[Housingwire] Hey 50-percenters, there is no “appraiser shortage” so knock it off

June 15, 2017 | 4:32 pm | Articles |

As a longtime reader of Housingwire, I always saw them as a great resource on the goings on in the mortgage industry. But lately, I grew concerned about the one-sided coverage as it related to my industry – residential appraisal.

HousingWire recently published an “appraiser shortage” blog screed that was tone-deaf to the problems facing appraisers. To their credit, Jacob Gaffney, the editor-in-chief, reached out to me for a rebuttal after reading all the negative appraiser feedback in the comments section. Rather than address specific failings of this piece, I opted to focus on current appraiser reality.

To start, the residential appraisal industry has a perception problem.

Read my full post on HousingWire.

Here is another thought on this appraisal shortage silliness. Not too long ago there was a webinar hosted by Housingwire that included some Powerpoint slides by one of the panelists, Matt Simmons. He is a Florida appraiser and former state regulator. He shared it with me and one of his slides is quite amazing. He matched mortgage origination volume with the federal registry of appraisers.

The finding?

The ratio of appraisers to mortgage volume has been higher since the housing bust than during the housing boom. While the chart only goes to 2015, both total origination and appraisers have changed little since then, so the ratio would remain stable, consistent with the post-financial crisis pattern. In other words, there are more appraisers now than there were during the Housing Bubble based on mortgage volume.


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Doubling Down On Appraisers as ‘Lone Wolves’ – Valuation Review

March 23, 2017 | 7:29 am | Articles |

Note: I have been a subscriber of Valuation Review and it’s predecessor for years. It provides a wide perspective on the appraisal industry and I’ve always got something out of it. Over the past few years, I’ve noticed that the voices in the magazine seemed to be skewing more and more towards national level AMC executives. I suspect the PR departments of these firms make their top executives readily accessible washing out the voices of individual appraisers. So I sent the editor a note offering another perspective with links to my content. He was immediately interested in getting another voice so he interviewed me.

From the Wednesday, March 22, 2017, Valuation Review Article:  CEO suggests appraisal industry comprised of ‘lone wolves’.

CEO suggests appraisal industry comprised of ‘lone wolves’

Reasonable compensation, lender and AMC issues are constantly on the mind of the appraiser. When things aren’t falling into place, the process of assigning blame kicks into high gear with appraisers continuing to look for guidance.

“That’s the problem in that there really isn’t any leadership for appraisers to follow. The false narrative of an appraisal shortage continues to be pushed by AMCs, unfairly tarnishing the image of individual appraisers,” Miller Samuel Inc. President and CEO Jonathan Miller told Valuation Review. “When an industry takes a 50 percent pay cut overnight, good people leave or struggle to hang on and weaker players are attracted-which equals problems. But is it the fault of the remaining individual appraisers?

“AMCs are at a seminal moment,” Miller added. “In what other industry does the company managing the talent get about the same compensation as the talent them? An agent representing a Hollywood actor isn’t going to get $1 million if their client is receiving that same amount for a movie role. It is a broken model.”

Like many in the appraisal profession, Miller strongly believes that there is not a shortage of appraisers. In fact, he more than challenges one reason for such a shortage is that too many burdensome regulations are being placed upon appraisers.

“There is a shortage of appraisers willing to work for 50 cents on the dollar,” Miller said. “The AMC model has hit a wall. AMCs have run out of new people willing to work for 50 cents on the dollar. Sadly, consumers think appraisers are getting the appraisal fee stated in their mortgage documents. They aren’t and typically the appraiser receives as little as 50 percent of it.

“The Appraisal Institute says there is a shortage of appraisers and seem to be championing the AMC concept but appraisers don’t understand why,” Miller added. “I’m not against AMCs; rather, I’m against the execution of business by the AMCs. They treat appraisers as a commodity rather than a professional service.”

For the rest of the story, visit here.

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An Honest Appraisal – Some Personal Background Including My Favorite Color and Love of Yo-Yos

July 30, 2015 | 9:59 am | Articles |

A while back, Kim Velsey at New York Observer reached out and thought it would be interesting to do a profile on me. Who wouldn’t like to talk about themselves for hours? What an opportunity! LOL. Uh, Yes?

We met and she proceeded to “drain my soul” as I am fond of saying – by the end of the interview my head was spinning and I wasn’t quite sure what I had said or if I would look foolish (the sign of a good interviewer). I was also getting a little worried when I started hearing through the grapevine who she was reaching out to – in other words this was an actual, real interview profile thing!

It turned out to be a fun, extensive and detailed read that captured a very fair and accurate picture of me for which I am very grateful (and relieved).

Jonathan Miller Is the Most Trusted (and Quoted) Man in New York Real Estate
An Honest Appraisal by Kim Velsey July 29, 2015

jmiller2NYO7-2015jmiller1NYO7-2015
Photo credit: New York Observer

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Bloomberg View Column: What Does It Mean When a House Sells for $50 Million?

September 17, 2014 | 2:58 pm | | Articles |

BVlogo

Read my latest Bloomberg View column What Does It Mean When a House Sells for $50 Million?. Please join the conversation over at Bloomberg View. Here’s an excerpt…

One of the byproducts of the global financial crisis has been the creation of a new class of housing and buyers. Some of the strongest evidence is the rise in the number of residences sold for more than $50 million. A buyer recently paid a record $71.3 million for a Manhattan co-op, breaking the $70 million record set only a few months earlier. These sales seem modest compared with a $147 million sale in East Hampton, New York, and a $120 million sale in Greenwich, Connecticut, the two highest U.S. residential transactions in 2014. There have been six sales of more than $100 million in the past four years, with more likely to come…

[read more]

BV9-17-14$50Mtable
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My Bloomberg View Column Directory

My Bloomberg View RSS feed.


Demanding More: terms of sale are now as important as the price

May 18, 2014 | 7:00 pm | | Articles |

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[click to open article]

Sellers and their real estate brokers are more focused on the qualifications of the buyer than ever before. “Flexibility of terms,” “limited contingencies,” and “paying with cash” have become well-used phrases in the current home-buying process.

Here’s an article I penned for the current issue of Elliman Magazine. It’s about the concept that the terms of a sale are now just as important as the price.

The latest issue of Elliman Magazine, including my article, as well as the most recent market reports we author are available in the Elliman App.

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Luxury Real Estate as the New Global Currency

November 18, 2012 | 5:46 pm | | Articles |


[click to read article]

Over the summer Camilla Papale, Douglas Elliman’s CMO asked me if I would present something about the state of luxury real estate for their Elliman Magazine (and iPad app!). The finished result contained 3 parts:

  • I wrote a brief piece about the influx of international demand as high end consumers were seeking a safe haven from the world’s economic problems. I called the piece: “LUXURY REAL ESTATE AS THE WORLD’S NEW CURRENCY” This post’s title was my working title which I also liked.
  • Plus I did a little research on housing prices across the globe using Knight Frank’s resources and
  • I moderated a discussion on the subject with Dottie Herman, President & CEO of Douglas Elliman, Patrick Dring, Head of International Residential at Knight Frank, and Liam Bailey, Head of Residential Research at Knight Frank. They all provided great insights to the subject.

Here’s the full piece in Elliman Magazine . I’ve inserted a portion of the presentation below in 2 parts:

LUXURY REAL ESTATE AS THE WORLD’S NEW CURRENCY

Since the beginning of the global credit crunch in 2008, luxury real estate has morphed into a new world currency that provides investors with both a tangible asset and a cachet that cannot be found within the financial markets. It’s as if these emboldened investors zoomed out of their local Google Earth view to discover the wider global perspective on luxury real estate.

HOW DID WE GET HERE? The US dollar has weakened in the years following the collapse of Lehman Brothers in the onset of the global credit crisis. The S&P downgrade of US debt in August 2011 from its benchmark AAA rating brought a flood of investors into US financial securities. That meant that our currency allowed us to buy less abroad, and the strength of other currencies provided international buyers with large discounts when purchasing property in US dollars. But it went further than that.

THE RISE OF LUXURY REAL ESTATE AS A “SAFE HAVEN.” The volatility of global financial markets and the resulting political fallout shook investor confidence, which in turn spurred a rise in foreign buyers seeking a safe haven to protect their assets. A wave of international buyers from Europe, South America, and Asia entered the US housing market, helping set record prices and revive luxury markets including New York, The Hamptons, and Miami.

SUPPLY-DRIVEN DEMAND. The luxury real estate market has become defined by the supply of available properties. While demand has remained constant and elevated, inventory has become a critical variable, particularly at the very top of the market, where surging international demand for one-of-a-kind properties has surpassed the limited supply. The resultant record-breaking sales of “trophy” properties have enticed more owners of luxury homes to make them available for sale.

THE RISE OF THE “TROPHY PROPERTY.” The trophy property has become a new market category that does not follow the rules and dynamics of the overall marketplace. One stratospheric price record is being set after another, and it is not only the list prices that are defining these record sales; the rarity of location, expanse of the views, quality of amenities, and the sheer size of these unique homes have all played an important part in attracting the interest of foreign buyers.

WHERE DO WE GO FROM HERE? Driven by the global credit crunch and political instability, the two factors that are expected to remain unchanged for the next several years, the US luxury housing market is expected to remain a “safe haven” for foreign investors for quite some time.

A CONVERSATION ABOUT THE COMMERCE OF GLOBAL LUXURY REAL ESTATE

I sat down with Dottie Herman and our friends across the pond, Patrick Dring, Head of International Residential, and Liam Bailey, Head of Residential Research at Knight Frank, to chat about the state of real estate in the prime markets across the globe and the rise of a foreign investment phenomenon.

JONATHAN MILLER: Douglas Elliman has a broad coverage area that includes some of the most affluent housing markets in the US. Are you seeing any short-term issues that may influence luxury investor decisions over the coming year?

DOTTIE HERMAN: At the end of this year, we may see a repeat of the consumer behavior we saw at the end of 2010 when US capital gains tax rates were expected to rise. Ultimately, the rates did not increase, but many consumers in the luxury market took preventative action before the potential tax increase and raced to close their sales by the end of 2010. Despite the ups and downs in the quarters that followed, the luxury housing market was not adversely impacted in the long-term.

JM: Paddy, according to Knight Frank’s Global Briefing blog, housing prices in central London are up sharply, but the pace of growth appears to be slowing, perhaps because of the new stamp duty (a tax on properties priced at £2M–the equivalent of $3.15M–or more). What does this mean for the luxury market?

PADDY DRING: In short, the £5M ($7.85M) market is up year-on-year. The new stamp duty on property sales above £2M seems to be having an impact only on the band just above the new £2M threshold. Foreign demand remains high and, notably, we have sold to over 62 different nationalities within the last 12 months. They are less affected by the changes in stamp duty, since the rates in London are still in line with many other European countries.

JM: Dottie, your firm has sold a large number of luxury properties this year, despite a lukewarm economy and tight credit conditions. Record sales and listing prices are becoming nearly commonplace and a significant portion of this demand for luxury real estate is coming from abroad. Do you see this developing into a long-term trend?

DH: It’s certainly been a year of records and I do think we are embarking on a period where luxury real estate has the potential to outperform the rest of the housing market. Several of the markets that we cover, Manhattan and Miami in particular, have been firmly established as highly sought-after international destinations. As much as we fret about how slowly our economy is recovering, the US has proven itself as a “safe haven” for many international investors who are concerned about the turmoil of the world economy and political stability. Luxury investors from much of Europe, Russia, Asia and South America have been buying here at the highest pace we have seen since the credit crunch began.

JM: Liam, the US is seeing a higher-than-normal influx of real estate demand from foreign investors who seem to be focusing on the upper end of the housing market. These investors are well represented from Europe, Asia and South America. Are you seeing the same phenomenon when it comes to luxury properties in the UK? What are the primary regions where this demand is coming from?

LIAM BAILEY: The focus of demand continues on London and its easily accessible suburbs. London is facing even higher global demand than New York, with the top end strongly led by Russia, Europe, Canada, and the Middle East, and demand in the new development investment market very much led by Asia.

JM: In the US, access to financing is a key challenge to domestic purchasers, including luxury investors. What are some of the key challenges facing your clients who are looking to purchase real estate outside of their own countries?

PD & LB: Financing remains a consideration for many, although mortgages are more available in many of the markets than people are led to believe. Of course, the property needs to be quality and in a core location and have a more conservative loan-to-value ratio, however, many of our clients purchase in cash, so they are more affected by market sentiment and, of course, liquidity if they need to sell unexpectedly in the future. Factors affecting market sentiment include the usual considerations, such as exchange rate, a stable political base, as well as a sound legal system that guarantees clarity of title and tax considerations. The latter of course is affecting not only the cost of acquisition (stamp duty), but also, in some countries, the cost of holding (wealth tax) and ultimately selling (capital gains tax). Access, infrastructure, and climate (if lifestyle-driven) all remain key, as do low crime rates as people become more aware of their privacy and personal safety.

JM: Since the beginning of the credit crunch, you’ve constantly stressed to your clients that the terms of a sale are just as important as the price of a sale, given the challenges of obtaining financing. How do international buyers fi t into this new world defined by tough lending standards?

DH: Despite mortgage lending in the US remaining tight, luxury markets in the areas we cover have improved quickly. I can only imagine how much stronger the US housing market would be if we saw credit ease to historically normal levels. International buyers tend to pay cash or obtain financing from their native countries, which has given them an advantage over many domestic purchasers. Combine the ability to pay in cash with both the weakness of the US dollar against many of their native currencies and a volatile global economy, and you can begin to understand why we are seeing a strong presence of international buyers in our markets. Like our friends at Knight Frank, these luxury investors are interested in our proven core markets that already have a large concentration of luxury properties. Overall, we continue to be excited about our market’s expanding presence in the global luxury housing market—there are many opportunities out there for this new international investor to explore.



Luxury Real Estate as the World’s New Currency [Miller Samuel (pdf)]
Luxury Real Estate as the World’s New Currency [Douglas Elliman]
Elliman iPad App [iTunes]

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[Three Cents Worth DC #214] The Real Reasons House Prices Are Rising

October 24, 2012 | 7:00 am | | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read this week’s 3CW column on @CurbedDC:

…I wrote this post a few hours before the third presidential debate and since the topic covers foreign policy and the first two debates (plus the VP debate) had only scant mention of housing, I didn’t think I’d get anymore insights on what our policy makers think is happening in the housing market. Both parties clearly see no bonus points in bringing up a complex subject that won’t score any points (and only happens to be our nation’s largest asset class).

So I am asking the question – Why are housing prices rising in the DMV (and the US)?…

 

[click to read column]


Curbed NY : Three Cents Worth Archive
Curbed DC : Three Cents Worth Archive
Curbed Miami : Three Cents Worth Archive

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[666 Park Avenue] Appraising Fictitious TV Celebrity Apartments

September 28, 2012 | 9:46 pm | Articles |


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In lieu of the new TV show 666 Park Avenue (the devil passed the board interview apparently), the Commercial Observer asked me for some thoughts on the value of some fictitious apartments and properties in some notable TV shows using what limited information was available back in the day and some strained logic (with a slew of hypotheticals and disclaimers) all in the name of fun.

Although the graphic incorrectly uses the building square footage total for no. 3, the graphics people at CO did an absolutely brilliant job with this – love it.

Here’s a cool web site I came across with theoretical floor plans for popular tv shows.



Lifestyles of the Rich and Fictitious [Commercial Observer]
Celebrity Floorplans [Deviant Art]
666 Park Avenue [Wikipedia]

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[Three Cents Worth DC #208] Keep Your Eye On The Numbers (For The Past Decade)

September 13, 2012 | 12:24 pm | | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read this week’s 3CW column on @CurbedDC:

…I thought it would be visually helpful to show the ebb of and flow of the DC Metro area’s housing market. And since I just learned how to rotate a GIF image, I’m making up for all the art classes I never took in high school (band). I trended a decade’s worth of the robust web data from the regional MLS (RBI, a division of MRIS)—monthly new pending home sales and median sales price in a two year moving window. I also inserted some commentary on the milestones during the decade (i.e. highest points for price and sales, lowest points for price and sales, Lehman/credit crunch, tax credit, etc). Hopefully it’s not too distracting…

 

[click to read column]


Curbed NY : Three Cents Worth Archive
Curbed DC : Three Cents Worth Archive
Curbed Miami : Three Cents Worth Archive

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[Three Cents Worth DC #205] Does The History of The DMV’s New Listings Predict The Next Housing Slogan?

August 29, 2012 | 4:57 pm | | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read this week’s 3CW column on @CurbedDC:

…No. But please read on. It’s been a while since I’ve placed a chart of Curbed DC, and even longer since I was politically correct (but hey, I’m really trying). With the RNC underway and DNC up next, I thought I’d try to find some sort of correlation to the DC Metro housing market that coincides with the party of the president voted into office and their slogan/theme. Obviously the elections aren’t all about housing, but housing is very important in terms of its economic impact and “Wealth Effect” influence” on the US economy. Doh! I looked at MRIS’ awesome online resources and thought that new listing history might tell the story – I clearly went overboard so please indulge me. My thinking was new listings reflect people placing listings on the market in reaction to their view or opportunity with the world around them. Job transfer, lost job, trading up, cashing out, etc….

 

[click to read column]


Curbed NY : Three Cents Worth Archive
Curbed DC : Three Cents Worth Archive
Curbed Miami : Three Cents Worth Archive

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[Three Cents Worth DC #194] DC’s Housing Market Turns The Tide; Good News For Sellers

June 11, 2012 | 11:01 am | | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read today’s 3CW post on @CurbedDC:

Here’s my chart version of the May 2012 report published by RBI/MRIS. They’ve got terrific data and when Curbed DC asked me to go old school and bring back the charts so the trends would be easier to understand, I gladly obliged. I called up my inner Three Cents Worth days in DC…

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Change is Constant: 100 Years of New York Real Estate

February 7, 2012 | 11:28 am | | Articles |


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Last fall Prudential Douglas Elliman turned 100 years old and they asked me to write an article for their Elliman magazine. If you’ve been living in a cave, I’ve been writing their housing market report series since 1994.

What started as a simple project morphed into a fun, albeit gigantic, research project. I learned a lot about the evolution of the Manhattan housing market, largely through the amazing incredible New York Times archives. This was right about the time of my web site revision and semi-necessary hiatus so I am cleaning out my desk of posts I have been itching to write so please indulge me.

The article I wrote for Douglas Elliman was beautifully presented by their marketing department and prominently inserted in their Elliman magazine (and iPad app!).

Diane Cardwell of the New York Times in her “The Appraisal” (an incredible column name BTW) penned a great piece: In an Earlier Time of Boom and Bust, Rentals Also Gained Favor that originated from my article and zeroed in on the 1920s and 1930s to draw a comparison to the current market.

I have the feeling my project is going to morph into something bigger – it’s just too interesting (to me). A few things I learned about the Manhattan market over this period:

  • Douglas Elliman published the first market study in 1927 [heh, heh] not counting other marketing materials written before WWI)
  • Real estate media coverage in the first half of the century was social scene fodder (same as today) but with extensive and excessive personal details presented on tenants, buyers and sellers yet housing prices and rents were rarely presented in public.
  • Manhattan made a rapid transition from single family to luxury apartment rentals and eventually co-ops.
  • Housing prices and rents by mid century weren’t that much different than the beginning of the century.
  • Manhattan’s population peaked at 2.3M around WWI.
  • Wall Street in the 1920’s was seen as the driver of the real estate market.
  • Federal and state credit fixes in the late 1930’s help bail out the housing market.



• Change Is The Constant In A Century of New York City Real Estate – pdf [Miller Samuel]
• My Theory of Negative Milestones [Matrix]

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