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them. They’ll help you land softly; you’ll keep your anger in check at the deposition and write another Housing Note next week.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Appraisal Related Reads

Extra Curricular Reads