Matrix Blog

Crain’s New York Business

Crains New York Business Economic Spotlight Chart – August 2007

August 20, 2007 | 12:01 am | | Charts |

I have had the pleasure of providing a monthly chart for the Economic Spotlight section of Crain’s New York Business magazine since 2003. Here is the latest, which appears in the current issue of Crain’s New York Business.

Source: Crain’s New York Business


Go here for a complete archive of all Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


Tags:


Crains New York Business Economic Spotlight Chart – July 2007

July 23, 2007 | 12:01 am | | Charts |

Since 2003 I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.

Source: Crain’s New York Business


Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.


Tags:


Crains New York Business Economic Spotlight Chart – June 2007

June 18, 2007 | 12:01 am | | Charts |

Since 2003 I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.

Source: Crain’s New York Business


Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.


Tags:


Another Appraisal Firm Enters Pressure Realm + 20,000 Reports

June 11, 2007 | 12:01 am | |

This is getting interesting.

Vanderbilt Appraisal Company LLC, the second of our two major competitors, was subpoenaed last week into the widening probe over mortgage brokers pressuring appraisers by New York State Attorney General Andrew Cuomo.

The news coverage has been particularly heavy, likely because the firms being subpoened cover the most expensive real estate market in the US. The irony here is the fact that this investigation stemmed from subprime lending practices, of which there is a limited amount in New York City. And of course, a subpoena doesn’t infer guilt.

Appraisal pressure is a key ingredient in the problem with the mortgage industry being uncovered today and I am glad it is getting the attention it deserves. Just talking about it helps bring the problem to the forefront. There’s been a lot of news on the topic in the past week:

And in Ohio…
The Ohio Attorney General filed suit against seven mortgage brokers, 2 lenders and an appraiser last week:

A related aside (is there such a thing?)
I was struck by a specific number in the Bloomberg story that was so over the top, I wanted to mention it. Bloomberg reported that the two principals have personally done over 20,000 appraisals. However, their web site actually says that number applies to one of the principals who has personally performed more than 20,000 appraisals since 1991. The site also reports that the other principal has done about 15,000 reports over what I assume to be the same period.

If I do the math with the first principal, that is the equivalent of one person doing 20,000+ appraisals/16 years/50 weeks per year (assume a vacation)/5 days per week (assume time with family on weekends) equals 5 full appraisals from start to finish per day while owning, running and growing a regional appraisal business that includes New York, New Jersey, Connecticut and Florida.

Thats about 4x the number I have personally appraised since 1986 (in 5 more years).

Now thats time management!


Tags: , ,


Crains New York Business Economic Spotlight Chart – May 2007

May 21, 2007 | 12:01 am | | Charts |

Since 2003 I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.

Source: Crain’s New York Business


Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.


Tags:


Badge of Irony: HALTing Appraisal Pressure Despite Ghost In The Machine

May 19, 2007 | 4:54 pm | |

New York State joins the post-housing boom mortgage clean-up effort and tries to learn more about the ghost in the machine. The machine being the lending industry and yet the government seems to know so little about it. This is ironic because fraud appears to have been blatantly prevalent (It ain’t just subprime) for many years. And although mortgage fraud is a significant problem, the cumulative effect of “little white lies” that are engrained into the system will be the most difficult to undo, detect or prove. You know, the things that are commonly done so much that eventually no one realizes that they are illegal or unethical?

New York state Governor Eliot Spitzer announced creation of a new interagency task force with the neat acronym (an important element of government culture): HALT (Halt Abusive Lending Transactions) that:

is designed to help the public handle questionable lending practices in the subprime market, and to make it easier for low-income families to buy new homes.

A Political Fine Line
Any government agency walks a fine political line when trying to reign in subprime lending because on one hand, the government can shut low-income families from access to funds to purchase new homes by being too tough, and on the other hand, low-income families will continue to get hurt if government does nothing and the abusive tactics continue. This week, Fed Chair Bernanke addressed the subprime issue and seemed to take a laissez-fare position on fixing the subprime mess.

There was a “Debtor Nation: The Mortgage Mess” special on CNN/Paula Zahn Now show last night that included real estate editor Gerri Willis. One of the facts mentioned was the statistic reported by Bankrate.com that 34% of loan applicants don’t know what type of mortgage product they have on their house. Amazing. No wonder the scope of the mortgage problem is so widespread. I am not downplaying the mortgage problem in any way, but at some point, people need to take some responsibility for their actions (assuming they are not misled).

The first overt action taken from this task force was announced yesterday:

Attorney General Andrew Cuomo issued a subpoena to Manhattan appraiser Mitchell, Maxwell & Jackson Inc., the company said. Manhattan Mortgage Co., a [mortgage] broker, also received a subpoena, Chief Executive Officer Melissa Cohn said.

I have known Jeff Jackson and Steve Knobel of Mitchell, Maxwell & Jackson (MMJ) professionally since they founded their firm in 1991 (my firm started in 1986). MMJ is my primary competitor. In addition, our firm has done work for mortgage broker Melissa Cohn, founder of Manhattan Mortgage on and off, but very little in recent years.

Here’s another irony:

I am pretty confident that Mitchell, Maxwell and Jackson (MMJ) as well as Manhattan Mortgage do very little, if any subprime work. Manhattan and the surrounding region have a relatively low concentration of subprime lending activity and these firms aren’t known for this type of work.

I am sure the AG’s office know these two firms are not orientated towards subprime, so this effort must be largely directed at the issue of appraisal pressure and not subprime lending.

Here’s how the MMJ responded to the media:

Y. David Scharf, an attorney at New York law firm Morrison Cohen LLP, who is representing Mitchell, Maxwell & Jackson, said his client has been told it’s not a target of the investigation.

The information that is being requested is whether or not pressure has been brought to bear on appraisers to change their appraisals,” Scharf said. The firm is “continuing to gather information” in response to the subpoena, he said.

We did not change appraisals in any circumstances,” he said.

I thought the closing quote by Jeff Jackson in the Crain’s article was particularly interesting.

Because we are a large company were not as easily pressured as a small company might be.

This phrasing seems to infer that the smaller an appraisal firm is, the more unethical it has the potential to become. I believe that size is not a proxy for insulation from pressure. Sure, a small firm can be pressured by small clients, whereas a larger firm is less likely to react to that type of pressure. I think that’s what Jeff was referring to and I agree with that example.

However, a large mortgage broker can inflict significant pressure on a large appraisal firm. Get the appraiser addicted to high volume and the potential to be influenced is just as significant. Small and large appraisal firms, like firms in any other industry, are always concerned about covering their overhead.

Every appraisal firm who does mortgage work, no matter what their size, is vulnerable to significant appraisal pressure.

The issue of appraisal pressure is why I got into blogging in the first place and started the appraiser blog Soapbox before I got the idea for Matrix. I can work up a good rant about the appraisal pressure issue with very little effort at a moment’s notice. One of my personal goals in life is to speak about appraisal pressure before Congress to explain what the problem is and how to solve it. Many of these ideas have been fleshed out in both of my blogs already. Of course, at the rate this is going, I may get my chance. I’ll keep my fingers crossed.

but I digress…

An edited down version of the Bloomberg wire story also ran in the New York Times today.

I was contacted by Bloomberg for the story to ask whether we too were issued a subpoena.

Other appraisers — Miller Samuel Inc. and the Vanderbilt Appraisal Company, competitors of Mitchell, Maxwell & Jackson — said they had not received subpoenas.

A quote of mine was left out of the New York Times version of the Bloomberg story – sort of an overview of the state of affairs in the appraisal industry:

Appraisers frequently face pressure to revise their findings, said Jonathan Miller, president of Miller Samuel.

“I would seriously doubt that there is one appraiser in the United States that has not been on more than one occasion pressured to make a number,” Miller said.

In a study conducted last year by Richfield, Ohio-based October Research Corp., 90 percent of appraisers said they felt influenced to write bogus appraisals. Four years ago, that number was 55 percent. Seventy-one percent said mortgage brokers asked them to do it.

I’d say the October Research report results were on the conservative side because I think the idea of appraisal pressure is so commonplace, its become invisible. Here’s a typical example:

Mortgage Broker XYZ hires my firm to appraise a property for a cash-out refinance. I estimate the market value but its not high enough to make the deal work. The value is reasonable but the property owner needs more. The deal dies and the mortgage broker simply never uses my firm again. This incident is a one-time situation but it exists in perpetuity because that mortgage broker learned from the experience and only selects appraisers who “play ball.”

Another irony in these situations, is that we have had owners or top producers at mortgage firms that don’t use us regularly, recommend or use us when it impacts them personally such as for a divorce, an estate, a complex deal, a lender who requires them to use us, a friend thinking about buying a property, etc. In other words, when incentivized to obtain a reasonable estimate market value, we get the call.

A Badge of Honor
I have spent a large portion of my professional appraisal career steering clear or getting rid of clients that pressure us. Don’t get me wrong. There are clients that don’t pressure us at all. Those clients are the keepers. I have worn this effort as a badge of honor. However, that badge of honor is bad for business and has cost myself and my family in significant economic terms during my career. I could triple the size of my firm tomorrow if removed that badge.

But that’s for another rant…


Tags: , , , , ,


Book ’em Dano: Real Estate Reading List+

May 10, 2007 | 7:50 am | |

With 4 kids, 3 businesses, the Yankees and a lot of things going on in between, I still wonder why I haven’t been reading as many books as I used to. My wife is a voracious book reader, but over the past few years, I haven’t kept pace.

I took on this self-loathing view point after attending Daniel Gross‘ book launch last night for Pop! Why bubbles are good for the economy. I spoke with him at his book launch party last night as well as met Barry Ritholtz, who, along with Dan, are among the smartest and most acessible writers and interpreters of economics out there.

I read a large portion of Dan’s new book on my train commute home. Really good…enjoyable. When I got home, I decided to take a look at my magazine and newspaper subscription list and I realized how large it has become. To examine my list…

I am not including papers I pick up for my commute home including the NY Post, NY Sun, NY Daily News or Newsday, or count copies of Metro or AM New York for the subway.

I am not includimg the 119 rss feeds coming into my bloglines account, the email blasts I subscribe to, nor the sites like Slate, Salon, CNN/Money, Curbed, TheStreet.com, Inman, WashingtonPost.com, SFGate.com (SF Chronicle), Bankrate.com, PIMCO, Forbes.com, Seeking Alpha and quite a few others I like to check in with every day.

Now there are a few on the list that are simply impossible to read everything or I choose not to (namely the New Yorker and The Economist because they are weekly and chock full of stories although I admit I look at every cartoon in the New Yorker.) I definitely don’t read all of these publications front to back. I included non-real estate subscriptions because, well, you never know.

Its apparent that anyone can get so involved in reading news, it could become a full time job. Where’s Evelyn Wood when I need her?

I feel like a sieve, with a slew of these publications going through my brain and the parts that stick, end up in my blog and in my understanding of the real estate market, the economy, and of course, make intelligent picks for next year’s March Madness tourney.

I suspect I am missing a few but don’t have time to check…too many to things to read. Here are the subscriptions I can think of and these are in no particular order.

new york times
wall street journal
barrons
financial times
new yorker
city journal
new york observer
crains
the economist
new york magazine
new york living
time out new york
the real deal
sports illustrated
portfolio
wired
hemmings muscle car
excellence (porsche)
panorama (porsche)
businessweek
american banker
valuation review
real estate weekly
yankees magazine
2 local weekly newspapers

The quantity has cut into my book reading time, that’s for sure. Its a good thing I have invented more time in the day (no time to explain). Suggestions for additions are welcome (no lesson learned from this exercise).

Hey did you hear about that new magazine that came out the other day….?

UPDATE: Here’s a few I forgot to mention:
rolling stone
haute living
new york home
appraisal today
real estate valuation magazine
appraisal journal


Tags: , , , ,


1Q 2007 Long Island/Queens Market Overview Available For Download

April 23, 2007 | 12:03 am | | Public |

The PDF version of the 1Q 2007 Long Island/Queens Market Overview [Miller Samuel] that I write for Prudential Douglas Elliman [PDE] is available for download. We just introduced this study series in 2006.

You can see the methodology that went into the report.

You can also build your own custom data tables using the aggregate report data (from 2Q 2003 through 1Q 2007). I have created a series of quarterly market charts that may be of interest as well.

_An excerpt_

…Overall price indicators showed weakness this quarter particularly at the higher end of the market. Overall median sales price showed relative stability as compared to the same period last year while average sales price showed a modest decline. Inventory levels are expected to level off as seasonal demand increases the number of sales. Current inventory levels remain below those seen in the second and third quarters of last year. However, the number of sales for the quarter is the lowest seen in three years suggesting a lower intensity of sales activity this spring, even when seasonally adjusted….

Download report: 1Q 2007 Long Island/Queens Market Overview [pdf]

Here’s the media coverage for the study. I think I got most of them. Normally I would have covered this the day of publication last week but if you remember, I was kind of in Seine.

Here’s the recap:

Bloomberg News
The Real Deal
New York Observer
Newsday
Crain’s New York

WPIX CW11
Bloomberg Television – In Focus

Bloomberg Radio
Bloomberg Radio


Tags: ,


Crains New York Business Economic Spotlight Chart – April 2007

April 23, 2007 | 12:01 am | | Charts |

Since 2003 I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.

Source: Crain’s New York Business


Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.

As an added bonus (to me, actually, ’cause I am in it), there is an interesting article in Crain’s on how NYC currently has the edge over the outlying suburbs.


Tags:


Crains New York Business Economic Spotlight Chart – March 2007

March 19, 2007 | 12:01 am | | Charts |

Since 2003 I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.

Source: Crain’s New York Business


Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.


Tags:


Crains New York Business Economic Spotlight Chart – February 2007

February 19, 2007 | 12:01 am | | Charts |

Since 2003 I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.

Source: Crain’s New York Business


Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.


Tags:


Crains New York Business Economic Spotlight Chart – January 2007

January 22, 2007 | 10:41 am | | Charts |

Since 2003 I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.

Source: Crain’s New York Business


Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.


Tags:

Get Weekly Insights and Research

Housing Notes by Jonathan Miller

Receive Jonathan Miller's 'Housing Notes' and get regular market insights, the market report series for Douglas Elliman Real Estate as well as interviews, columns, blog posts and other content.

Follow Jonathan on Twitter

#Housing analyst, #realestate, #appraiser, podcaster/blogger, non-economist, Miller Samuel CEO, family man, maker of snow and lobster fisherman (order varies)
NYC CT Hamptons DC Miami LA Aspen
millersamuel.com/housing-notes
Joined October 2007