March 22, 2019

Bowling for Housing Tax Revenue At Your Pied-a-Terre

I’m making a few stops in the midwest this week so I found it difficult to sit down and write these Housing Notes this week. I presented a single topic that is a potential bombshell to the New York City real estate market – in a bad way, not just for the wealthy, but for the typical citizen and their public transportation. Even if you don’t live or work in New York City, this is an important example of proposing a new tax and not considering human behavior. And the patently false thinking that the wealthier you are, the less you care about taxes. In the case of this NYC pied-a-terre tax proposal, the net taxes generated from this proposal may end up being far less than the current revenue streams currently enjoyed.

Understanding tax policy is like understanding how the bowling pins are reset (something I do once every several years…bowling, not resetting pins). It’s a lot more complicated under the hood.


But I digress…

The Proposed NYC “Pied-A-Terre Tax” Looks Catastrophic to NYC Real Estate

An earlier version of this post appeared in my weekly Housing Notes, March 15, 2019 edition. I’ve since added more information and insights as the situation unfolds.

This proposed “pied-a-terre” tax law has a name that infers it concerns “pied-a-terres” when in fact that property type is but one part of the property types that are impacted. I’m sorry about the length of this piece but please read on.

The New York political zeitgeist was recently and suddenly tilted against luxury development in New York City. If this latest turn of events plays out as written, we’ll be able to look back at this era as a milestone where the supertanker began to turn in the wrong direction for the new development industry.

The White Paper That Started It All

The Fiscal Policy Institute proposed the tax in 2014, and it has been floating around Albany ever since. At the opposite end of the spectrum, the fiscally conservative Citizens Budget Commission described the tax as appealing but problematic:

Gov. Andrew Cuomo’s office suggested last week that such a levy might reap $9 billion for the moribund Metropolitan Transportation Authority over the next decade and Assembly Speaker Carl Heastie reiterated his chamber’s support proposal at a Crain’s breakfast forum days later. Mayor Bill de Blasio gave it his blessing as well.

In the original 2014 proposal by the Fiscal Policy Institute, the first item in the proposal is off to a bad start as they describe what happened in the market:

These owners bid up the price of NYC residential real estate, and since they don’t spend much time in these units, contribute little to the local economy compared to full-time residents.

Wrong. A large swath of high-end condo market activity of the past five years are non-primary residences which include pied-a-terres but most are investor purchases that are subsequently rented after the unit closes when construction was completed. The majority of new development units purchased as non-primary were rented out which is why the high-end rental market was crushed by all the new development condo sales by investors. Renters in these units do spend and help drive the local economy. Manhattan is about 75% rental by unit and New York City is about 2/3 rental by unit. It is therefore clear that renters drive a large swath of the NYC economy. Why would renters of high-end apartments be any different than all renters? They eat, sleep, work, and consume. FPI’s apparent belief that most of the high-end development sold ended up as empty pied-a-terres while wealthy buyers bid up the prices is incorrect. This position seems to be derived from one of only two references cited in the FPI white paper, a fun New York Magazine cover story by Andrew Rice. That article came out in 2014 right as the housing market was peaking. The strengthening dollar was cooling demand via international currency plays and the sight of cranes rising everywhere told buyers that an oversupply was here (that still exists today with over 6 years of excess new development product. I was one of the resources for Andrew Rice’s piece and here I explain what happened leading up to the 2014 condition which I later dubbed “Peak Luxury” and “Peak New Development”.

Much of this speculation is being driven by two factors: sparse supply, due to the absorption of the inventory left over from the last boom, and fast-rising prices. Manhattan saw a 30 percent price increase over the past year, on average, which market analyst Jonathan Miller attributes primarily to sales closing in ultraluxury buildings. The highest end of the market has seen stunning inflation.

In other words, the 30 percent price rise wasn’t a “bid up” by wealthy buyers; it was a massive shift in the type of housing stock that was being created and sold. New building materials and engineering enabled 100 story buildings instead of 50 story buildings. Landowners factored this into land prices since many buildings above the 50th floor had expansive open views and (not enough) buyers were willing to pay for it. Prices rose significantly in lower-priced segments (below $5 million) because supply was static and no match for a rising population and the city’s record job growth.

Developers are in the business of developing, and land prices remained high after the housing bubble burst a decade ago because of the large amount of money that was flooding into development. Central banks worldwide pressed rates to zero, creating an army of global investors chasing higher returns. To keep developing despite all this new capital, developers had to build what land prices required, high-end real estate. Developers would create affordable housing if it realized a higher return on the risk they take on. While it has always been difficult and expensive to build in New York City, the post-financial crisis was especially challenging with heavy competition for labor, materials, and land, exacerbated by free-flowing global capital in a low-interest-rate world.

Now the buyers of this real estate, who committed to New York City, are being punished by this new tax, the result of which will damage the city’s global brand that took 25 years to evolve. Why? Because a white paper with only two reference citations, one of which was a magazine article on a small niche of super-tall buildings, was the basis. I am also concerned that the paper did not address the change in consumer behavior when such taxes would be implemented. Why would they push to implement a new tax when it raises the probability that existing tax revenues will fall? To get specific here’s what happened after this article was written. The building known as One57 on the cover of the cited New York Magazine story – 5 years later and after 8 years on the market is 25% unsold and resale activity (the same unit purchased from the sponsor and then sold again) shows as much as a 30% drop in prices since this article was written.

This drop is why I think that the implementation of this new tax as written will be catastrophic to the market, potentially causing it to seize up. As a result, the city would see a significant drop in transfer tax and other associated revenues before considering the new tax. Hit a declining market with more than 6 years of excess supply with a new high tax out of the blue and watch what happens.

The Political Timeline

The shift in New York State and New York City government sentiment against real estate development began with the following recent events:

The proposed law is in each New York State Albany chamber right now and although they have different introduction dates of January 9, 2019 (Senate) and February 4, 2019 (Assembly) they look the same.

The New York State Assembly version: Assembly Bill A4540 or in this format.

The New York State Senate version: Senate Bill S44 or in this format.

The bills are short on details and are currently in committee, wide open for interpretation. As written, the bill is both sweeping and ominous to the real estate industry in New York City, and I expect it will result in less overall tax revenue to the city than currently enjoyed. I’ll get into that further on.

How this proposed S44/A4540 tax seems to work

I am not a tax advisor, and anything I say here should not be relied on, and you should seek appropriate counsel. Seriously. I am merely interpreting what I think are the critical issues established this proposed tax.

  • This tax directed is specifically at New York City because it is designated for cities in the state with populations of more than 1 million. As evidenced by the 2010 census data in Wikipedia, there is a significant population difference between New York City and Buffalo.

You probably think of the market value of your co-op or condo as the price you could sell it for on the open market. However, State law requires us to value residential cooperative and condominium buildings as if they were rental apartment buildings. This means that we look at the income and expense statements of rental buildings that have similar characteristics to determine your condo or co-op buildings market value.

  • It taxes residential properties valued at $5 million and above in NYC, most of which are in Manhattan.
    • And it is a marginal rate tax – only the amount above each threshold is taxed.


    • And it is a property tax which means it will be paid annually, not just upon sale like the Mansion tax. Here is how consumer behavior is impacted by the $1 million threshold of the New York State “Mansion” tax. I did this a while ago, and the pattern still exists. As an annual property tax, the dollar thresholds will be more firm.

  • The tax is not really about pied-a-terres. It is a tax on non-primary residences as written.

Therefore it should apply to investor units and LLCs.

I don’t think it is unreasonable to assume that the language of the bill infers that LLCs could be interpreted as “non-primary residences” even if they are used for primary residences since New York State defines LLCs: An LLC is an unincorporated business organization made up of one or more persons. That definition does not sound like a primary residence to me.

Although the working title of the proposed tax is “pied-a-terre” there is no mention of this particular use in the Senate or Assembly tax bills. They specifically refer to “non-primary residences” so that would include other uses like investor units and possibly LLCs (possibly even those used as primary residences). It’s all still up in the air at this point.

From the New York Times article of March 11, 2019: Lawmakers Support ‘Pied-à-Terre’ Tax on Multimillion-Dollar Second Homes

In 2017, New York City had 75,000 pieds-à-terre, up from 55,000 such units since 2014, according to the New York City Housing and Vacancy Survey. The share of vacant apartments that are classified as pieds-à-terre has held steady during that time at about 30 percent.

From the New York Times article of October 26, 2014: Pied-à-Neighborhood

“If you said you are going to impose a special surcharge on apartments that are worth more than $20 million, that would be perfectly legal,” said Peter L. Faber, a partner at McDermott Will & Emery. “But the problem comes when you start imposing a special tax on nonresidents. That is unconstitutional under the interstate commerce clause.”
The current revenue estimation appears overstated by nearly a third

The bill’s sponsor, New York State Senator Brad Hoylman said:

There are only 5,400 units in New York above $5 million that are owned by non-residents.

For the year 2018 my ACRIS search yielded 952 residential single units sales (1-3 family, co-ops, condos) above the $5 million threshold (1,188 in 2016 and 1,173 in 2017).


I will assume that the Senator included all the apparent nuances within the 5,400 count for the entire NYC housing stock (pied-a-terres, investor units, LLC-owned primary and non-primary residences).

I projected this mix of sales as proportional to the 5,400 units impacted by the new law to break out the tax revenue calculations, understanding the 2018 sales included both primary and non-primary residential uses.


[click to expand]

From the New York Times article of March 11, 2019: Lawmakers Support ‘Pied-à-Terre’ Tax on Multimillion-Dollar Second Homes

It was not immediately clear how much money the tax would raise; the office of the city comptroller, Scott M. Stringer, estimated that a pied-à-terre tax would bring in a minimum of $650 million annually if enacted today. And based on the expected revenue stream, Mr. Cuomo estimated that the state could then raise $9 billion in bonds, backed by the expected taxes paid by pied-à-terre owners.

Based on my calculations, the tax-impacted housing stock would yield tax revenue of roughly $455,000,000 which is about 30% below the $650,000,000 estimate assuming this new tax would not impact any current consumer behavior of the wealthy who would be affected by the tax… which is a GIANT assumption that is patently not true.

Impact to Housing Prices

Using the median sales price of each price traunche set up in the bill, and assuming a 5% discount rate and the median tax for each traunche and a 10 year holding period, the adverse impact to value rises in each higher traunche.

I’ve added 20-year and 30-year holding period versions using the same variables. I started out using the 10-year as a placeholder for the brokerage industry’s default assumption of 7 years for homeownership but then added 3 more years to account for the current market slide. The 20 and 30-year holding periods assumptions might be more realistic given the long term view of investors after the decline in prices of the past several years and the phenomenon of capital preservation in this latest development frenzy since 2012. If that’s the case, properties valued at $25 million or higher might lose 30% of their value overnight…not factoring in a market pause or even collapse in sales until the terms are ironed out. That period of uncertainty starts now through July 1, 2020.


[click to expand]

More New Yorkers Will Leave The City

From the New York Times article of March 11, 2019: Lawmakers Support ‘Pied-à-Terre’ Tax on Multimillion-Dollar Second Homes

Moses Gates, a vice president at the Regional Plan Association, disputed the notion that New Yorkers would leave the city. The association believes that most wealthy pied-à-terre owners would pay the tax. If they chose to sell, then the property has the chance of being purchased by a full-time city resident, who would then be subject to income and sales tax.

It is already happening. His assumption does not take into consideration the new federal tax law enacted on January 1, 2018, that was especially punishing the wealthy real estate property owners that were already considering moving their domicile to a low tax state like Florida. The wealthy who already were on the fence before the new law are now beginning to make their moves. You can see this happening in Florida right now. New Yorkers are the new foreign buyer there. This proposed pied-a-terre tax piles on to the fresh new federal taxes just served to wealthy property owners in NYC metro last year, and sales were already slowing.

Taxing Wealthy Property Owners Around the World

The trend of raising tax revenue on real estate of the wealthy is gaining momentum worldwide. New York City had the distinction of being one of the few major global cities that have not implemented taxes that are openly hostile to foreign buyers or investors. Here is what some countries are doing to tax these buyers and it is slowing sales.

From the New York Times article of February 9, 2019:

Large cities around the world have been grappling with how to make wealthy absentee property owners pay for the privilege of owning secondary residences, a recent report from the Real Estate Institute of British Columbia shows. Sydney, Paris, and London have all recently added or increased taxes on the purchase of secondary homes.

In Hong Kong, nonpermanent residents pay a 15 percent fee on the value of the home, and foreigners pay an additional 15 percent fee. Singapore has restrictions on the purchase of residential property by foreigners and a 15 percent tax. In Denmark, foreigners are required to obtain permission from the government to purchase secondary homes.

In Vancouver, where the greatest concentration of vacant properties is downtown, owners of empty residential properties are charged a 1 percent tax based on the assessed value.
Why Senate Bill S44/Assembly Bill A4540 Will Not Achieve Its Intended Goal As Found Money for MTA Improvements
  • This bill may obliterate future transfer tax revenue from real estate activity and could result in lower net receipts from the real estate sector in the aftermath. The 2014 whitepaper doesn’t consider this but instead presents the tax in a vacuum as if market forces don’t respond.
  • New York City is one of the last “international cities” that is not hostile to foreign buyers and real estate investors
  • The new tax is targeted to condo development since there are few co-op and townhouse non-primary units over $5M
  • The new tax will crush new development activity because land prices will take years, maybe even more than a decade to reset to levels that will support new affordable housing because landowners take long-term buy and hold positions
  • This tax could destroy any progress made with inclusionary zoning to create more affordable housing
  • This tax will not create more affordable housing
  • The idea of the building of “bank safety deposit boxes in the sky” and saying pied-a-terre owners don’t spend money in the city is misleading. Most of the taxed units have occupants that do just that. Many non-primary residences are occupied with renters and those occupants spend money on a daily basis. The actual pied-a-terre segment is a subset of non-primary residences
  • Aspects of this bill might be illegal such as the disconnect in valuation methods to calculate property taxes versus this new tax – state law requires co-op/condos to be valued as income properties and this new law wants the sales comparison approach
  • Luxury real estate buyers do not ignore new taxes as is commonly pontificated. That never happens and I’m not sure where that form of conventional wisdom came from. As such there will be substantial damage to high-end property values going forward, perhaps as much as 30% if not more than that. With the news of this new tax, we expose the market to a panic selloff as existing owners look to take their lumps and get out as new sales pause.
  • The damage to the housing market above the $5 million threshold will not be contained and will likely melt into the layers below it as market stigma expands.
  • The suburban markets, as key competitors to NYC in the immediate area, may actually benefit within their respective high-end markets as NYCs brand damage and new tax may incentivize city buyers to look closer at alternatives in NYC suburban metro as well low-cost areas such as Florida.
Pausing the Market While Politicking

At a bare minimum, the guaranteed uncertainty of the bill’s final form from April 1, 2019 when it is enacted and July 1, 2020 when it is implemented, will help “pause” sales starting now. Sales at the top of the market will slow further than they already have. This uncertainty will have a significant impact on market participants as they wait for Albany to sort this out and will play a significant roll in impacting transfer tax revenue as the market cools further.

There is a strong political appetite for this to be part of the budget. I can only imagine the heavy volume of lobbying and litigation activity to occur between now and July 1, 2020. There is a need/hunger for more revenue by the governor and the mayor for the MTA – which will include a lot of lobbying and litigation since everyone wants a piece of this. Unfortunately, the Real Estate Board of New York does not have clout in Albany political circles but they appear to be working hard to reduce the damage this bill will cause to new development (with a by-product of reducing the loss of existing tax revenues). Whatever happens to this bill, it will probably damage the credibility of the bill’s author, the Fiscal Policy Institute who will learn that market forces do matter and policy should never be considered in a vacuum.

On a positive note, present circumstances included, the impact of this tax bill is so over the top and disconnected from market forces that I would expect the lawsuits and negotiation to be significant and improve the odds this bill will be converted into something less catastrophic. The Senator who is sponsoring this has seemed to suggest this in interviews.

History Fades and so do Lessons Learned

Remember the 1970s version of New York City? The success the city is enjoying now was the result of 25 years of proactive management of city spending and branding efforts. Besides record tourism, real estate activity has been revitalized and that has brought billions of dollars to the city coffers. The introduction of this new tax law ignores human behavior and assumes the tax revenues will rise as if market forces don’t exist. The wealthy will not shrug off these heavy new costs. They will simply go elsewhere. New real estate taxes, especially significant ones, change consumer behavior almost immediately.

If the objective is to punish the high-end housing market and the development community, then this bill will do that. If the objective is to generate new tax revenue for MTA, it won’t. In fact, I believe it will cannibalize existing related tax revenue streams after all the mayhem it causes to the new development industry.

Let’s hope economically informed voices are able to make themselves heard during this process.

I’ll be providing additional insights on this important and developing issue in my weekly Housing Notes. You can sign up for free right here.

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

On hiatus somewhere in the midwest this week while simultaneously writing appraisal reports.

OFT (One Final Thought)

After the stress of reading the proposed tax law, consider watching this to calm down.


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 like wasabi;
  • You’ll be more marginally taxed;
  • And I’ll continue to follow this new tax proposal.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

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March 15, 2019

Housing Changes That Are Hard To Dance To

This has been an incredible, if not a surreal week for those housing market professionals in New York City. It’s as if old ideas are being covered with new clothes. What would Judy Garland think?

Original

New Interpretation


And many other versions.

But I digress…

Elliman Report Released: February 2019 – Manhattan, Brooklyn & Queens Rentals

I’ve been the author of the expanding Elliman Report series since 1994 for Douglas Elliman Real Estate. This week’s release known as the Elliman Report: Manhattan, Brooklyn & Queens Rentals 2-2019 is the only monthly version of our series.

As it turns out, the slow down in sales is helping the rental market as more would-be buyers are “camping out” in rentals until they are comfortable with sales conditions.

Bloomberg news covered the report with a chart, which always makes life worth living:


Here are some key points I made about each of the three boroughs and have included a few of our related charts:

MANHATTAN

“Landlords were better able to retain tenants as the sales market slowdown continued to drive rents higher.”

– Landlord concession market share falls year over year for the second straight month after rising for forty-three.
– Net effective median rent rose for the second consecutive month
– Number of new leases fell year over year for the fourth straight month
– Non-doorman median rent outperformed doorman median rent for the second time in seven months
– New development median rent rose annually for the fourth straight month and outpaced existing median rent gains
– Market share of leases above $10 thousand was second highest in nearly six and a half years

BROOKLYN

“Rising use of the rental market by would-be buyers to ‘camp-out’ until they are comfortable with purchase market conditions.”

– Net effective median rent rose year over year for the third straight month
– Concessions market share declined year over year for the second consecutive month after thirty-five months of increases
– Upward price pressure remained strong in the starter market

NW QUEENS

“The market optimism that developed before the Amazon HQ2 decision to withdraw mid-month was largely offset in the second half of the month.”

– Net effective median rent fell year over year for the first time in four months
– Market share of concessions rose year over year at a diminishing rate for the past six months
– New leases fell year over year for the first time in seven months

The Proposed NYC “Pied-A-Terre Tax” Could Be Catastrophic to NYC Real Estate

The New York political zeitgeist was recently reset towards anti-luxury development. The shift began with the following recent events:

Timeline

Here’s the Senate bill S44 or this format. It is short on details and is both wide-sweeping and ominous to the real estate industry.

How this proposed S44 tax seems work

But I am not a tax advisor and this is not a law yet. Please seek appropriate counsel first. I am simply interpreting what I think is the points made in Senate Bill S44.

  • The tax has NOTHING to do with pied-a-terres. It is a tax on non-primary residences as written. Therefore it should apply to investor units as well.
  • It is a property tax – will be paid annually, not just upon sale
  • It is a marginal rate tax – only the amount above each threshold is taxed
  • It taxes residential properties valued at $5 million and above in NYC, most of which are in Manhattan

VERY CONCERNING I am very curious whether LLCs could be interpreted as “non primary residences” even if they are used for primary residences since New York State defines LLCs as: An LLC is an unincorporated business organization made up of one or more persons.

Why Senate Bill S44 is So Bad For NYC
  • New York City is one of the last “international cities” that is not hostile to foreign buyers and real estate investors
  • It is targeted to condo development since there are few co-op and townhouse non-primary units over $5M
  • It will crush new, new development activity because land prices will take years, maybe more than a decade to reset to levels that will support new affordable housing because landowners take long-term buy and hold positions.
  • This could destroy any progress made with inclusionary zoning to create more affordable housing
  • This will obliterate future transfer tax revenue from real estate activity and could very well result in lower net receipts from the real estate sector than if this tax were not enacted. The 2014 whitepaper doesn’t provide this but rather presents it in a vacuum as if market forces don’t respond.
  • Substantial damage to high-end property values. Existing owners could panic sell. Luxury real estate buyers do not simply absorb new taxes as is commonly thought. They modify their purchase behavior and go elsewhere.

This new law, which seems likely to be passed in the current environment and embedded into the budget, will become effective on July 1, 2020. I can only imagine the lobbying and litigation activity between now and then. There is a need/hunger for more revenue by the governor and the mayor for the MTA.

Hudson Yards: Yea or Nay?

Since the 1970s as Penn Central was going bankrupt, ideas to create something useful with the railyards began and the Hudson Yards concept formally in the early 2000s. Hudson Yards has been an expensive endeavor and it officially opened this week to much fanfare and media coverage against the backdrop of the Amazon HQ2 disconnect. The project is spectacular and it comes online at a time where high-end development is being challenged within the political realm.

Here are two differing views from two people I know in the media that always have thoughtful things to say, wade into the debate about the development. They are short clips and each are worth a listen.

Yay: Greg David, Columnist for Crain’s New York Business”

WNYC Money Talking Podcast – listen to segment.

Nay: Justin Davidson, New York Magazine architecture critic:

Bloomberg TV 3-11-19: The Malling of Hudson Yards

For the record, this is the first time I recall using the word “cognizant” on national television. A personal lexicon triumph.

There has been a lot of fanfare about the new Related Companies ‘Hudson Yards‘ mixed-use development being created over the West Side Yard in Manhattan and is connected to ‘The Highline.‘ The centerpiece or “hook” is a $2 billion mall in the middle of the complex. While ‘malls’ are generally a non-starter in Manhattan, there is a successful precedent. The same developer built Time Warner Center at Columbus Circle (southwest corner of Central Park) nearly twenty years ago and it was considered a significant success. I used to live two blocks to the west of Time Warner Center and it was a pretty rough area at the time but that submarket has been significantly upgraded.

Related has pushed out a media blitz on the mall opening this week. It is important to note that NYC gave Hudson Yards more tax breaks than were proposed for Amazon in Long Island City. However, as Barry Ritholtz writes in his excellent comparison between the two deals (LIC v. Hudson Yards) offered by the city. Related seemed to do this deal right and Amazon came across as greedy in the end.

The $3.4 billion dollars committed to parks, subways, etc. in the Hudson Yard project is exactly what the government is supposed to do. You can create incentives for companies to relocate in a way that directly benefits every taxpayer in the region. The incoming company could have burnished their reputation as a good corporate citizen, instead of being perceived as rapacious and greedy.

Here is a rendering of the completed Hudson Yards. I think it looks spectacular. And don’t forget ‘The Vessel.


[Source: DeZeen]

Teachable moment for condo development naming strategies that include a company: Don’t do it.

The Time Warner precedent-setting mall scenario included a condo offering plan circa 2000 named “AOL Time Warner Center” and then the project was renamed “Time Warner Center” after they sold off AOL (Someone named Jonathan Miller took over AOL strangely enough). Deutsche Bank is replacing Warner Media as the anchor tenant in 2021 so the project will be renamed for the new tenant. However, Deutsche Bank has been having its share of financial problems and is considering a merger with Commerzbank. Uh-oh.

Perhaps that’s why Related went with ‘Hudson Yards.’ 😉

Getting Graphic


Favorite charts of the week of our own making

Len Kiefer Chart Magic

I continue to be mesmerized by Len Kiefer‘s chart making skills. Len has no peer.

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

But We Have AVMs, So Why Get An Appraisal?

But it’s new construction, why get an appraisal? This is the current zeigeist of the regulatory agencies that oversee the mortgage process. How quickly we forget.

California’s Bureau of Real Estate Appraisers Warns Consumers About Restricted Appraisal Reports

The Appraisal Insitute-pushed SB-70 law I talked about a while back has been in effect since January 1, 2019 and expires December 31, 2019. I just checked back in since it went into effect and was shocked to see this warning on the California’s Bureau of Real Estate Appraisers web site say this:

The real estate appraisal process concludes with the appraiser’s opinion of value. Development of an appraisal includes the gathering of facts and evidence, using recognized methods and techniques of analysis, and applying reasoning and judgement. An Appraisal Report is a summary communication of this process and includes the data, relevant evidence, and an explanation of the reasoning and judgement used to support a credible value opinion.

As a stand-alone document an Appraisal Report can be read and understood by users and be the subject of an Appraisal Review by other appraisers. The Appraisal Reviewer’s role is often an essential part of the business process to establish a level of confidence in an appraisal, given the wide variety of skills, knowledge and experience existing among appraisers.

A new law recently enacted in California makes changes to the reporting requirements for licensed appraisers. During 2019 Licensed Appraisers can for the first time provide broadly circulated brief reports for users other than the client; reports that do not summarize the data, evidence, or reasoning used to develop the value opinion. Similar brief reports labeled for users other than a client could previously only be prepared by un-licensed appraisers.

These reports are known as Restricted Appraisal Reports and do not contain sufficient information to be read and understood as a stand-alone document. Restricted Appraisal Reports may not contain enough information for independent verification of facts, analysis or conclusions without access to important additional information.

If you, as a consumer, are considering a significant financial decision that relies upon the services of a licensed real estate appraiser in 2019, be aware that this change may affect you. The Bureau recommends that you do not rely on a Restricted Appraisal Report. Instead, ask for an Appraisal Report; a report that contains written support for the credibility of the value opinion.

In other words, the state regulator seems concerned about this law and how it exposes the most vulnerable to potential abuse – what SB70 enables. And because the safety of the consumer and the public trust was challenged it looks like they needed to issue a warning. If you want evidence on the level of damage the Appraisal Institue has caused to our industry reputation to the consumer so far, there is no need to look further. If you assume that 20%-25% of appraisals done in California are for private non-FRT (that’s another topic for discussion) such as divorces, partnerships, private loans, small carries, family notes, and other non-mortgage work, certified appraisers can do restricted appraisals without intended users and not show their work.

Here’s how it works. The entire idea of a restricted report is to be able to present something directly to your client who probably knows the property better than the person valuing it. In SB70 the report writer is required to include the following disclaimer in each restricted appraisal report, and I’m assuming the legislators could see how reckless this law is:

There may be assumptions that the appraiser has not verified that may significantly impact the appraised value of the subject of the report.


What credible, someone who can sleep at night, licensed appraiser would place their name on a report with this disclaimer? Yet the Appraisal Institute sees SB70 as an incremental win.

Draft 4 of USPAP effectively takes care of the intended user loophole on April 1 if licensed appraisers choose to do a restricted appraisal report by requiring them to include specific names rather than a class of users so if you are a certified appraiser doing these in California in 2019, I’d think twice about doing these restricted appraisal reports.

With SB70, accountability or need for a license becomes obsolete for a large swath of appraisals being completed in California. I believe this is part of the broader AI goal to remove licensing, get rid of TAF/USPAP and restore days of yore to their designation relevance. SB70 is essentially an attempt to make appraisal certifications and some bare minimum standard of qualifications obsolete for non-FRT work. AI leadership in favor of this are still reading their own press releases from the late 1970s about how important a designation is and think the consumer understands quality differences outside of the consumer’s busy personal lives. No disrespect to appraisers with hard-earned MAI and SRA designations, but in reality the organization has failed to keep the branding relevant.

The Appraisal Institute has essentially taken the position that this law makes its members competitive with a tv-repairman (no offense meant to tv-repairmen who are long obsolete) looking to make a few bucks writing restricted reports on the side. What this does in the real world is damage the meaning of “Certified Appraiser” by placing them on a level playing field with anyone writing restricted reports, i.e. pool cleaners, pet groomers, barbers, tv-repairman, nurses, or anyone who wants to do these reports on the side.

NOTE: The reason for any type of licensing is to paint a bullseye on your back – as a professional you are held to a higher standard and jump through more hoops to maintain that professional stats of which you are compensated. This is why appraisers are paid more than TV-repairman moonlighting as appraisers. Certified appraisers need to carry e&o insurance because of the likelihood of being sued and that is another reason why the market pays higher fees for professionals “you get what you pay for.” If you want some electrical work done in your house and get your unlicensed buddy to do it cheaply and illegally, you may not be aware of the potential risks such as fire and sellability later. In the case, of SB70, AI efforts are focused on taking down the difference between appraisal professionals and tv-repairmen so appraisers can get more business by being more competitive with tv-repairmen. In the quest for more appraisal volume at any cost, the cost is a lower consumer value placed on certified appraisals. This mentality has plagued our industry and was the subject of a blog post I wrote on August 9, 2005. Some of the links are broken after 14 years, but the point was made.

Speaking of bullseyes, Realtors hate the exposure this law gives them on these deals when something blows up – they will see such an appraiser as nothing but a crook. How is that for branding our industry to consumers?

The California Chapters of the Appraisal Institute are now pushing SB131 (likely without informing their members as I’m told they didn’t do with SB70) to extend SB70 for another two years.

OFT (One Final Thought)

UPDATE I forgot to to insert this video in these Housing Notes on Friday. It is a follow up of the congressional take down of the new head of the CFPB director who doesn;t understand what an APR is. Good grief.

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 be more paleo;
  • You’ll be more visual;
  • And I’ll murder my next appraisal report with excellence.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Pied-a-terre Tax Info

Appraisal Related Reads

Extra Curricular Reads


March 8, 2019

Jurassic Housing And Other Visualizations

With all the housing analytics out there, sometimes I get the urge to live in a cave (no, not a man-cave) like back in dinosaur times.


But I digress…

Downtown Brooklyn Partnership’s Five-Year Review

Like my ongoing relationship with the Downtown Alliance in Manhattan, I have started to work with the Downtown Brooklyn Partnership on their presentation of market conditions. Partnerships like this are established to promote/market the positive aspects of their particular submarket. DBP just released their five-year review and it is full of granular bits and pieces about the market, and separately, some quick facts. But first some background (from the report):

In the years following the 2004 adoption of the Downtown Brooklyn Development Plan and an area-wide rezoning of the Special Downtown Brooklyn District more than 14,000 new housing units were delivered in Downtown Brooklyn, nearly two-thirds of which were delivered during the past five years. The district’s growth has accompanied a boom in Brooklyn and NYC’s economy, with record employment and population in the borough and city.


One of the market characteristics of the last five years has been the proliferation of rentals over condos, unlike Manhattan. This and other context is captured in the following chart.


[click to open report]

Finally, Connecticut Gets Good Housing News With Nary A “Nutmeg” Reference

This is another great read by Justin Fox at Bloomberg. My only complaint as a “Nutmegger” is that the MTA train image used in the article is more likely of the type of trains that go to Westchester County, New York. But my home state gets some long overdue economic love.

Going by third-quarter state gross domestic product data that were just released, Connecticut’s economy is on track to grow more than 2 percent in 2018! That’s … not much. But it’s better growth than the state has seen in more than a decade…U.S. real GDP grew 19.1 percent over that same period. The only other states that experienced GDP declines were Louisiana (0.2 percent), Mississippi (2.1 percent) and Wyoming (5.5 percent).


GDP is trending higher…


Housing price growth is in check…


Demographics are shifting…


New York City Is Considering What Other Global Cities Already Have

Bloomberg’s New York Considers Taxing Non-Resident Owners of Luxury Apartments

One of the unique positions of New York City to global real estate investors has been the absence of a tax on foreign investors or vacant luxury units. This has been implemented in other cities such as Vancouver and the results to the local housing markets have been somewhat harsh. I bring this up because I believe such a tax will restrain sales transactions which generate significant tax revenue for the city. Combined with Fincen actions and the Tax Cuts and Jobs Act of 2017 that helped crush demand for high end real estate in high tax, high cost cities, NYC is gambling that this new tax to make up for decades of transit system neglect won’t make new development conditions worse.

And for those who think the SALT cap is going away…The SALT Cap Isn’t Going Anywhere, Right and Left Agree.

Knight Frank’s Wealth Report With A Shot of Single Malt Whiskey

Each year the Knight Frank Wealth Report is published, I pour through their wealth visualizations and wonder why I didn’t do more homework in the seventh grade. Apparently, single malt whiskey is the number one non-real estate investment this year, yet I prefer craft beer. Knight Frank is the international affiliate of Douglas Elliman Real Estate, the company for whom I have authored the expanding market report series since 1994.

Here is a Wall Street Journal story on the report results: Can the World’s Wealthiest Absorb the High-End Home Glut?

And here are a couple of favorite visualizations in the Knight Frank Wealth Report.



Another Way To Visualize Climate Change’s Impact on Housing

This art installation is fascinating.

Documentation of Installation by Pekka Niittyvirta & Timo Aho



Getting Graphic

Our favorite charts of the week


This is an oldy but a goodie. I haven’t drawn text bubbles in a while but was talking to someone about this sort of thing and showed this as a sample – I did this 5.5 years ago…


More Len Kiefer Visualizations


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Murder And Death As A Valuation Specialty

There was a fascinating read in Rolling Stone about appraiser Randall Bell and his appraisal specialty.


He doesn’t believe that bulldozing the property removes the stigma. I’d love to know what he thinks about how stigma might change with market conditions. In my own market, tight conditions seem to have negated the impact of tragedies like murder or suicide, or perhaps New Yorkers are simply more jaded. But Bell seems to have seen it all.


A Conversation with Jim Park, ASC Executive Director

Appraiser eLearning hosted an interview with Jim Park, ASC Executive Director. Jim is one of the best friends of the appraisal industry out there because he has an appraisal background and therefore understands what is going on through the same eyes as us.

Here’s the ASC credential chart that shows the national trends:


One personal question for Jim: What’s with the sword hanging over your head in the video? Is this an analogy? Ha. But seriously, good stuff and thanks for sharing your insights with the industry.


OFT (One Final Thought)


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 be more paleo;
  • You’ll be more visual;
  • And I’ll murder my next appraisal report with excellence.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
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


March 1, 2019

Building That Perfect Housing Mousetrap

We had a nice snowstorm here in Connecticut last night and the ground is covered. It was a bit surreal after spending the previous 24-hours traveling to and from Boca Raton, Florida to give a presentation. Going from 22-degree weather to 82-degree weather after a 3-hour plane ride and back was a bit disorienting. When I woke up this morning I thought, what should I do on a snow day? Luckily my friend and appraiser colleague in Chicago gave me inspiration because I did this kind of stuff as a kid (and would now if I had time):

My Sister, My Business Partner Gets Her New York Times Due

The New York Times weekend real estate section has a cover story The Boss? You’re Looking at Her: 7 Women in the Building Business and my sister Dina was one of them. I’m very proud of her. She, myself and my wife are the principals of our firm Miller Samuel we co-founded with our parents in 1986. Dina is not a public person like I seem to be but has often said her brother (me) “never met a microphone he didn’t like” which I wear as a badge of honor. Congrats to my sister for her well-deserved recognition.

One of The World’s Most Important Charts (Per Business Insider)

Business Insider reproduced a chart of mine in their own format that represents the change in the Manhattan housing market right now. It’s pretty cool if I do say so myself. With their ability to make SEO-friendly headlines, this one especially sings: Paul Krugman, Rick Rieder, and 47 of the brightest minds on Wall Street reveal the world’s most important charts [paywall]:


[click to expand]

Millennial Debt and The Economic Slowdown

Two good follows on Twitter shared some interesting charts this week:

Ben Casselman, an econ/data reporter for the New York Times had this to say about the following chart and his article:

“The economy grew at a 2.6% rate in the fourth quarter — better than economists expected, but a marked slowdown from earlier in the year. And the start of 2019 is looking even worse.”


[click to expand]

Alex Tanzi of Bloomberg news wrote a terrific article with charts partly about the next generation for housing, the millennials. While mortgages are the largest part of consumer debt, millennial mortgages are not keeping up with the prior generation. They are late to the housing party.


[click to expand]

The Superdumb Superbowl Housing Indicator

While I’m a big fan of ‘The Indicator’ podcast from Planet Money/NPR, this was an icky topic with a strong hook. Glenn Kelman of Redfin fame shared a theory, and you can see how embarrassed he is in his voice, as he attemtped to link the fate of the spring housing market to the NFL Superbowl, almost as if he had a concussion.

The discussion about the market was fine. The gimmick was super dumb. I guess the old PR saying goes, “right or wrong, just spell my name right.”

Hell’s Angels Headquarters For Sale, Crime Will Return

In the mid-1980s when I was just starting out as an appraiser, I remember inspecting a walk-up 1-bedroom apartment across the street from the biker gang’s New York digs. I asked the broker about it and heard the same narrative for years: The existence of the gang on the street made the block safer (especially in the 1980s before gentrification consumed the gritty neighborhood). The only rules were:

  • not to engage them in conversation
  • do not make eye contact with them
  • do not take any pictures of them
  • and never, never, park in front of their building

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

There is a lot of change brewing in our industry. Look for a lot more from Appraiserville in the coming weeks. Time was short this week but the following could not wait:

Support Barry Cleverdon

I do not know the appraiser Barry Cleverdon personally, there has been an outpouring from colleagues I know and respect to provide financial support to his family. As Ryan Lundquist shares on the Go Fund Me page he set up for Barry’s medical expenses:

Barry Cleverdon has over 35 years of appraisal experience in California and he’s been teaching appraisal classes since 1991. On February 5th while on his way to the REAA appraiser meeting in Sacramento he got into an accident with a large truck. After the incident he actually walked to a Walmart, called a cab, and was driven home. But he fell in his front yard and was then rushed to the hospital where he had surgery to relieve pressure on his brain. He has been in a coma since then. He is moving his limbs but not opening his eyes. He is in ICU.

Let’s show our industry support for one of our own by donating to this worthy effort and help his family. I did.

OFT (One Final Thought)

David Gilmour, my favorite member of the band Pink Floyd, plays Shine On You Crazy Diamond (Parts I–V) (In Concert) and it is a beautiful song. I broke out all my Pink Floyd music this week after an extended absence.


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 be more like my sister;
  • You’ll make an important chart;
  • And I’ll play in the snow.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
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


February 22, 2019

Waffling On The Housing Market

Cheryl & I just spent three days in Nashville visiting good friends and gaining some new friends. I was kind of checked out when it came to real estate this week, but not waffles. There were Waffle Houses seemingly everywhere Nashville, but I’ve never been to one. Although I had some excellent waffles during my stay (Thx Susan!), I’m still curious about the source of FEMA’s Waffle House Index inspiration (and my own waffle maker continues to impress.)

Manhattan’s Housing Decade As A Moving Window

As part of the expanding Elliman series of market reports, we produce a ten-year moving window on Manhattan with a slew of neighborhood breakouts. I’m going to be doing more of this in 2019 but this 57-pager should keep you busy for now.

The cover (click on the image to access entire report)


Page 4 (click the image to access entire report)


What is Zillow Up To?

Zillow had been running out of upside, having fully saturated the search revenue vertical. Raising revenue on the backs of real estate agents has its limits so they have been expanding their footprint into other businesses like mortgage and ibuyers. This hammered their stock price in 2018. They brought co-founder Rich Barton (I met him at a party on the day before Zillow launched – little did I know…) back into the CEO position to take over CEO Spencer Raskoff’s reign of incredible growth as they prepare to ramp up their efforts into new ventures.

The Basis Point has a good piece on how this will all work: Zillow just told us what the future of buying a home looks like. And it’s all about scale.

With the significant inaccuracy of their Zestimate product (50% of their Zestimates are NOT within 4.5% of the correct value and they aren’t using Zestimates for their iBuyer model?) and with regulators pushing appraisers out of the way without a replacement, with housing slowing and a non-housing recession probability gaining momentum, all bets are off for the future the housing market.

Nobody Lives Here

From cartography web site mapsbynik, a visual that is the opposite of what we would expect – where people don’t live. When I was 15, I rode my bicycle across the U.S. with what was then called Bikecentennial ’76 and the route was planned on roads with 10 cars or less per hour. I can personally attest that there is a heck of a lot of desolate areas in America.


Wrapping up NYC’s Self-Loathing About Amazon HQ2

At the end of the HQ2 debacle, the market will return to as it was before. Michael Hertzenberg of Spectrum News NY1 captures the sentiment so well. Click on image for video story.


The future of Long Island City still looks pretty bright…as long as there is community involvement.

Getting Graphic

Some of our favorite chart creations this week…

Upcoming Speaking Events

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Smedley Dingledorf Saves The Day But Hurts The Consumer As Told By Bart Simpson

One of my lifetime best friends is Bart Simpson, who is an actual person. We grew up together from elementary school through high school but went our separate geographic ways to college. My other best friend during that era of my life was Harry Benson, who was also the key character in Michael Creighton‘s early best seller, “The Terminal Man” but that’s another story. Bart taught me how to ski and how to make plexiglass cookbook holders (hey it was the 70s). We spent our weekends riding bicycles everywhere, especially into D.C. on weekends to meticulously go through each of the Smithsonian museums – you could say we were sponges of random information. There must have been something borderline addictive in the Bethesda, Maryland water because we also both turned out to be real estate appraisers. He would tell me how he would leave messages to schedule appraisal inspections as “Mr. Simpson” because his full name caused many homeowners to think it was a crank call and not call him back.

Last week I posted an interview: The Apple Peeled – Ask the Experts: Market Dynamics with Jonathan Miller and Bart had something to say about it. He gave the most coherent spot-on description of the AMC situation most appraisers find themselves dealing with daily. However, these AMCs hire many of the lobbyists that have helped forge regulatory rule changes like the recent proposal that raises the de minimus to $400,000 without any concern for the consumer (or the taxpayer). Here is his perfect depiction of AMC interactions with appraisers:


I am so fed up with the AMC’s that spend plenty of time giving me the opportunity to bid on a job (Please provide your fee and turn time) when they have not even taken the time to see that I am not licensed in that state. They just send an email to everyone within a large radius and wait for us to research it and provide a fee. Last week, I had one ask for a fee and turn time. The crazy part was that they did not have an address or legal, just: “3o acre property by the river Per lender-Tax Ma 4, Parcel 6” If you research this property and find out details please provide them to us so that we can provide the details to the customer when quoting this assignment. Please confirm you can assist with this assignment and then provide your fee and turn time.

So they wanted me to find a 30 acre parcel, assume that it was the one they needed appraised, research it and provide a fee, so they could respond to someone else that was clueless. I was not licensed in that state, so I did not waste my time.

The idea for AMC’s was logical – that they would be able to distribute the work without bias. Jonathan gets this appraisal, Bart gets the next one, and Whit gets the third. It is now standard practice to see: We collected $600 for an appraisal at Deep Creek Lake Bart charges $575, Whit will do it for $350, Bill can you do it for $300? Bill eventually will say yes just to get some work, but along comes Smedley Dingledorf, who just got his license and has never been to Deep Creek Lake. He is happy to visit and learn about it at the buyer’s expense, and takes the job for $275. No quality or expertise, but they got a piece of paper saying the house is worth what they need it to be.


The Appraisal Petition Against The Higher De Minimus Just Cracked 7,000

I strongly believe that our industry is our own worst enemy.

The notion that this appraisal petition started by Ryan Lundquist (whose essential blog just turned ten) and I hasn’t reached at least 75,000 signatures by now says a lot about why we’ve been taken advantage by our trade groups, appraisal management companies, lenders and regulators. Most of us aren’t paying attention. We just sit and wait for someone else to do it or for the fax machine to ring. Let’s turn this industry attitude around in 2019. We’ve come along way since 2016 and have been making progress but there is much to do and our attitude still, frankly, sucks as a complacent industry.

OFT (One Final Thought)

My nephew brings the boom!


Ok, one more thought.

With the passing of Peter Tork, there’s this.

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 dunk it;
  • You’ll learn to sign the petition;
  • And I’ll waffle.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


February 15, 2019

Amazon To NYC Housing Market: “Drop Dead!”

A recent headline in the Commercial Observer said it best with a possibly NSFW awesome graphic. The Amazon pull out was all the news rage since Thursday afternoon. I’ll discuss this further down in these Housing Notes and provided a list of links down at the bottom for the Amazon HQ2 situation.

In the meantime, this is what my work week felt like. I was trying to move fast and things kept slowing me down that I didn’t expect:

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omg

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Elliman Report Released: January 2019 – Manhattan, Brooklyn & Queens Rentals

As the same time there was all the hoopla on the Amazon decision to walk away from their deal with NYC, Douglas Elliman published our research on the rental market of the Long Island vicinity as well as Manhattan and Brooklyn. This is part of our expanding Elliman Report series I’ve been authoring since 1994.

Elliman Report: 1-2019 Manhattan, Brooklyn & Queens Rentals

First of all, Bloomberg News coverage of the Manhattan rental market gave me a “twofer” in the chart department. And you all know how much I love charts.

But there’s more chartage..

…from Dow Jones:

The Wall Street Journal…

…and Mansion Global…

…and The Real Deal bedazzled the existing chart in our report…

And some of our charts:

NYC Rental Market Talking Points by Region

Manhattan Rentals

“The market share of landlord concessions declined year over year, after forty-three consecutive months of increases.”

– The use of concessions may be peaking as more potential homebuyers move into the rental market, helping push rents up
– Median rent growth accelerated in larger apartments as a shift to higher quality stock continued
– The year over year market share of landlord concessions falls after forty-three consecutive months of increases
– Vacancy rate fell year over year for the eighth consecutive month
– Non-doorman median rent outperformed doorman median rent for the first time in six months
– The entry threshold increased in line with luxury price trend indicators

Brooklyn Rentals

“The market share of landlord concessions declined year over year, after thirty-five consecutive months of increases.”

– The use of concessions may be peaking as more potential homebuyers move into the rental market, helping push rents up
– Market share of concessions declined year over year after nearly three years of increases
– Market share of 1-bedroom rentals was the only segment to see a rise
– Median rent growth was most robust in smaller apartments

NW Queens Rentals

“With rising new development market share, increasing rental price trends continue to be influenced by the shift to higher quality new housing stock.”

– Face rents pressed higher as new development influx skewed prices upward
– Market share of concessions increased year over year for the fifth consecutive month
– Number of new leases increased year over year for a seventh consecutive month

Amazon Gone

On Thursday I was climbing up a ladder in an old Brownstone to access to roof area (hey, I’m an appraiser too) when my iPhone blew up. I got about 20 press calls in the subsequent two hours concerning the impact to the LIC and NYC residential market (see “Amazon HQ2” links at the bottom of these Housing Notes. Here are two call-ins I did (with my high school graduation-like photo) on Bloomberg (lol) – file photo was taken around 2003:

Yesterday:

This morning:


I’d pontificate more but the Bloomberg interviews above and the coverage of the real estate angle are included in the “My New Content, Research and Mentions” links below.

My friend Barry Ritholtz gets specific on where he thinks the blame lies for the Amazon decision in this thread…


How Big Is NYC Tech Versus Wall Street?

There was a terrific article in the New York Times related to the Amazon HQ2 deal collapse but it was more of an analysis of how the NYC economy is configured: Even Without Amazon, Tech Could Keep Gaining Ground in New York Seems like mandatory reading for anyone in NYC real estate.

I remember when Wall Street accounted for 23% of the pay, now it is down to 19%. Other sectors have stepped up to fill the void. Here are a few charts from the New York Times piece that give context to the tech and securities role in the NYC economy. Click on the graphics to read the article.


The Housing Bubble/Bust of a Decade Ago May Keep The Market From Repeating It

Bloomberg shared an interesting home sale process video that focused on the phenomenon of rising price AND rising inventory at the same time – not what we are seeing in this cycle.

New in the Real Estate Lexicon: Mosh Pit

The first time I’ve ever been able to use “most pit” in a real estate context but it somehow works in this Realtor.com interview:

After Amazon plucked it from national obscurity, it became “overhyped,” says New York City-based real estate appraiser Jonathan Miller. “There have been lots of stories about people buying three apartments sight unseen like there’s some sort of frenzy. … It’s not some sort of frenzy where people are in a mosh pit diving over each other to get the next apartment.”


Small Town Boom: The Indicator from Planet Money

The Indicator is a daily listen for me because its full of economic topics that relate to housing. This one discusses the topic of rural economies and how some rural towns are getting out of the classic failure spiral.

Bloomberg: Why America’s New Apartment Buildings All Look the Same

This was my favorite read of this week: Why America’s New Apartment Buildings All Look the Same I interviewed the author Justin Fox years ago on my old “The Housing Helix Podcast” and have always been a fan of his writing.

I’m not exaggerating when I say that each time I have visited a different U.S. city in the past five years, I always ask myself, “Is it just me or do all these rentals buildings look like all the rental buildings I’ve seen in other cities?” Examples include Boston, Washington, D.C., Dallas, Detroit, Chicago, San Francisco, Los Angeles, Philadelphia, Cleveland, Baltimore, Harrisburg, Wilmington, Annapolis, San Antonio, and Columbus to name a few. It’s crazy. And good grief, I am traveling way more than I thought.

When you look at these images in the Bloomberg story below, I’ll bet most of my Housing Notes readers have seen buildings like this EVERYWHERE.

China: 65 Million Empty Apartments

You think we have a lot of vertical (vacant) rental or condo housing units in the U.S. Take a look at the situation in China from this Nikkea Asian Review article: China’s housing glut casts pall over the economy – A building binge leaves cities with 65 million empty apartments

A few years ago my wife and I were in China and took a 5.5-hour high-speed rail trip from Beijing to Shanghai. During the trip, on both sides of the train, this was essentially the view (I took with my iPhone) Mile after mile of concrete midrise towers.

Upcoming Speaking Events

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

I’m light this week on appraisal issues due to the time devoted to the Amazon HQ2 pull out and its impact on the market over the past 24 hours. So I’ve provided a podcast and interview I gave with top real estate agents in their local markets who care about valuation and want to see our world accurately. These might provide some thoughts on how appraisers can explain the state of their profession and market to those outside the appraisal industry. I think many of us are good at writing about it but not necessarily articulating it. Elements of this will also apply to consumer interaction which is where future opportunities are. Here you go…

Sweat The Details Podcast: DUMBWAITERS, MARKET ANCHORS, CREDIBLE MARKET REPORTS

My longtime online friend Jim Duncan who is a Realtor and a Broker/Partner in Charlottesville, Virginia of Nest Realty. I’ve only met him once at an Inman Conference about 15 years ago but devotedly follow his online presence, especially his monthly note. He invited me to be interviewed with his colleagues on his new “Sweat The Details” podcast. It’s a 30-minute interview and I think they sped up my voice by 1.5 times to squeeze it into their 30-minute format. Hey, I have a lot to say! LOL.


The Apple Peeled – Ask the Experts: Market Dynamics with Jonathan Miller

Over the years, I have bantered with the Espinal Adler Team (Marie Espinal and Jeff Adler) at Douglas Elliman Real Estate about the market which has been invaluable for on the ground intel. And we’ve become friends. When Jeff and Marie asked me to be formally interviewed for their blog “The Apple Peeled” I was happy to do so, especially because I could veer off the road into issues about the current mortgage and appraisal process. This “The Apple Peeled” blog post: Ask the Experts: Market Dynamics with Jonathan Miller was distilled from the 90-minute conversation (I could have gone on for 5 hours) I had with their team.

I hope you find that this apple was fully peeled:


Jonathan Miller’s Market Outlook

The number of units sold in Manhattan in 2018 was down by more than 14 percent compared to the previous year. The brokerage industry tends to be very linear in its perception of the market, so many believe when the market is rising, it will rise forever. And, in-turn, when the market falls, it will fall forever. That approach can lead to overreaction.

The 10-year Challenge (2009 vs. 2019)

Some analysts are even comparing the current cycle to the last downturn and the housing bubble in 2009, but Miller outlined quite a few differences between then and now.

In 2009, the average discount from listing was 10.2%. In 2018 the discount was 5.2%. In ’09, Miller said sellers were anchored to the “pre-Lehman, pre-financial crisis asking prices” and had to travel farther on price to meet a buyer. (Miller measures listing discount by the percent difference between the contract price and the price that the property was listed for sale at the time of contract – not when it was first listed). The most recent asking price is “really the moment the property entered the market,” he said.

Miller said there are more buyers today compared to 2009, but those buyers are “very jaded about what value is.” Meanwhile, sellers are anchored to another market completely, he said.

The change in tax laws in 2018 and a several-month stretch that saw mortgage rates rise before recently dropping close to previous levels had both buyers and sellers re-calibrating what value is. That process can take time.

“If a seller overprices a listing, it takes them up to 2 years to de-anchor from what their price was without thinking that they left money on the table,” Miller said. “The disconnect between buyers and sellers is measured by lower sales volume.”

Starter Segment vs. High-End Luxury

For the last two years, Miller has said that the NYC market is softer at the top and tighter as you move lower in price.

Overall inventory is up by about 17%, with a significant amount of supply coming from the studio and 1-bedroom market. Studio inventory is up 21% percent.

“The pace of the starter market is still the fastest of all segments,” Miller said. “It’s just not as detached as it was because now you have more supply.”

Interest Rates and Their Impact

Typically, rates rise when the economy is strong. The low rates we’re seeing today understate the strength of the current economy, according to Miller. “That’s the disconnect.” In the long run, interest rates do not impact price trends. Mortgage rates have trended lower for three decades, Miller said, but housing prices have fluctuated up and down during that same lengthy stretch.

Mortgage rates weren’t wildly different in ’09 compared to today. In a recent report, Miller stated that an adjustable rate mortgage rate averaged 4.38% in 2009 and was at 3.98% using the same metrics in 2018.

Miller said that real estate investors should stop trying to perfectly time the market (both with rate and supply vs. demand). Perfect timing is a concept that was born out of the housing bubble, he said, when investors viewed housing as a highly liquid stock, instead of in its proper context. “(Real estate) is more of a long-term asset.”

In-Depth Look at the State of Appraisals

“There was nothing learned from the bad behavior of a decade ago,” Miller said, reminding himself of a Mark Twain quote. “History doesn’t repeat itself, but sometimes it rhymes,” Jonathan Miller recited. Miller, President and CEO of real estate appraisal and consulting firm Miller Samuel Inc., said federal regulators are acting irresponsibly in their effort to reduce and perhaps even eliminate the need for an appraisal as part of an overall effort to erase “friction points” that slow-down the mortgage application process.

Miller said the regulators were more concerned with collecting fees than they were with protecting the American consumer. He likened the subtle de-regulation to the housing bubble of a decade ago, pointing out that regulators were getting paid by the failing investment banks they were rating back then. Now, he said, regulators and both Fannie Mae and Freddie Mac are getting paid whenever loan volume passes through those agencies. (Fannie Mae and Freddie Mac are Government sponsored enterprises that purchase mortgages from banks and mortgage companies in an effort to create liquidity so that lenders have the capacity to lend to more homebuyers).

The Office of the Comptroller of the Currency (OCC), The Board of Governors for the Federal Reserve System, and the Federal Deposit Insurance Corporation (FDIC) proposed a rule to amend the agencies regulations requiring appraisals for certain real estate related transactions. The proposed rule would increase the threshold level at, or below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000.

In response to our request for comment, spokespeople for the FDIC, the OCC, and The Federal Reserve said they do not comment on proposed rules during the rulemaking process.

Mortgage volume has trended lower despite rates falling steadily since the housing bubble, because lenders don’t want to take on risk, Miller said. “They’re in the fetal position. Banks are afraid of their own shadow.”

The tremendous amount of regulation implemented since Dodd Frank has led to mortgage lenders filling Fannie and Freddie’s portfolios with low-risk “pristine” mortgage bundles. But with rates so low, margins are so compressed, regulators need to stimulate volume to make money, according to Miller. “I think (Fannie and Freddie) are emboldened to take more risk.”

The push for fewer mandatory appraisals isn’t the only thing that has hurt the appraisal industry since the Dodd Frank Act was passed in 2010. The evolution of the mortgage industry’s use of the Appraisal Management Company (AMC) has led to a collapse in quality of appraisals ordered by banks, Miller said. He described the AMC as an institutional middle man that takes more than 50 cents on the dollar away from the professional appraisers who do the actual work.

“It’s like a Hollywood actor paying their agent 60% instead of 10%,” Miller said. “The mortgage industry is trying to widgetize the appraiser.”

The AMC is supposed to act as a communication barrier between the appraiser and the loan officer or mortgage broker, to thwart undue pressure to bring appraised values in at specific numbers. But according to Miller, the AMCs are under the same types of pressure that an individual appraiser might face. Some AMCs receive hundreds of thousands of dollars every month by way of appraisal orders placed by big banks. At least at the sales level, the banks apply pressure to the AMC to not “kill deals,” said Miller, who has testified in several class action lawsuits against AMCs.

In many instances, Miller and his firm were hired to do sample reviews of appraisals that came through AMCs. Often, the AMC would utilize appraisers in the market that would always “hit the number,” Miller said. A lot of those appraisers were ignoring valid comps, sometimes from directly across the street that were virtually the same as the subject property. “The AMC encouraged it because they were getting the work,” he said.

Appraisers are pushing back and there are already signs that AMCs were beginning to crumble, Miller said. Quality appraisers are turning away bank work when they know the order is coming in through an AMC because they’re not happy working for less than they deserve and because they’ve been reduced to “form-fillers,” Miller said.


The Apple Peeled Blog, February 12, 2019

Espinal Adler Team at Douglas Elliman Real Estate

OFT (One Final Thought)

Well, this week’s OFT is more like (FFT) with 5 thoughts concerning volatility. The housing market is shifting gears and the economy may be doing the same. This infographic from the must-read Visual Capitalist site is fascinating:

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 be more volatile;
  • You’ll be taking inventory;
  • And I’ll get up early and talk on TV.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

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February 8, 2019

Spocking Fives for Housing To Live Long and Prosper

And you thought the weakening Canadian housing market was of great concern? (For the record, my politics are Star Trek over Star Wars any day):

Scrolling The Most Expensive U.S. Residential Sale In History

I plotted out all Manhattan residential closed sales since 2008 through January 2019 to provide some context to how much of an outlier the recent $238 million luxury condo sale was. I’ve had a heck of a time converting my excel chart into a format to display on my web site so I resorted to making my first screencast video. I did it on the fly but it really helps illustrate how out of context the recent $238 million sale actually was.

My solution? Make a screencast video.

To watch this, first, pack a lunch. Then, click here or on the snapshots below of the top and bottom segments of the tall chart to play the video.

Then relax and watch me start scrolling. It provides some useful context and is pretty cool despite the poor audio quality:


/////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////



This Week in Aspirational Pricing: $50 Million Will Get You The Most Expensive Miami Sale in History

If one record wasn’t enough, the highest price paid for a residential sale in Miami-Dade County just clocked in at $50 million (same Douglas Elliman brokers as the $238 million condo sale in Manhattan).

Just as I get too jaded, another record makes me marvel at how far all this is from mere mortals like me. Here’s what the house looks like from the Miami Herald story:

Memories Can’t Wait: Hamptons Permits Are Down

As the Talking Heads, one of my favorite bands, once sang…

There was a good story in 27east about how the Hamptons era of heavy building has come to an end. Supplemental metrics were extracted from our Hamptons research in the Q4-2018 Elliman Report: Hamptons Sales.

This leveling off of permits reminds me of the period leading up to the financial crisis.

Developers on the South Fork have been busy building in recent years. As a result, the number of homes on the high end swelled, and space available for large construction projects has become limited.

Here’s a chart on building permit trends and revenue growth from the piece. Many towns and villages rely heavily on the revenue that development generates.

How The Mortgage Brokerage Industry Sees The Financial Crisis Legacy

Former CEO of Countrywide, Angelo Mozilo was interviewed by Rob Chrisman at The National Association of Mortgage Brokers’ (NAMB) annual convention in Las Vegas.

For me, the Mozilo interview at the conference was somewhere between fantasyland and a farce. Chrisman lobbed up softball questions about Mozilo’s background and the rise of Countrywide. Nowhere was it mentioned that the mortgage company was seen by many as the “epicenter” of the 2008 mortgage crisis, issuing millions in “liar loans” homeowners couldn’t afford.

The most telling (and chilling) part of the interview was this. Mozilo said of his former company:

“I loved the changes you make in people’s lives. I approved 80 percent of the loans my underwriters rejected”

No wonder we are still in the “hangover” phase of the financial crisis. How incredibly irresponsible. In fact, Mozilo was given a standing ovation at this event.

Getting Graphic

My favorite chart of the week. I whipped this up before a presentation yesterday. The inventory coming off the market above $3 million represents the clearing of “dead wood” or overpriced inventory that the seller has finally realized is unsaleable at that price. The surge in supply below $3 million represents the slowdown in that market (it’s still moving faster than luxury) is allowing supply to rise sharply. At first this was explainable by rising mortgage rates which are more impactful to the starter market, but rates are at their lowest levels in 9 months. Uncertainty rules all price levels right now.

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

The Letters Came Pouring In Just In Time

As the comment period on the regulatory rule change that would raise the de minimus from $250,000 to $400,000 to require a certified appraisal of the collateral for a mortgage, there was an inflow of position letters on the insanity of this rule change. It is important that appraisers read them and understand what is at stake here.

‘The Network’ Letter – Peter Gallo and the 30 State Appraiser Coalitions put their money where their mouth was and hired the best law firm to cover key appraisal industry issues of the day: CONSTANTINE CANNON LLP. This letter has been disseminated across the industry and can be used not only against this rule change but as an “evergreen” summary to ensure the accuracy of the appraisal industry’s narrative. That last point is key as the appraisal industry has shifted to a grassroots effort after being bludgeoned by REVAA (the AMC trade group), the mortgage and banking industries.

Comment of Thirty State Appraiser Organizations, Constantine Cannon LLP

Incidentally, the ABA (American Banker’s Association) liked the rule change and submitted their letter at the end of the day of due date.

Interestingly their letter claimed that “The evaluation would provide an estimate of the market value of the property, but would not be required to be prepared by a state licensed or certified appraiser, and would be less detailed and costly than an appraisal.”

Does this evaluation mantra sound like what AI National has been saying for a few years now? Strange.

‘NAR’ Letter – The National Association of Realtors was very direct about the misleading narrative the regulatory agencies are using to support the rule change that blames costs and turn time – which is completely fabricated by institutions that hate appraisers – i.e. ABA who likes the rule change and AVM owners (often AMCs) who are pushing for their product to be the status quo even though their lack of accuracy is embarrassing. Here is what their powerful letter – based on actual data – showed:

Assuming the median home price of $250,000 would have a median appraisal cost of $450, the appraisal would be 0.18 percent of the total transaction cost – hardly approaching a “burdensome cost.”

and

When asked about ease of obtaining an appraisal, 67 percent of REALTORS® felt it was “easy” or “very easy” to get an appraisal and only one percent noted it being “difficult” or “very difficult.”

Given the fact that consensus has a 70% chance of a recession coming in 2020, why would Treasury, FDIC, OCC and the Fed use bogus claims as evidence to remove oversight from our industry designed to protect the consumer and taxpayer? We’ve heard this song before.

2019.02.04 NAR letter to OCC FDIC Fed Res re Residential Appraisal Threshold

“Appraisal Organizations” Letter – American Society of Appraisers, Appraisal Institute, American Society of Farm Managers and Rural Appraisers, MBREA|The Association for Valuation Professionals, American Guild of Appraisers, OPEIU, AFL-CIO and RICS signed off on opposing the threshold change. There is an amazing paragraph that actually (and accurately) uses the word “wild” in their criticism of the rule change.

As stated in Table 2 of the proposal, should the threshold be raised to $400,000, 72 percent of regulated transactions would be exempt from Title XI appraisal requirements. That means over 7 in 10 Americans would be deprived of an objective, impartial, and independent opinion of value regarding the single largest purchase many of them will ever make. To say this proposal runs counter to consumer protection principles is a wild understatement. The proposal, if adopted, will irreparably harm consumers who frequently have little to no real estate knowledge, and therefore rely on a system of checks and balances to ensure they are not entering a purchase well above the value of the collateral.

Appraisal Org Comments Opposing Threshold Increase

Letter Summary – My thoughts on why these letters were necessary were because:

  • The regulators never expressed concern about damaging quality and reliability of valuations
  • The regulators have lamely referenced trying to help out rural banks who traditional have had a harder time finding appraisers versus suburban and urban located banks – and rationalized it was better to help a small number of rural banks and expose all the other banks with more risk for no actual reason
  • The regulators are earnestly trying to pump up loan volume because low rates haven’t push loan volume higher for a decade and they enjoy fees from the banks

Let’s hope that Congress will call on the head of these agencies to testify very soon.

Why I Don’t Call Out The Appraisal Institute As Much As I Used To?

No, it’s not because they have proclaimed 2019 as the Year of the Residential Appraiser. Coincidentally, this is also the Chinese “Year of the Rat.”

No, not any of that.

Simply put, it is because nothing has changed in their culture and their priorities to its membership over the past year and therefore they are no longer relevant nor are they considered an industry leader anymore having enjoyed and earned that status in years past.

Why waste time and energy on something the industry has already decided?

The work of the 30 state coalitions who filled the void because of AI National’s lack of national leadership demonstrates how marginal AI National has become as a trade group. For an example of their institutional dishonesty, they launched a residential committee nearly two years ago and nothing has been presented or shared to the public. A few of the members appointed are people I know personally who are good people that remain in love with the soul of an organization that died years ago and who very much want to salvage it. When that residential committee was formed and I professed to be skeptical as to the intent (to placate AI residential members who had some loyalty remaining so they would continue paying dues) and as time passed, AI National effectively shut it down by inaction. This what happens when an organization’s leadership isn’t accountable to its members and lives in a bubble.

After all, this isn’t rocket science when you apply critical thinking to the problem.

So to those who challenged me directly on my cynicism 2 years ago, its time to apologize. A nice private email would suffice.

Oops, I believe I just called AI National out again. Sorry about that.

OFT (One Final Thought)

I hate Brutalist architecture so I thought I’d ask you to watch this.


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 be more inclined to pay record prices;
  • You’ll be more cynical;
  • And I’ll keep scrolling through my charts.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

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February 1, 2019

Cockroaches and Housing Seem To Survive Anything

With this recent Polar Vortex event and how they are becoming more regular and that we should name them like hurricanes…I thought about the “name a star” promotion many year’s ago that would enable a person (not officially) to name a star after a loved one. Now we’ve come full circle in the naming rights department with a new affordable service: You can name a cockroach after your ex in time for Valentine’s Day, and it costs only $2!

From stars: To cockroaches:

What a time we’re living in!

But I digress…and I’m somewhat brief today (too much to talk about in Appraiserville!)

Manhattan Townhouse Annual Numbers

From our research for Douglas Elliman (formal report with a lot of drill-down information will be online soon) which is a ten-year moving window of annual sales activity:

General observations

“Sales and price trends outperformed the apartment market over the decade.”

  • Market share of townhouses was 2.2% of all residential sales, consistent with the decade average
  • Price trend indicators showed mixed results as sales size expanded
  • Inventory fell expanded from year-ago levels while sales declined
  • The number of Downtown sales rose sharply, the only region to see an annual gain
  • Since the financial crisis, the median price of a townhouse is up more than fifty percent
  • Townhouse median sales price rose twice as fast as the co-op/condo market from 2009
  • Every region saw a shift towards larger sized sales
  • Northern Manhattan prices more than doubled since 2009


Manhattan Apartment (Co-op+Condo) Annual Numbers

From our research for Douglas Elliman (formal report with a lot of drill-down information including neighborhoods will be online soon) which is a ten-year moving window of annual sales activity:

“The decade demonstrated a noticeable shift to more large-sized sales and their higher price levels.”

  • While the overall sales volume rose nearly 40% since 2009, the sale of 4+ bedrooms jumped more than 90%
  • The overall median sales price has remained remarkably stable for the past four years
  • Price trend indicators all declined year over year as the legacy contract pipeline ran out of product in early 2018
  • Annual sales saw the largest year over year decline since the financial crisis
  • The annual number of sales declined for the fourth time in the last five years
  • The largest sales surge occurred in 2010 when sales quickly rebounded from the “bottom” reached in 2009


This Week in Aspirational Pricing: $239,958,219.15

The buzz of last week’s mega-million sale of $238 million still floats through the air of the real estate market but with a clear understanding that the sale represents a simpler time – when homes were worth whatever the seller wanted. In the New York Times real estate section, the precise number filed in public record was $239,958,219.15.

The hard math provided in the subtitle was brutally straightforward: “What’s the difference between a $200 million penthouse and a $100 million penthouse? About $100 million.” The context was provided in a world where little is offered. Even with the context, however, mere mortals will continue to process how hard it is to relate to housing for us mere mortals. It reminded me of my visit in 1970 to Dover Air Force Base in Delaware as a ten-year-old. I still remember that a C5-A transport plane could carry 100 VW Beetles or 58 GM Cadillacs. Perfectly valid comparisons but I couldn’t imagine all those cars in our driveway.




Getting Graphic: New Home Sales By Price

h/t Steven Miller

Love this visualization! Click to expand.


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Appraisers Sue New Jersey Appraisal Board Saying They Don’t Have To Follow USPAP

Gerald McNamara and Colleen Kudrick were admonished by the board in a five-count takedown. There is a lot of nuances here but the sanctions seemed to be based on the fact that one of the appraisers wasn’t licensed at the time and could not explain how she valued the property. The other who was certified said he did not assist in the preparation but did inspect the property. The client made a complaint and the board investigated.

Seemingly doubling down on damaging their reputations, they filed a lawsuit against the appraisal board and seem to be saying that USPAP is unconstitutional because The Appraisal Foundation is a private organization. This has ramifications for many reasons including:

  1. The evidence presented against the two individuals is quite detailed, and if accurate, shows that the appraisers were negligent enough for a financial services firm to complain.
  2. It questions appraisal laws on a technicality that USPAP is overseen by a private organization.

The following documents are available in public record and are worth reading:

McNamara v Grewel et als Docket Report 20190118

Doc 1 McNamara v Grewel et als Complaint 20190107

Doc 2 McNamara v Grewel et als Plaintiff Verifications 20190107

Doc 3 McNamara v Grewel et als Summons 20190107

Doc 4 McNamara v Grewel et als Amended Exhibits to Complaint 20190107

Doc 5 McNamara v Grewel et als Notice Rule 5_1_a 20190107

Regulators Misrepresent Appraisers’ Role In Mortgage Process

Peter Gallo shared the North Carolina Real Estate Appraisers Association [NCREAA] comment to the proposed threshold change proposed by federal regulators. You can and SHOULD provide your own comments as well. You can do that here. The regulators describe the rule change like this:

The OCC, Board, and FDIC (collectively, the agencies) are inviting comment on a proposed rule to amend the agencies’ regulations requiring appraisals for certain real estate-related transactions. The proposed rule would increase the threshold level at or below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000. Consistent with the requirement for other transactions that fall below applicable thresholds, regulated institutions would be required to obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices. The proposed rule would make conforming changes to add transactions secured by residential property in rural areas that have been exempted from the agencies’ appraisal requirement pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act to the list of exempt transactions. The proposed rule would require evaluations for these exempt transactions. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the proposed rule would amend the agencies’ appraisal regulations to require regulated institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice.


Unfortunately, they use the phrase “safe and sound banking practices” but in the weeds, all they care about is eliminating appraisers all together to save the consumer a few hundred dollars. Its lip service since the discussion only concerns the cost and timing of appraisals. Get ready taxpayers. With the rising probability of a recession by 2020, it is a great time to reduce neutral oversight by appraisers and shift to relying on automation. I’m already being told that underwriting systems are already being tweaked to reduce loan kickbacks.

NCREAA Threshold Letter

Only 275 Comments So Far? Please Submit Your Comments to the Threshold Rule!

From the Central Texas AI Chapter:

The Federal bank regulatory agencies have proposed to increase the residential appraisal threshold level from $250,000 to $400,000, exempting nearly three-quarters of residential real estate-related financial transactions from appraisal requirements.

In 2017, the exact same proposal was evaluated and answered as part of the federally mandated EGRPRA (regulatory relief) process – a process that encompassed four different notice and comment periods and six public hearings. From that process, the same agencies decided it “would not be appropriate” to increase the threshold from $250,000 based on safety and soundness and consumer protection considerations.

Now, in an apparent attempt to pacify rural community banks, the agencies will increase the threshold unless they hear convincing comments and evidence from stakeholders, including consumers and appraisers. Standing unified in opposition to the proposal, a coalition of nationally recognized professional appraisal organizations will be submitting comments on the proposal. These organizations encourage all appraisers to do the same by the February 5th comment deadline.


To comment, click here.

The Digital Transformation of the Appraisal Industry

By Jeff Bradford, Bradford Technologies

Jeff’s PR team reached out to see what appraisers think of bifurcation of appraisals.

Hello Jonathan,

On behalf of Bradford Technologies, I’m speaking to appraisers to gauge the response and thoughts towards Hybrid appraisals. It appears that going forward a ‘team’ approach to developing and delivering appraisals will continue to grow.

Our CEO, Mr. Bradford, has written an article addressing the anticipated approach. I’d love to hear your thoughts.

If you’d like to take a closer look at ClickFORMS we’d love to guide you through a 15 day evaluation. http://www.bradfordsoftware.com/

Kind Regards,

Darlene Conners 800/622- 8272 ext. 209 Corporate

Here is Jeff’s essay. Admittedly I view hybrids as more expensive and less reliable for lending purposes and frankly are incredibly idiotic. However, many software vendors are caught in the middle trying to figure out the zeitgeist so they can survive. Here is what Jeff wrote:

For over 30 years, I have been serving appraisers and during that time I have seen many changes in the appraisal industry. Mostly these changes have been due to advancements in technology, but not all were due to technology innovations. Some were due to changes in compliance and regulations, such as the Home Valuation Code of Conduct (HVCC) and Dodd-Frank, or due to the changes in requirements to become a Certified appraiser. There were changes caused by advancements in technology, such as dot matrix printers to laser, film cameras to digital, fax to email (if you do not remember these changes, you are very young). Remember when everyone would FedEx the report; then PDF became acceptable, and today we live in a connected world where information is just a click away. All of these changes had an impact on the appraisal profession, but producing an appraisal report is still a legacy business. We all do it the old fashioned way–manually collecting data, pictures, working the sales grid and then writing the report. It’s definitely easier and faster than it was 30 years ago, but we still follow the same steps.

Change is Coming

Well, as you might have guessed, more changes are coming and it’s technological for sure, but it’s not driven by an invention, such as when the digital camera was invented. Today it is demographics that is driving the change. The millennials are forcing businesses to change. It is estimated that at their peak, there will be 75 million of them. They are expected to be a larger force than the baby boomers. The millennials have never seen a fax or dot matrix printer. They only know mobile. They live in a digital world connected by their mobile phones, and they expect everyone they deal with to be digital as well. That includes the mortgage industry.

This group has given rise to the FinTech industry–startups that are out to disrupt the financial industry. Their aim is to make it easy to get a loan, make payments and do anything financial using their smart phone, and they don’t understand why an appraisal takes seven days. They certainly don’t understand why last year there were areas of the country where it took four to six weeks to get an appraisal.

This pressure has caused the GSEs to take notice and to begin to take action. As many of you know, the GSEs are on a three-year mission to remake appraisals into a much more efficient process. Last August, Fannie Mae CEO Timothy Mayopoulous stated, “Appraisers should be at their desks,” not in the field with a measuring tape or making phone calls to track down homeowners. This has led to pilot programs to test the validity of using third party inspectors paired with appraisers at their desks to study if appraisals can be produced quicker without a loss in quality. Many are saying the pilot programs are working well. Additionally, based on the changes the GSEs made to the 1003 (loan application form), the new 1004 will be pared down considerably, with fewer data points, creating a new slimmed down UAD dataset based on the new MISMO 3.3. (The current UAD is based on MISMO 2.6.) If the move toward bifurcation of the appraisal succeeds, this could open up some great opportunities for appraisers and the industry in general. Let me explain. Eight years ago, we introduced a product to the market that used a third party inspector. Our reasoning was that teams can do more than individuals. That product was not widely accepted. Why? It was less than successful because the inspector and the appraiser were not teammates. They were just individuals doing a job without regard to each other’s issues or concerns. We had missed the concept of teammates and the need for close collaboration between the two. It did not help that trainees and licensed appraisers were essentially banned from working together on the appraisal for fear that the appraisal would be rejected by a lender.

Fast forward to today. If lenders accept third party inspections, they will also have to accept appraisals completed by teams managed by appraisers. This change will open the door for appraisers to create their own teams consisting of assistants and trainees that produce the appraisal, opening the door for trainees to once again be part of the appraisal process.

The key to high performing teams is tight collaboration. It’s the elimination of the distance and time factors between the stakeholders and team members. If the appraisal process is going to become more efficient and accepted by millennials, there needs to be better collaboration between all stakeholders in the valuation (lenders, AMCs, appraisers, inspectors, assistants, reviewers, and anyone else involved with the valuation). In the past, we collaborated by phone, then email, and today we can collaborate instantly by taking advantage of the digital workspaces that are being developed in the cloud. For example, Google already has 1.4 billion users collaborating using apps on G-Suite. There is Slack, Microsoft Teams, Dropbox, Box and Apple iWork just to name a few others. There is now even a new term to describe people who work primarily in the cloud—Cloud Worker. They log in, do their work and log out. They work from anywhere, anytime on any device. Companies that want to remain relevant are moving to the cloud. They are becoming digital businesses with an emphasis on allowing their employees to collaborate seamlessly and on delivering their services as quickly as possible with full transparency of the process (think Amazon).

From Legacy to Digital

An example of a company that made the transition from legacy to digital is Domino’s Pizza. In 2008, its stock was at $3 and they were hurting. Today it’s at $277 and they are thriving. They did two things: 1) made improvements to the quality of their product, and 2) realized they were also in the pizza delivery business. They started thinking of themselves as an e-commerce company that happens to sell pizzas. This revelation led to a commitment to innovate the pizza delivery experience. Today, they have a Chief Officer of Delivery Technology who makes sure you can order a Domino’s pizza from the web, by email, by texting, or by asking Alexa to order you a pizza. They are a digital business catering to the anytime, anywhere, on-any-device millennial crowd. Domino’s is currently experimenting with delivery by drones and self-driving cars. Little Caesars pizza has followed suit with their own Pizza Portal and mobile app for ordering, scheduling and pre-paying for a pizza. The point is that moving from a legacy business to a digital business is not only good for business, it may be the only way to stay relevant in the age of millennials (think Sears).

As I write this article, JPMorgan Chase just announced that they are building a “FinTech campus” in Silicon Valley where it expects to have 1,000 employees focused on building its digital banking business. Chase understands what is at stake.

Appraising is a legacy business and if it’s to remain relevant and not marginalized by appraisal waivers, it must transform itself into a digital business. The GSEs are going to make some structural changes to the process. They will probably simplify the form, remove some fields and reduce the amount of data that needs to be collected. This change will make it quicker to create a report, but it does not transform appraising. It does not transform a legacy business into a digital business. Appraisers are the ones who need to make this transition. Appraising is at an inflection point. Just like Domino’s, it needs to improve quality (no more silly mistakes, unsupported comps and arbitrary adjustments) and it needs to realize that it’s in the appraisal delivery business. The industry needs to start collaborating to improve efficiency, quality, transparency and delivery speed. The one size (1004) fits all approach is no longer an option. This is primarily why you see so many different alternative valuation products springing up.

What does it mean to be a digital business? It means that you are doing most, if not all your work in the cloud, in a digital workspace. It means that you are connected to cloud resources (data, imagery) simply by plugging them into your workspace. It means that you are working as a team, collaborating via your digital workspace. All the time and distance factors that would normally slow your appraisal process down no longer exist because all files automatically sync with every team member.

Collaboration is the key and it starts at home. Appraisers should start thinking about how to incorporate team concepts into their workflows and processes and by thinking of everyone as a teammate–not a partner or an assistant–a teammate. If you have one teammate assisting you, think of using Dropbox as your digital workspace for sharing files. It’s good for storage and backup as well. If you want to expand, consider online form processing and the use of a mobile inspection app linked into your digital workspace. At this point, you are starting to empower teammates to work from anywhere, anytime on any device. At Bradford Technologies we’ve developed a Team Appraising platform to provide that digital workspace for you. It’s a little ahead of its time (like many things we do), but when bifurcation of appraising is accepted by the lenders, appraisers will want to control and manage their own teams to defend their business and outperform the competition. Like Domino’s, appraisers need to realize they do more than just produce a product, they are also in the appraisal delivery business. AMCs, likewise must realize they do more than manage an appraisal order; they are also in the appraisal delivery business. For the industry to fully transform to a digital business, appraisers need to extend the concept of a team beyond their office to include AMCs. Both need to work more cooperatively, as teammates to produce and deliver a product for their mutual client, the lender. If both do this in a collaborative fashion, working in a digital workspace with all the time and distance factors removed, the appraisal industry will be transformed and secure its position as a valuable, highly relevant component of the financial community.

About Bradford Technologies

For over 31 years, Bradford Technologies has been providing appraisers innovative software solutions such as ClickFORMS, the most intuitive appraisal report processor and Redstone, the leader in valuation support analytics. Today, the company is focused on its new cutting-edge solution for residential appraisers – Team Appraising. Utilizing “team” concepts and providing connected mobile, desktop and online solutions for inspection, report processing and communications, residential appraisers can create an efficient digital business that excels in the all-digital world of tomorrow.

About the Author

Jeff Bradford is the founder and CEO of Bradford Technologies. Mr. Bradford has been recognized as a Valuation Visionary by the Collateral Risk Network and a Tech All Star by Mortgage Bankers of Association for his continual innovations in the appraisal field and support for residential appraisers.


Voice of Appraisal E216 Will Bifurcation lead to Market Blindness?!?!

Yes it definitely will.


A Day In The Life

h/t Lori Noble

OFT (One Final Thought)

Since I’ve been obsessed about housing price records as of late, here’s a great read on the surfing wave height record. Things that go viral aren’t always what they appear to be.

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 be less cockroach obsessed;
  • You’ll be more wave obsessed;
  • And I’ll be more price record obsessed

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 J. Miller, CRP, CRE, Member of RAC President/CEO Miller Samuel Inc. Real Estate Appraisers & Consultants Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

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Recently Published Elliman Market Reports

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Extra Curricular Reads


January 25, 2019

Commuting By Vertical Travel When Your Home Is Nearby

Sometimes a good moat might sell castles in suburbia. h/t McMansionHell When a new development concept goes awry…

But I digress…

Market Report Gauntlet Week 4 Q4 2018: Hamptons, North Fork and Long Island

Douglas Elliman just released our research for the Hamptons, North Fork, and Long Island markets (I’ll have the links up shortly) covering the fourth quarter. The Hamptons and North Fork showed an acceleration of weakness and long Island showed more (but unexpected) strength.

Here are some key points for each market and some charts:

LONG ISLAND

Coverage from Newsday: Report: Long Island home sales rise as inventory falls

“A shortage of listings “is what’s driving prices up, because there’s still limited inventory,” said Ann Conroy, president of the Long Island division of Douglas Elliman. “That’s what’s keeping the prices where they are and pushing the prices up.”

Thoughts

  • Listing inventory fell to a more than fifteen year low after three straight quarters of year over year declines
  • Number of sales rose year over year in two of the past three quarters
  • Median sales price has not seen a year over year decline in 23 consecutive quarters
  • Median sales price slid year over year for all quarters of 2018
  • Luxury sales price slipped below the $1 million threshold for the first time in two years



HAMPTONS

Coverage from Bloomberg: Hamptons Listings Surge 82% in a Year, Pushing Home Prices Lower

“Would-be Hamptons buyers have been dragging their feet, betting their money is better off in the stock market, or reluctant to commit to discretionary purchases after a federal tax overhaul that capped write-offs for mortgage interest and property levies. With so much inventory, sellers will have to drop their prices to attract interest, said Cia Comnas, who oversees sales in the Hamptons for brokerage Brown Harris Stevens.”

Thoughts

  • Median sales price stabilized as average sales price moved higher
  • Number of sales declined year over year for the fourth consecutive quarter
  • The ratio of sales above and below the $1 million threshold remained essentially unchanged
  • Listing inventory rose sharply after twelve quarters of declines
  • Luxury sales at or over $5 million reached its highest market share in three years
  • Luxury listing inventory continued to rise as sales declined



…and a cool chart from Bloomberg:

NORTH FORK

“Record prices with fewer sales and more inventory.”

Thoughts

  • Median sales price set a new record for the third time in the past four quarters
  • The number of sales declined sharply year over year for the third consecutive quarter
  • Listing inventory remained relatively stable, with nominal changes over the past three quarters
  • Luxury price trend indicators rose sharply as listing inventory fell by half
  • The market share of sales under $1 million was only price strata to rise



Market Report Gauntlet Week 4 Q4 2018: Aspen, Snowmass Village, Los Angeles, Venice, Mar Vista, Malibu & Malibu Beach

Douglas Elliman released our research for the Aspen, Snowmass Village, Los Angeles, Venice, Mar Vista, Malibu & Malibu Beac markets (I’ll get the links up shortly, I’m running behind) covering the fourth quarter. The Aspen and Snowmass Village markets showed an emphasis on smaller properties. Los Angeles and the submakets we cover remained brisk but sales are slowing. Malibu sales were impaired by the tragic wildfires late last year.

ASPEN

“The number of market-wide sales rose year over year for the first time in 2018.”

Thoughts

  • Listing inventory edged higher year over year for the third straight quarter
  • The number of single-family sales for the quarter matched the ten-year quarterly average
  • Luxury average price per square foot slipped, consistent with the decline in average sales size
  • The starting threshold for the luxury market fell to the second-lowest level in two years



SNOWMASS VILLAGE

“Rising sales has been on a multi-year streak as sales mix emphasized smaller properties.”

  • Number of sales again surged year over year, the tenth straight quarter of gains
  • Price trend indicators showed mixed results as average sales size declined sharply
  • Listing inventory edged higher for the fourth consecutive quarter
  • Luxury price per square foot jumped while the other indicators were skewed lower by a shift to smaller sized sales



LOS ANGELES

“Overall price trends moved higher as sales slipped and inventory expanded.”

  • In light of November’s wildfires, it was natural for sales activity to slow
  • Number of sales declined year over year for the third consecutive quarter
  • All price trend indicators rose year over year for the second straight quarter after declining in the spring
  • After three consecutive quarters, of annual inventory gains, the market pace was the slowest in three years
  • Total sales for 2018 edged above the total for 2017
  • Despite the decline in luxury average sales size for single-families, all price trend indicators moved higher
  • Luxury condo median sales price rose annually for the second consecutive quarter



This Week in Aspirational Pricing: $238 Million Buys You A Home

All heck broke loose yesterday when the Wall Street Journal broke the story that billionaire hedge funder Ken Griffin paid $238,000,000 for a 23,000 square foot multi-story penthouse at the top of 220 Central Park South. There was a bunch of interest in the story about the highest sale in U.S. history and it made for a lot of fun additional reading, a fantasy alternative to the stress of current headlines.


[Source: Not sure who to credit – found on web]

Some of the reads you should check out include:

The story that broke the news:

Billionaire Ken Griffin Buys America’s Most Expensive Home for $238 Million [Wall Street Journal]

…Reporter Kathy Clarke also broke the Michael Dell prior Manhattan record $100+ million sale a few years ago.

America’s Most Expensive Home Sold to Billionaire Ken Griffin [Bloomberg]

…the source of the epic “vertical travel” reference.

At $238 Million, It’s the Highest-Price Home in the Country [New York Times]

…That article by Stefanos Chen covers the idea that this sale has nothing to do with the current market. This was a sale representative of what I call “peak” luxury circa 2014 into 2015.

To give context to how disconnected from mere mortals this sales price was, Azi Paybarah who writes the New York Times newsletter New York Today made the context simple. He took all my data on the highest priced Manhattan residential sales for each year since 1982 and adjusted them for inflation:


[Source: New York Times]

The visual context is quite jarring.

Here is my updated multicolored version (not cpi-adjusted) that my Housing Note readers have seen before. I had to move my company logo to the left to accommodate the line:

Most Expensive U.S. Home Sale Ever: Billionaire Ken Griffin Closes On $238 Million New York Penthouse [Forbes]

…This is a story that speaks to the price context of this sale.

An apartment on Central Park just sold for $238 million. That’s the highest price ever paid for a home in the US [CNN]

…This story mentions my hobby of tracking these big sales that began in late 2013 when I saw so many listings over $100 million appear (and few ever sold).

The $238 Million Penthouse, and the Hedge Fund Billionaire Who May Rarely Live There [New York Times]

…This was today’s New York Times cover on Ken Griffin.

New in the Real Estate Lexicon: Vertical Commute

As mentioned above in the Bloomberg article, a “vertical travel” is something New Yorkers do every day – I’ve just never heard it described that way (bold is my emphasis).

Citadel has signed a lease to anchor a skyscraper at 425 Park Avenue, eight-tenths of a mile from Griffin’s new apartment, not including vertical travel.


When Ken Griffin travels from his new penthouse to his office, I imagine his commute, that includes “vertical travel,” looks like this:

The Value of Land Across The U.S.

The value of land, or “dirt” as New York City real estate developers call it, varies wildly accross the U.S. A research paper explores this. Price moved higher faster than the suburbs which is why I think so many super luxury towers were built in Urban markets – that’s the only way to make the acquisition feasible (because landowners saw their value potential that way.



…but I have questions:

First: From a valuation perspective, homes depreciate and land appreciates so this is somewhat confusing:

“Generally, land tends to appreciate faster than structures because when housing demand changes, you can build more structures but you can’t build more land,” Larson said.

Second: How is New York County (Manhattan) not in the top ten? Manhattan doesn’t appear in the data yet Brooklyn does. Housing prices in Manhattan are higher than Brooklyn if locations are similar. This omission seems to jump out and I can’t find a disclaimer or reference to it in the piece.

The Only Housing Collapse Is The Collapse of Context

This Bloomberg piece seemed a little confusing to me BofA Says Don’t Believe the Hype on a Housing Collapse

And quotes Michelle Meyer’s research note:

“Don’t believe the narratives of a housing collapse,” economist Michelle Meyer wrote in a note to clients on Tuesday. Meyer said the challenges facing the sector “should only be a slight drag on growth” and that “the recent decline in mortgage rates is well timed, ahead of the spring selling season.”

On the national market, existing and new home sales are falling year over year and prices are rising. Inventory is rising but still remains inadequate in many areas. Are pundits suggesting this declining condition will lead to a collapse? Is anyone saying this? Does anyone suggest we are seeing another housing meltdown?

No. What we are seeing is a housing slowdown brought on without the help of fast and loose credit policies (yet) distorting supply and demand. Slowing sales may eventually lead to declining prices. This is supply and demand and affordability in action.

This is a smart housing economist simply being adept at hyping her research notes. Let’s not get crazy here.

Sharp Decline In Sales Baffles, Sort Of.

Existing home sales fell 6.4% seasonally adjusted which is unusually large.

Real estate brokers are trying to figure out why sales of existing homes plunged in December.

If you notice on the NAR data release, the number of sales fell 11.7% YOY WITHOUT SEASONAL ADJUSTMENTS. In other words, the number of sales was almost 12% lower than the same period last year in their raw form. We are seeing this in nearly all of our regional research coverage. I contend the uncertainty of regulatory policy (tariffs) and the new federal tax law, as well as higher mortgage rates earlier in the year (and possibly late year financial market volatility) caused many buyers to pause on their decisions.


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Mining Appraisal Data

Here’s an FHFA/AEI research paper that mined data from more than 16 million appraisals. There seems to be a lot of mining going on these days to fuel research and more profits. The appraiser’s role is being phased out at the same time. I presented the Washington Post piece earlier in these Housing Notes.

OFT (One Final Thought)

Hat tip to the padre.

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 be love vertical commuting;
  • You’ll be more contextual;
  • And I’ll collapse.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


January 18, 2019

Fast Food Visualizations On Housing

Sometimes art just jumps out of the picture and drenches you with a message:


But I digress…

Market Report Gauntlet Q4-2018 Downtown Boston

Although I was born in Boston and had traces of an accent until we moved to Delaware when I was 6 years old, and definitely annoyed my mother for adopting the New York Yankees as my favorite baseball team, I’ve always wanted to cover the Boston market in our Elliman Report series. Last year Douglas Elliman acquired a local firm and yesterday published our research on the Downtown Boston market.

Curbed Boston went gonzo with report coverage here, here and here.

The data within the reports cover the condo and townhouse markets in the neighborhoods of Back Bay, Beacon Hil, Charlestown, Fenway, Midtown, North End, South Boston, South End, Seaport, West End & Waterfront. Its basically a luxury market moving at a blistering pace but there was a noticeable drop in condo sales in Q4-2108.

Elliman Report: Downtown Boston Sales 4Q 2018

Here are a few basic observations:

DOWNTOWN BOSTON HIGHLIGHTS

CONDO
– “Price trends and sales for the entire year finished above prior-year levels.”

– Sales for the quarter fell year over year as median sales price edged higher
– The highest fourth-quarter inventory total in five years
– Negotiability tightened from year-ago levels as marketing time expanded

TOWNHOUSE
– “More sales and less inventory kept the pace of the market moving quickly in the final quarter of 2018.”

– Median sales price rose year over year after three straight quarters of declines
– Year to date median sales price was unchanged year over year as annual sales slid
– Listing inventory declined year over year for the first time six quarters

And some charts!






Market Report Gauntlet Q4-2018 Greenwich, Fairfield County

For Greenwich, CT, the news was weakness but I wonder if the crazy volitility in the financial markets were the root cause of the luxury sales slowdown countywide. Since I measure luxury as the top 10%, if those units stopped trading, the top 10% is at a lower echelon rather than an actual decline in property values.


Elliman Report: Greenwich Sales 4Q 2018

Elliman Report: Fairfield County Sales 4Q 2018

FAIRFIELD COUNTY HIGHLIGHTS

“Shift towards smaller sized properties as countywide sales slipped.”

– Median sales price declined for the second time in three quarters
– Number of sales declined year over year for fourth straight quarter
– Listing inventory rose after ten straight year over year quarterly declines
– Luxury price trend indicators skewed lower by a sharp decline in average sales size
– Luxury listing inventory rose year over year for the fourth straight quarter
– Entry threshold to the luxury market fell to its lowest level in four years


GREENWICH SALES HIGHLIGHTS

Overview “Condo sales surged as single-family sales showed modest slip.”

  • Single-family average sales size fell sharply, pulling down price trend indicators
  • Single-family sales slipped as listing inventory saw a modest gain
  • Condo sales surged as listing inventory edged higher
  • Sharp drop in luxury threshold reflected the shift away from the top of the market
  • Luxury listing inventory expanded with a slight tightening of negotiability

And some charts!





Market Report Gauntlet Q4-2018 South Florida

The report links will be available shortly. In addition to the research for the Elliman Reports covering South Florida, I compiled 5-year sales patterns for condo/single-family properties that sold over $1M. Their high-end is seeing sales growth:


Bloomberg TV 1-17-19: The Northeast to South Florida Housing Market Connection Explored

Just before I stepped on the set, I got to look at the file photo Bloomberg took about 15 years ago (I think I’ve aged gracefully) but I was also called out for it.


Here’s the interview along with a cameo by Sam Zell, lol!


The Big Mac index shows how strong the US Dollar is

If you are wondering why foreign investors in U.S. residential real estate are not what they used to be, look no further than the Big Mac you were about to devour. Does anyone at The Economist or really, anywhere, see the irony of the initials for “Big Mac Index” are “BMI” or am I over thinking this?


This Week in Aspirational Pricing

The quip “I’m like a farmer, outstanding in my field” crossed my mind when interviewed for this epic profile piece on prolific New York developer Gary Barnett and his Extell firm.

His success opened the door for other high-end towers across the city, permanently altering the Manhattan skyline. “The frenzy around One57 gave everyone the idea that this was a market that was ripe to be harvested,” said real-estate appraiser Jonathan Miller.

Barnett is currently building the tallest condominium in the world, over 1,500 feet high. This WSJ piece “The Man Behind Billionaires’ Row Battles to Sell the World’s Tallest Condo” supposed to be on the front page of WSJ today but it was bumped off to the real estate section. When I read this piece and their announcement of a new CEO, it made me wonder if investors were getting worried about the timing of this super luxury project in the middle of a market reset. Their nearby project One57 still has a lot of units left to sell and this new project is priced higher (however it is 50% taller with more views) and has twice the number of units. Will this project be the marker for the end of this era through “Billionaire’s Row?”

Aside from those concerns, I’ve always found this form of innovation fascinating and the constant change to the skyline exciting. Just peruse some old Dover-type books to see what I mean.


Foreclosures Are So Not A Part of The Housing Conversation Now

Here’s a press release from Attom (who acquired Realtytrac): U.S. Foreclosure Activity Drops to 13-Year Low in 2018


New in the Real Estate Lexicon: Down

The housing market conversation is using the word “down” quite a bit more than in the prior several years: California Existing Homes in December: Sales Down 12% YoY, Inventory Up 31% [Calculated Risk]

High Student Loan Debt and Low Homeownership Rates

The Federal Reserve released a research piece that includes discussion of the student loan debt crisis in a chapter called: Can Student Loan Debt Explain Low Homeownership Rates for Young Adults?

From 2005 to 2014, homeownership among 24-32 year-olds fell 8.8%.

The part of the “school debt to housing” connection that doesn’t get discussed is just how much the credit side of student loans mirrors what happened during the housing bubble. Schools can keep raising tuition because it is not seen by the students – everything can be covered by the easily-issued debt. Why do you think tuition costs have outpaced inflation?

College marketing commonly touts how more than half of their students graduate in 6 years! (in a 4-year program). My wife and I attended orientation for one of my sons. In the presentation, honor roll students were brought on stage and both the school and students touted how many students were getting a major AND 3-4 minors. None of that makes much economic sense. By now the disconnect between the cost of a college education and the benefit to their careers is being talked about. Fast and loose credit has enabled reckless spending by universities. There are no checks and balances – simply raise the fees and the students will pay for it…for years.

Here was the authors’ previous piece on the topic: A Trillion Dollar Question: What Predicts Student Loan Delinquency Risk?

All told, our finding that student loan balances are only a poor predictor of future student loan delinquencies challenges aspects of the popular narrative that frequently link borrowers with high student loan burdens (and often advanced degrees) to student loan debt repayment difficulties.


[Ritholz: MIB Podcast] Len Kiefer, Freddie Mac Deputy Chief Economist

My friend Barry Ritholtz interviews my zen-god for mortgage-related visualizations, Len Kiefer for his Masters in Business Radioshow/Podcast. Len is an amazing follow on twitter.

Upcoming Speaking Events

These aren’t upcoming but I had a great time speaking on the 84th floor of 1 World Trade Center this week with this view:

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

CoesterVMS is experiencing severe financial problems

If you haven’t been paid, I suspect it is a long shot for appraisers to recover anything from them. The irony here is that many AMCs attempt to verify an appraiser’s financial wherewithal when signing them up yet I suspect the shoe is more often on the other foot, especially when considering the scale of a controversial company like CoesterVMS.

Dave Towne wrote a piece on what to do if you’re still owed money by CoesterVMS.

Here’s an email I received as a certified appraiser in Connecticut. I’ve never done any work for them but it is nice to see that they are being proactive.

OFT (One Final Thought)

Only because this is weird.

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 migrate to Florida;
  • You’ll borrow to add 4 more college minors to you existing major;
  • And I’ll revisit my childhood Boston accent.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


January 11, 2019

Sometimes We Don’t See Signs Of Housing Trends Until They Hit Us

Since the New Year began, reporting on the housing market has been consistent in identifying that many markets are undergoing changes after many years of consistent white hot conditions. In many ways the changes that are being openly discussed already began more than a year ago but consensus wasn’t yet formed. Now the chorus is getting louder.


No more signs to share – but I do have some cool charts below.

I clearly have digressed.

Market Report Gauntlet Q4 Week 2: Westchester, Putnam & Dutchess Counties

Since 1994, I’ve been the author of an expanding independent series of market reports for Douglas Elliman, the third largest real estate company in the U.S. After each quarter ends, they publish our research in more than 30 U.S. housing markets in what I call “The Gauntlet.”

Elliman Report: Q4-2018 Westchester Sales
Elliman Report: Q4-2018 Putnam & Dutchess Sales

Bloomberg provided a nice chart on our results for the quarter illustrating the tight co-op market. I’ve got this data back to 1994. The chart shows the compression (faster speed) of the past two years.


WESTCHESTER SALES MARKET HIGHLIGHTS
Countywide
– Overall price trend indicators slid year over year by a shift in the mix toward apartment sales
– Single-family and 2-4 family sales and their market share declined year over year
– Total contracts fell year over year for the fourth consecutive quarter

Single Family
– Sales declined annually for the sixth consecutive quarter
– Total contracts fell annually for the ninth straight quarter
– Listing inventory expanded annually for the third consecutive quarter


PUTNAM SALES MARKET HIGHLIGHTS
– In contrast with the region, sales rose year over year for the third time in the past four quarters
– Inventory, marketing time and negotiability tightened year over year
– Median sales price increased year over year for the seventh consecutive quarter


DUTCHESS SALES MARKET HIGHLIGHTS
– Listing inventory rose year over year for the second straight quarter after falling for the previous nine
– The number of sales decreased year over year for the fourth consecutive quarter
– All price trend indicators rose year over year for the second consecutive quarter


Market Report Gauntlet Q4 Week 2: Brooklyn, Queens & Riverdale Sales

Elliman Report: Q4-2018 Brooklyn Sales
Elliman Report: Q4-2018 Northwest Queens Sales
Elliman Report: Q4-2018 Queens Sales
Elliman Report: Q4-2018 Riverdale Sales

BROOKLYN SALES MARKET HIGHLIGHTS
– The market continued to be characterized by steadily rising prices, and a fast-moving pace.
– The number of sales declined year over year for the fourth consecutive quarter
– After reaching a record low in the prior year quarter, listing inventory rose sharply
– Median and average sales price increased year over year for the second consecutive quarter


QUEENS SALES MARKET HIGHLIGHTS
– Consistency in setting new price records, sliding sales, and rising inventory trends
– Seventh consecutive quarter with average sales price record
– Fifth consecutive quarter of year over year declining sales
– Listing inventory rose year over year for the seventh consecutive quarter


RIVERDALE SALES MARKET HIGHLIGHTS
[includes Fieldston, Hudson Hill, North Riverdale and Spuyten Duyvil]
– Price trends moved higher despite rising inventory
– All price trend indicators move higher as sales fell sharply
– Listing inventory edged higher, but marketing time dropped
– Negotiability eased nominally as the market pace slowed


Market Report Gauntlet December 2018: Manhattan, Brooklyn & Queens Rental Markets

Elliman Report: 12-2018 Manhattan, Brooklyn & Queens Rentals

MANHATTAN RENTAL MARKET HIGHLIGHTS
– The Manhattan rental market saw fewer new leases, more concessions, and aggregate prices skewed upward by higher quality rental housing stock.
– Median net effective rent slid year over year for the second consecutive month
– Vacancy rate continued to fall year over year, down for the seventh consecutive month
– Market share of concessions rose year over year for the forty-third consecutive month
– Mid-tier, entry tier and starter median rent moved higher year over year
– Luxury median rent fell year over year for the fifth time in the past six months


BROOKLYN RENTAL MARKET HIGHLIGHTS
– The Brooklyn rental market continued its trend of rising rents skewed higher by the influx of higher quality new development rentals.
– Market share of 2-bedroom and 3-bedroom rentals rose 1.8%, skewing overall price trends higher
– Median net effective rent rose year over year for the second time in five months
– Market share of concessions increased year over year for the 35th consecutive month


QUEENS RENTAL MARKET HIGHLIGHTS [Northwest Region]
– The Amazon “HQ2” announcement has led to speculation that the market will tighten soon if not already. It hasn’t.
– Rental price trend indicators skewed higher by an influx of new development product
– Market share of concessions increased year over year for the 4th consecutive month
– Only 2-bedrooms saw a year over year rise in rental market share


Shifting Fortunes of International Real Estate

Knight Frank, a global real estate firm affiliated with Douglas Elliman has issued forecasts for 2019 for a number of global cities. Europe (and Miami) are poised to be standouts.


Home Sales Are Slowing

Here’s a Bloomberg video featuring our Elliman Report research on slowing sales. Admittedly I prefer rock music in the background.

New in the Real Estate Lexicon: Shutdown

Please be advised that surveys are one step worse than bad data but NAR is taking an aggressive stance on the impact of the shutdown to the spring housing market.

Among those that reported problems, 9 percent said clients who were federal employees had held back from buying, while 25 percent said buyers pulled out simply because of “economic uncertainty,” according to the report. Of those, about half had closings delayed or canceled because customers’ mortgages were backed by the Federal Housing Administration, U.S. Department of Veterans Affairs or the U.S. Department of Agriculture.

Uncertainty Still Remains Popular in The Housing Lexicon to the point where homebuilders can’t forecast their outlook for the year. Now THATS uncertainty.

The “R” word

According to JP Morgan, the odds of a recession in two years are 70%

The issue isn’t whether we will go into one – we always do eventually. The issue is how bad it will be. Rates are already low so the Fed has less wiggle room to work with since the tax cut was made a time when the economy was booming – generally the opposite moment when a tax cut should be issued. The Indicator Podcast by Planet Money does a great job explaining.

This Week in Aspirational Pricing

Yawn, another $125 Million Los Angeles listing.

Here’s proof that titans of Wall Street don’t get housing. The $70 million price cut from a $115 million price set five years ago isn’t a price cut. The cut really shows how wildly over the market the listing was priced around the time of “Peak Luxury.”

According to our data, the top 1% of the market had an average sales price of $28,447,888 in 4Q18, a 97% increase since 4Q13. Basically double. This listing cut its price by 61% over the same period. Wow.

Punchbowl Economics: Metro Home Supply-Demand Imbalance

This AEI study (h/t Ritholtz) is measuring recent market changes across 100 metros.

I love how AEI constantly refers to the “punch bowl” in a serious research piece:

Minimal access to the leverage punch bowl makes difficult for buyers in high price tier (almost exclusively repeat buyers) to offset higher home prices and interest rates. As noted earlier, these buyers have been using quality trade-offs to offset rising constant quality home prices. As a result, 40 of 100 metros are buyer’s markets, while many others are just moderate seller’s markets.

Raking The Living Room Carpet

One of my friends during college had a mom that was a bit enthusiastic about there living room. It was a shrine. The carpet was “raked” so she could see if the kids ventured into the room where all the couches and chairs with covered in clear plastic.

I found this Curbed article by must read McMansion Hell author fascinating: “Our homes don’t need formal spaces

One of the simplest reasons so many clamor for formal spaces is because they are a signifier of wealth and prestige, a sign of having “made it.”

Working With Appraisers

Here’s a good video for agents to better understand how to work with appraisers – wait for the end of the clip.


h/t Maureen Sweeney

Upcoming Speaking Events


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

12-24 Hour Valuations: How Are We Worth So Little?

An appraiser sent me the following email. It has become clear to me that the valuation industry that engages appraisers now places more value on the physical inspection than it does the actual valuation itself.

Why?

They can’t replicate the interior inspection so the valuation portion is where the fee shaving occurs and believe they can come up with the value themselves or find people that will work for wages that won’t attract people who are competent, but rather, people that are desperate.

[Bold for emphasis]


Hello,

You are receiving this email because you have expressed interest in completing desktop products for Computershare. If you are not interested in completing these products and wish to no longer be contacted, please let me know and I will remove you from our list.

We have recently completed a recording of our AppraisalX (Desktop Hybrid Appraisal) and ARA (Appraisal Review) training session and made it available for everyone on our BrickFTP site. This training runs for approximately an hour and covers both products as well as general system navigation within our Acuity platform. This is a requirement to complete, along with a short test, in order to be eligible to receive these assignments.

On the BrickFTP site you will find our video labeled “AppraisalX _ ARA Training Recording 2018-09-18” which is in .mp4, .mov, .wmv, or .avi format. These are all the same video, just different formats that your computer or portable device might be able to read. Also included within the BrickFTP site are our training documents: (Three for each product) A completion guide, instructions and an example. This documentation should be downloaded and reviewed in conjunction with the video and testing.

Within the video there will be instructions on how to contact us to have the tests sent to you. These tests will be sent through SurveyMonkey, which is a third party site. You are required to get a 90% or better on each test to be eligible. If you fail the test the first time a wait period of a week is enforced before a new test will be sent to you. If you fail the test twice, you will not be eligible to complete that particular product. We do allow you to review the documentation while taking the test, so these are essentially open book tests to ensure you pass.

Each of these products pays $50. The typical turn time for the AppraisalX is 24 hours from assignment. The ARA has two different turn times based on the clients’ needs. One is 24 hours, and the other is 12 hours (or basically the next morning).

Below you’ll find the link to our BrickFTP site as well as the login information you will need to access the video and training documentation. When you login to the site, click the upper left icon that says “All Files”. This will take you to the videos and documentation. You do not need to download any additional software to view these files. The website does have an option, but we don’t recommend this.


URL: https://computershare.brickftp.com/v3/login

Username: HybridAppraisalTraining
Password: training@1234!

If you have any additional questions regarding this, feel free to reach out to me directly.

Thank you again and we look forward to working with you!

Sean Buford
Computershare
Sr Valuation Analyst > Loan Services > Property Solutions
T +1 303 895 2858
8742 Lucent Boulevard, Highlands Ranch, CO 80129
www.clsps.us

Because firms like this and their clients believe they can reliably value property through automation despite clear evidence they can’t. Their clients don’t seem to care about valuation reliability because of the need to drive more lending as profits have waned as well as the moral hazard created by the federal backstop used in 2008. The taxpayers will bail these institutions out.

Our industry has a weak voice, largely from a combination of self-loathing, ineffective trade group leadership and the shear nature of the largess of the financial institutions that lobby against us. We are the last resort for the consumer and taxpayer, but ultimately regulatory authorities have yet to prove they care.

OFT (One Final Thought)

And you thought Millennials were hard to understand:


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 overprice their listing;
  • You’ll rake the carpet;
  • And I’ll dig out my rotary dial telephone.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


January 4, 2019

‘This Is A Moment’ For Housing: Serenading Cows With A Trombone Edition

A little over a year ago our market research across the U.S. began to show that housing trends were weakening, largely based on sales, not price trends. But very few in the real estate seemed to be talking openly about it. But over time the chorus got louder and by the end of 2018, it became very clear to many that market conditions were weaker now than the prior year, but to varying degrees.

This “cows enjoying trombone music” provides the perfect analogy, without getting into other quotes like “the grass is always greener…” or and “I gotta have more cowbell.


Market Report Gauntlet Q4-2018 Week 1: Manhattan (and Northern Manhattan)

To start the new year, Douglas Elliman, the 3rd largest real estate brokerage firm in the U.S., published my research on the Manhattan sales market. I’ve been the author of the expanding Elliman Report series since 1994 (and we are adding two more reports this month! – more on that later).

The Reports
Elliman Report: Manhattan Sales
Elliman Report: Northern Manhattan Sales

Video Interviews About Our Report

My interview on Yahoo Finance TV was fun!


Others bantering about our report results on Bloomberg TV based on this article:


And here is a great interview with New York City Douglas Elliman CEO Steven James on CBS Channel 2’s new streaming service:


Bloomberg created a nice chart on the $999,000 median sales price falling below the $1 million threshold.

And of course, a sample of our Manhattan charts More here.





Going Back In Time, Block By Block

There is a fun visualization story by the New York Times if you have time to kill: Every Building on Every Block: A Time Capsule of 1930s New York

In the late 1930s and early 1940s, New York City sent photographers to every building in every borough in an attempt to make property tax assessments fairer and more accurate.

Riding Elevators All Day, Sometimes With Gruesome Results

As appraisers in Manhattan, our staff collectively rides elevators every day. According to this alarming investigative piece by The Real Deal: Elevated risk, there are 63,000 elevators in New York City enabling an estimated 1 billion rides, annually and people die more often than you think.

Since 2010, at least 22 people have been killed in passenger elevators or shafts in the city, and there have been nearly 500 incidents, 48 of which led to serious injuries, according to the DOB.

The piece has a collection of gruesome stories, many not for the faint of heart.

They built a nifty tool to verify what outstanding issues remained in each building. Thankful, the office building where our company is based is well-managed and has no issues.


TROUBLE: Things To Look For In Fraud (Video)

Back in 2008, when the Madoff case broke, it was clear that a declining market prevented his Ponzi scheme from continuing. With evidence of a national housing slowdown becoming more and more tangible, it makes me wonder if we will see such schemes related to housing begin to appear. Our firm was hired for some of the cleanup. This Institutional Investor video is a compelling narrative of an investor who didn’t fall for the Madoff fraud. Seems like good common sense advice is being dispensed. Click image to play video.

h/t to Barry Ritholtz.


[Institutional Investor – click image to play]

When Government Raises Taxes On Residential Properties, This Happens

Vancouver, Canada has been the poster child for trying to tamp down foreign buyer appetites for their new development condos. Foreign buyers, especially from Asia, flooded the market shortly after the financial crisis to diversify risk. In response, the government instituted taxes to discourage foreign investment and values began to decline. The emphasis was focused on the upper end of their market. It also interesting that the national housing stats in Canada have shown declines but Vancouver was the first to fall. With only 5 major markets nationwide, they played a large role in the national decline in housing trends.

Newsflash!!!! Higher housing costs suppress housing prices.


Upcoming Speaking Events


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

To all my friends and colleagues, I ran out of time this week to do any deep thinking (if you call my thinking “deep”). IRONY ALERT: A slew of appraisal business and research absorbed my time allotted for Appraiserville.

Next Week!

OFT (One Final Thought)


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 be more like old photos;
  • You’ll want more cow bell;
  • And I’ll be on TV even more in 2019.

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 J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads