ABC World News Report 5-2-20 ‘Urban to Suburban’

May 3, 2020 | 9:08 pm | TV, Videos |

If you can indulge me, I was included in the ABC World News Tonight broadcast on Saturday night to talk about the potential urban to suburban housing shift, particularly in NYC. It was cool to be interviewed by Deirdre Bolton for her first World News Tonight segment since just joining ABC via Fox Business and previously from Bloomberg where I had spoken with her before. Great move ABC!


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Contract Data Is Pending Data Is Lagging Data

April 29, 2020 | 11:50 am | Explainer |

In our post-Coronavirus world, it is clear that market conditions and our understanding of the future are subject to change every day. In my prior post Establishing the COVID-19 Demarcation Line: From ‘Hanks To Banks’, data that falls after the line represents a different market.

So how do we determine what data falls in after the demarcation line? It’s not as straightforward as it sounds.

Throughout my career, I have seen brokerage firms publish pending/contract reports, touting pending trends as more reliable than reports based on closings. I don’t look at them as better or worse, just a different way to look at the market. The simplistic, uninformed argument for pending sales is that contract dates occur before closing dates, so they are more current. Incidentally, contract prices are not readily shared. I get all of this. Yet I have seen the failure rate of contracts be as high as 40% – in other words, many contracts might not close whereas closing reports are solely based on successful transactions. Still, pending sale trends are useful as long as the reader understands their shortcomings. I plan to develop one someday.

Closing data and contract/pending data lags the “meeting of the minds.

Meeting of the minds (also referred to as mutual agreement, mutual assent, or consensus ad idem) is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract.

While we know that closing dates lag the “meeting of the minds,” we also need to understand that signed contract dates are lagging indicators, often by 2-4 weeks. During this crisis, I’m speculating the failure rate will be high initially, and the time lag will be on the longer end rather than, the shorter end of this 2-4 week range.

Here’s why contract dates are a lagging indicator and not necessarily more insightful than closing data:

1) The “meeting of the minds” occurs when buyers and sellers negotiate price and terms, usually facilitated by a real estate agent or broker.

2) The price and terms are handed off to transaction attorneys who work together to craft language agreeable to both parties.

3) The contract is signed by both parties and often indicated as such in an MLS-type system.

4) In some markets or marketing periods, especially when a market is cooling, many contracts never close, so their initial inclusion makes pending trends reports suspect.

If there is a four week signed contract lag from the meeting of the minds, and considering the March 15 demarcation line for post-Coronavirus, that means that with us being six weeks into the crisis, we are only able to see two weeks worth of post-Coronavirus data. And even with that reality and current shelter in place rules, many current contracts might have been older deals that were facilitated by the buyer who had already inspected the home in January/February – we are seeing some of that now.

In other words, relevant data on the new market remains extremely limited.

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Establishing the COVID-19 Demarcation Line: From ‘Hanks To Banks’

April 28, 2020 | 5:26 pm | Milestones |

This topic was explored in last Friday’s Housing Notes.

In order to understand what is happening now, we need to ween ourselves off of what happened before this crisis and focus on finding data exclusive to the post-COVID-19 era. In Manhattan, that data set is not yet apparent because we are in nearly a total market shut down but it is evident elsewhere to a limited degree. From my perspective, the demarcation line for the onset of the crisis is where market participants would have to be living in a cave on a desert island to be unaware of the sharp pivot in market sentiment.

March 15, 2020

I believe that date is March 15th which is the date of the Federal Reserve federal funds rate cut to zero and was their second cut in less than two weeks.

March 11, 2020

My friend and California appraiser Ryan Lundquist proclaimed March 11th which was the date Tom Hanks announced he and his wife had contracted COVID-19. Phil Crawford of Voice of Appraisal said the demarcation line was March 5, 2020 dubbing it “data point zero” and I had originally said the demarcation line was March 3, 2020, on the day of the 0.5% rate cut in March.

I was talking about this difference in these dates with a friend, Chicagoan, and RAC appraiser Michael Hobbs who brilliantly dubbed this four-day window from March 11 to March 15 as: “From Hanks To Banks.”

And if you do the math, the median and average date of March 11 and March 15 is literally Friday the 13th so what more confirmation of a demarcation line do you need?

Whatever your specific local demarcation line is, use it to keep the data for these two market periods separate.

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Do We Hope This Listing Goes Viral?…No We Don’t.

April 7, 2020 | 2:08 pm | | Favorites |

I am reading a lot more about everything right now, including real estate. Yesterday’s Bloomberg article caught my eye: Greenwich Homeowner Bets on Virus Getaway Pitch to Win a Sale. Desperation to sell can take many forms. Please read on.

The article featured a listing in Greenwich, CT that came on 68 days ago that wasn’t moving (I assume this based on what was done later). Here is the text for the original listing displayed at the bottom the screenshot:

Like new light-filled house with a modern design by Donald Breismeister including 9 ft ceilings on the first floor. High-tech amenities throughout with e-thermostat, lighting and security cameras all hardwifred CAT-5 wiring throughout. Bathrooms are beautiful and modern with separate steamshower and large whirlpool tub. Nice front yard and backyard has large entertainment deck. All these amenities are just two blocks from the Post Road on a quiet road within walking distance to GreenwichHS, Greenwich Country Day and Central MS.


[click to expand]

With the sales market slowing down despite entering peak selling season, many homeowners are reluctant to add their homes to the rental market. The owner in the article said:

“I rented property in the past. It’s too much hassle. My trust level is pretty low with renters.”

About ten days ago the listing was modified by raising the price to $100,000 and throwing in a 2011 Subaru, linens, televisions, etc. and rebranding the sales effort as a Coronavirus Special (bold emphasis mine).

CORONAVIRUS SPECIAL – Some houses are move-in ready. This house is live-in ready. It comes with all furniture, kitchen appliances, washer & dryer, dishes, silverware, TVs, pool table, beds, linens, lawn equipment and even a car. Everything you need to enjoy living in your own house in Greenwich. The house was designed by an award winning architect with lots of custom features. The first floor has high ceilings and two fireplaces. You have a Costco closet just off the 2-car garages and 5 BRs upstairs.You have town water, gas and sewer and are close to both public and private schools. Tomney is a quiet side street, but near downtown, the train and I-95.If you don’t want the time and hassle of arranging movers and buying lots of new items, this house is ready for you now.

While I very much appreciate how hard it is right now to market a home for sale during a global pandemic, the marketing of a home as a CORONAVIRUS SPECIAL is a bit tone-deaf especially when raising the price to include a bunch of the seller’s personal stuff. “Throwing in” used furniture, appliances, linens and an old car by raising the listing price by $100,000 is not, by definition, “throwing it in.”

When I first saw the listing in the Bloomberg piece I thought about all the snarky headlines during other pandemics/tragedies and using brutal sarcasm I found myself chuckling from the absurdity of all of it. Now, as I was writing this post a day later, the initial LMAO title ideas felt icky and were not worth repeating.

Q: Can you imagine associating the word “SPECIAL” with these?

  • AIDS
  • SARS
  • H1N1
  • 9/11

A: I didn’t think so.

Times like this call for creative marketing and perhaps the Bloomberg story and even this blog post may bring new eyeballs to the listing to help it sell. I suspect that won’t happen because the appearance of the home and what comes with it for the price isn’t the problem. The agent is definitely not the problem. The seller is definitely not the problem. The problem is the sudden change in the world we live in and the understanding that it will take time to adapt. Our initial impulses to take action, such as this situation, are often wrong.

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More Bloomberg Media Hits On Real Estate and the Coronavirus

April 5, 2020 | 2:29 pm | | Podcasts |

If you missed this week’s Housing Notes, here are two Bloomberg clips (from radio and TV) where I break down the state of the market post-Coronavirus:


Bloomberg Radio: Surveillance – ‘Jonathan Miller…details how the housing market is dealing with fallout from the coronavirus.’

I spoke with Tom Keene and Lisa Abramowicz on Bloomberg Radio’s morning show “Surveillance” on the state of the housing market.

The full segment is a great listen. My interview starts at 21:33.


[click image to play]


Bloomberg TV: Markets – ‘Manhattan Home Sellers Hold Back Listings During Coronavirus’

I joined network Vonnie Quinn in New York to talk about the state of the market since the coronavirus hit. She is always wonderful to speak with. The stock photo they used for me was taken about 15 years ago (when I was 15, obviously). At the last second, they had me speak through their London bureau for technical reasons, so each question and answer saw a small delay. The interview was based on this Bloomberg article: Manhattan Home Sellers Hold Back Listings in Coronavirus Retreat:


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Bloomberg Radio’s Barry Ritholtz – Masters in Business Show: Jonathan Miller on Real Estate After the Coronavirus

April 5, 2020 | 2:17 pm | Podcasts |

I joined my friend, columnist/blogger at Big Picture and Bloomberg Radio host Barry Ritholtz to talk about the housing market before and after the Coronavirus crisis on his must-listen radio and podcast show Masters in Business. He interviewed me in 2014, 2016 and now, 2020.

I rationalized that the long gap since 2016 was because he was interviewing other Millers on his show, Steve Miller of the Steve Miller Band and Bill Miller of Legg Mason Capital Management. Ha.

Barry’s show is always a good listen and has long been part of my podcast feed. I’ve received quite a few shoutouts from people who were listening to the show in their cars.


[click on image to play]

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Elliman Magazine: 8 Regional Housing Market Charts

April 2, 2020 | 12:01 am | | Articles |

I whipped up eight charts using data from our expanding Douglas Elliman Market Report Series to touch base on a wide array of U.S. housing markets. These charts appeared on pages 280-282 in the 2020 Spring/Summer edition of Elliman Magazine. Click on each graphic to expand.

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Staying Put Locally = Saving Lives Globally

March 28, 2020 | 9:05 am |

Visual Capitalist created a terrific infographic of 41 cities around the globe comparing the outbreak trend against the commuter activity trend. Incredible

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The Future of Real Estate (And Life) Is Happily Looking Remote

March 26, 2020 | 10:37 am | Favorites |

With many Americans living under self-quarantine, the future of housing and office space will experience radical change. Here are some random thoughts about life after coronavirusappoccalypse:


The Man-Bun will make a big comeback due to the inability to get a haircut

There will be so much toilet paper to appear on store shelves that it will take years to use it up and toilet paper production-related employment will be bleak

Consumers will not regret hoarding toilet paper but will refuse to admit it in public

With everyone frustrated about being housebound, they will plot and plan to buy or rent a larger home as soon as this crisis is over

Buy a new refrigerator after burning out the refrigeration unit with thousands of sustained door-opens

A surge in the stock prices of Jenny Craig and WW

Gyms will see a new revival (see ‘Jenny Craig’)

People will discover they actually like to walk every day to clear their mind

Many people will begin to use Zoom.us every day and discover they like to see their friends and relatives faces when chatting – even in HD

Universities will incorrectly believe that students will want to learn remotely when really all they want to do it party in the dorms

Employees will decide they hate the time wasted on the commute even more because it is not completely necessary

Americans will love sleeping in until 8:30 am permanently changing the 9-5 standard to 10-6

Podcast usage will become a bigger thing than it ever was (see ‘walk every day’)

People will rush to cut their cable service after enduring endless hours, watching mindless cable shows, for reasons they can’t explain, but did realize being permanently pissed off was exhausting and unnecessary

The difference between weekends and weekdays will suddenly be thrust back into our daily lives and we’ll hate it despite the dated conventional wisdom that we should keep our personal and business lives separate (see ‘walk every day’)

The divorce rate will skyrocket as couples actually discover their real partner in close quarters

Parents will completely shed their ‘put their kids on the couch to watch tv’ shame as they consider how many episodes of Gilligan’s Island they have watched

Commercial real estate will never be the same again as millions of employees worked remotely and companies realized it wasn’t that big a deal


UPDATES

There will be a new generation classification known as Baby Boom II beginning nine months from now – ok, boomer? (see ‘divorce’)

Uncomfortable chairs will no longer be tolerated as Herman Miller Aeron Chairs will be the only office chairs made worldwide


I’ve seen the future, and it is good. -Beavis & Butthead

Other insights welcomed.


Real estate appraisers are an essential business and here to protect the public trust

March 24, 2020 | 8:00 pm | Milestones |

I hope all my readers (and everyone else) are staying safe and healthy during this crisis – now let’s get to business.


With New York State on lockdown, real estate brokers/agents can’t sell real estate right now because they are not considered an essential business (yet they are in nearby Connecticut!) This declaration determines whether you can or cannot remain in business during a crisis like this.

Are real estate appraisers considered an essential business in New York? Yes. They are in New York State and they are stated as such in the federal Gramm-Leach-Bliley Act of 1999. But the fact that real estate appraisers are an “essential business” is not consistent in the federal language, especially now when many states are, or will be going on lockdown.

My good friend and appraiser/regulator Pete Fontana and I wrote a letter nicknamed: Fontana/Miller Essential Letter of March 24, 2020. This letter combines the scattered references to address this issue in very specific terms using key language in the public record that illustrates the fact that appraisers are an “essential business” now and going forward.

This letter is the first to address this important issue. It was just sent to Congress, state officials, trade groups, agencies, and other groups related to our industry today and went viral industrywide. The feedback from these groups has been immediate and overwhelmingly encouraging and positive.

Please share the Fontana/Miller Essential Letter of March 24, 2020 with your colleagues in the industry, trade groups, state governments, on forums, and with anyone or in any place you think is relevant to our industry.

Real estate appraisers are an essential business in our country, always have been.

Stay safe!

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Cheddar TV – Looking Back In History (8 Days Ago) To Talk Falling Rates

March 19, 2020 | 1:22 pm | TV, Videos |

Cheddar TV reached out to me on March 11th as I was 4 days into my self-quarantine and my voice sounded quite scary. Aside from bad lighting and a red face, the discussion was long-form in nature covering low mortgage rates, which is why I so appreciate Cheddar’s format.

March 11 was soooo long ago!

Using Skype (which has been improved since Microsoft acquired it to be less of a horror show) I am able to blur out the background so you don’t get distracted by my prized autographed drum head from Lynyrd Skynrd, my 2002 March Madness pool victory plaque and my certificate for passing a 1978 Italian Cooking class in my Dad’s former cooking school in the DMV.


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Some Financial Institutions Care About The Safety Of Appraisers, While Most Do Not

March 18, 2020 | 10:08 pm | Investigative |


[Johns Hopkins University]

As co-owner of an appraisal firm for 34 years, while based in Manhattan, we generally don’t drive to appraisal inspections. Our staff relies on public transportation to get around including buses, subways, and commuter rail. I’d been following the coronavirus in the news since early this year, and became quite alarmed by mid-February and soon suggested my staff work remotely. By the time the first Fed rate cut was made in response to the coronavirus on March 3, we adopted a screening process for appraisal inspections. When our team made an appointment for the inspection, we inquired about the health of the occupant, and then on the day of the inspection, the appraiser called again to confirm that conditions had not changed.

Soon after we learned that we could be carriers of the virus without knowing and infect someone vulnerable, we stop performing interior inspections.

My appraiser colleagues around the country have become very concerned, if not plain scared.

Here are two scenarios shared by appraiser colleagues in another part of the country. Imagine if the appraiser was a carrier?

Scenario 1 Conversation
Sounds good 10 am is better
Kids are home
With no school
If your sic with a cold or similar please reset appointment

Scenario 2 Recap
Borrower is elderly and on a respirator
Says the appraiser can walk through the house by himself
And reminds the appraiser to keep their distance

Appraisers should not be placed in harm’s way or be in a position to be forced to unintentionally harm another.

So let’s look at some industry actions of the past few days:

HEROES

These lenders have shown how much they respect the appraiser’s role in the mortgage process and their concern for the appraiser’s health and welfare as well as the borrower.

First Republic Bank
I submitted a temporary driveby appraisal solution to First Republic Bank, a large CA/NYC+ lender we have worked with since 1999. I feared for the safety of our appraisal staff and didn’t want to risk infecting others. Plus we were starting to get pushback from homeowners who are getting uncomfortable. They embedded this solution within days. I challenge any appraiser to name any other bank that is more professional, more appraiser-centric than they are. Here is the note they sent out to their panel.


Citibank
We’ve been working for Citibank since 1986 and have enjoyed a great relationship. This policy treats appraisers as human beings. I’m not sure how closely this policy will be observed by the AMCs they engage to manage their appraisals orders (read-on).


ZEROES (AMCS, etc.)


To combat the COVID-19 outbreak in the appraisal industry, Appraisal Management Companies (third-party institutional middlemen that account for as much as 90% of residential assignments) have essentially provided a lethal magnanimous gesture by simply telling appraisers to wash their hands often and stay away from people that are sick and that they must go inside the property. While I anticipate that many AMCs would defend their position of placing appraisers in harm’s way because their bank clients require it, I say that indicates selective morality or incredible ignorance. They could push back and make a strong case for public safety.

We are in the early stages of a global pandemic that may infect 100 million Americans (1 out of 3, conservatively) with a 3% death rate (that’s 1 million people if you do the math). The appraiser population has an average age in the high-50s, and we have been told that the older populous is the most vulnerable.

In reality, these AMC policies show disdain not only to appraisers but to their own (bank client’s) borrowers by letting a fee appraiser, who is paid only for the assignments they accept, determine whether or not the appraisers themselves are carriers of this pandemic and whether they can assess the safety of the property they inspect. Here’s a key point.

NO ONE CAN TELL IF SOMEONE IS A CARRIER IF THEY HAVE NO SYMPTOMS.

The following AMCs opted to treat appraisers as a widget instead of a human being requiring them to physically inspect a property when they now know that it is not safe to do so. Today I was told that one federal agency lost 20% of their appraisers because they have refused to continue doing interior inspections. Different cities and states have different rates of infection. Because we don’t have full testing in place as a country, the number of infections might be significantly higher than we might anticipate. My particular location in Manhattan is highly problematic because of the reliance on public transportation – buses, subways, commuter rail, and just walking down a crowded street – no social-distancing here. And based on the comments the NYC Mayor made yesterday, it is possible that tomorrow could see NYC restricted to “shelter in place” like San Francisco.

If you’ll note in this pattern of negligent behavior, great efforts were made to plan for the safety of order staff, but no regard for the safety of the appraiser, who is providing the service – telling appraisers to wash their hands and practice social-distancing when they know that it is not enough. When you get right down to it, these companies sent similar silly instructions so they can check off a box to be compliant. Yet they must know that appraisers could be carriers, and occupants in the property could be carriers. This is not business as usual.

When we pushed back the appointment on a few of our AMC clients for safety concerns, they simply took away the assignment and rescheduled with another appraiser. No human contact to assess the risk. In good conscience, even if the new appraiser doesn’t have symptoms or doesn;t think the occupant does, that AMC or lender is placing the public at risk, going directly against CDC guidelines. This is what robots would do.


Here is a sampling of AMCs that provided COVID-19 instructions in the past few days shared by my appraisal colleagues – this is clear evidence that they see appraisers as widgets instead of human beings. To save you the trouble of reading all of these INSTRUCTIONS, here’s the translation: WASH YOUR HANDS A LOT

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