March 5, 2021

Housing Construction Port-A-Potties Have Reached Their Max Headroom

Not all data is presented as numbers. For years, I have collected names of construction port-a-potties and this week, I tripped over a new one, while waiting in line for my first COVID vaccine.

Here is the go list:

Royal Flush
Johnny on the Spot
Jiffy John
Scottie’s Potties – we’re no 1 in the no 2 business
Gotta Go
Call a Head
Mr. John
Don’s Johns
GI John’s: it’s go time


But I digress…

New Signed Contract Activity Shows Rabid Demand Across All Markets Covered; Manhattan Finally Arrived, But Was Late To The Party

Douglas Elliman just published our new signed contract research for the month of February, and it was blistering in the New York, Florida, Colorado and California markets we cover.

CNBC reported using our data that the Manhattan housing market was the standout.Here’s a screenshot from my internal spreadsheet – it represents the YOY% trend of all three property types combined. In journalism, we know that three data points make a trend…



California
Los Angeles County
The new year has seen two straight months with year over year gains in the combination of single family and condo new signed contracts. The month of February saw the largest annual increase in new signed contracts since this report series began last April. New inventory has fallen year over year by half over the last four months, keeping the pressure up on the market.

Orange County
New inventory for single family and condos combined fell year over year by the largest amount since April when tracking began. The new year has seen two straight months with year over year gains in the combination of single family and condo new signed contracts. The month of February saw the second-largest annual increase in new signed contracts since this report series began last April, with January seeing a slightly larger gain.

San Diego County
The new year has seen two straight months with year over year gains in the combination of single family and condo new signed contracts. New inventory for single family and condos combined fell year over year by the largest amount since May when tracking began, keeping the pressure up on the market.


Colorado
Aspen
February was the eighth straight month with significant year over year gains in the combination of single family and condo new signed contracts. The month of February saw the largest annual increase in new signed contracts since this report series began last April. The continuation of heavy sales levels has begun to pull new inventory into the market, as evidenced by the second straight month of year over year gains after two months of annual declines.

Snowmass Village
The combination of single family and condo new signed contracts rose sharply year over year for the sixth time in seven months. High sales volume has pulled in significant new inventory for both months in the new year.


Florida
Palm Beach County
Single family and condo new signed contracts combined have risen significantly year over year for the twelfth consecutive month. New inventory has seen modest annual declines for the third time in four months, unable to keep up with the robust sales activity.

Broward County
The combination of single family and condo new signed contracts rose sharply year over year for the twelfth consecutive month. New inventory has seen expanding declines since October, unable to keep up with sales.

Miami-Dade County
New signed contracts for condos surged year over year by the highest amount since tracking began in May. New condo listing inventory fell significantly year over year since June. Single family new signed contracts surged annually at their highest rate since July as supply fell annually for the fourth time in five months.

Pinellas County Since July, the combination of single family and condo new signed contracts rose sharply year over year at its highest rate. New inventory has declined year over year for four consecutive months, unable to keep up with sales.

Hillsborough County
Single family and condo new signed contracts combined have risen significantly year over year for the twelfth straight month. New inventory has seen modest annual declines for the third time in four months, unable to keep up with the heavy sales levels.


New York
Manhattan
For the third straight month, new signed contracts for co-ops, condos, and 1-3 families combined have risen annually. Manhattan has lagged the region in activity since the summer but appears to be catching up in the new year. The new listings coming to market have declined year over year for five consecutive months, overpowered by rising sales levels.

Brooklyn
New signed contracts for co-ops, condos, and 1-3 families combined have risen significantly year over year for eight consecutive months. Despite the heavy new signed contract gains since July, new listing inventory has increased annually since June as robust conditions have encouraged more property owners to list.

Long Island (excluding H/NF)
For the first time since June, new signed contracts for condos and single families combined did not rise year over year. The sharp annual drop in listing inventory over the past two months has restrained new signed contract levels.

Hamptons
New signed contracts for condos and single families combined had risen significantly year over year since May when tracking began. The sustained year over year sales surge since the spring finally began to overpower new listing inventory in the new year, which fell sharply.

North Fork
New signed contracts for condos and single families combined saw a modest year over year gain after slipping in January. New listing inventory has fallen sharply year over year for three straight months.

Westchester
New signed contracts for condos and single families combined have risen significantly year over year since July. The extended sales surge finally began to overpower new listing inventory in the new year, which fell sharply in January and February.

Fairfield
New inventory for condos and single families combined has shown significant year over year declines since October, restraining new signed contract activity in January and February of this year.

Greenwich
New signed contracts for condos and single families combined had risen significantly year over year since July when tracking began. The sustained year over year sales surge since the summer finally began to overpower new listing inventory by this month.

The Suburban Plunge In Listing Inventory Continues While Expanded Vaccine Distribution May Help Resolve The Shortage

The New York Times and Bloomberg News looked at the collapse of listing inventory in the suburban markets that surround New York City.

The plunge in mortgage rates have stimulated sales demand nationwide to the extent that listing inventory has collapsed. This is the current plight of suburban housing markets.

The Manhattan Decade Report Results Included A Global Financial Crisis And A Global Pandemic

Elliman Report: 2011-2020 Manhattan Decade

I haven’t given the The Elliman Report: 2011-2020 Decade Manhattan Report a proper shout out since Douglas Elliman published it last month. The report is nearly 60 pages of co-op and condo market results by region, neighborhood, property type and other views during a ten year moving window. The first iteration for Douglas Elliman was way back in 1996 when it covered the market from 1989-1996, not quite a decade but hey, it was a start.


Manhattan Townhouse Buyers Got More For Their Money, But Weren’t The COVID-Safe Haven That Was Anticipated

This month in my monthly data contribution to the New York Times Real Estate Section’s Calculator Columm, it’s all about townhouses: Townhouse Buyers Are Getting More for Their Money.

The Elliman Report: 2011-2020 Decade Manhattan Townhouse Report

But while the shift to buying bigger has been part of the pandemic story — particularly suburban buyers seeking single-family homes for working, schooling and everything else — in Manhattan, it was a dearth of sales that helped drive up the median price.

There was an initial narrative that with Covid there’s going to be this flight to townhouses, from multifamily, from condos, when actually the number of sales for townhouses was the lowest in 24 years

Here’s the table illustrating average square footage trends…

Greenwich Connecticut, The Luxury Suburb, Continues To Boom

Bloomberg did a story relying on our new signed contract research for the Greenwich housing market – sales conditions continue to out perform the regional housing market.

The large estate portion known as “Backcountry” has switched back on, after being dormant since 2007.

Those with a taste for the ultra-luxury have turned their attention to Greenwich’s older estates outside the town center, which had fallen out of favor in recent years. Two homes listed at $20 million or more found buyers last month, compared with none in February 2020.

[Podcast] Barron’s Live – Feb. 26: Understanding Home Values in a Shifting Market

I joined Barron’s Live again for a fun discussion with Beckie Strum on appraising and how the housing market recovery is taking shape in the new year. This event was supposed to be a video chat but my new gigabit fiber optic internet service dropped about 5 minutes in (I think the culprit was my VPN) and I had to scramble and call in to do the interview on a backup number. That disaster has been edited out and the audio interview is available in their podcast feed:

Understanding Home Values in a Shifting Marke‪t‬ [Barron’s Live]

[VIDEO] The Pandemic Renter Wish List Is Likely Short Term

I did a quick interview for Fox5 NY this week. The laundry list of amenities tenants ask for in return for moving out of the city seems temporary to me. As the vaccine distribution expands and the infection rate drops, those amenities on the wish list will be much less important. Remember, those items are an offset for being cooped up in the city. I believe much of the amenity hype dissolves when companies call their employees back and the city is more widely perceived as safe.


The Compass IPO Chronicles: They Might SPAC

Why do I continue to write about the brokerage firm Compass? Partly because it is the business model grift gift that keeps on giving.

There has been so much to write about because so much they have said seems disconnected with an understanding of real estate or is representative of the prior bubble era. To be clear, I have good friends that are agents that moved there, like it there, and I wish them well. They’ll be fine in whatever the company’s outcome and their intentions are not in question. The “emperor wears no clothes” sense I get after reading what Compass constantly puts out truly galls my “right versus wrong” sensibilities as they appear to be nothing more than a “disruptor by capital.” I’ve been watching this firm since they were known as Urban Compass, and I seem to recall a press release or quote after their first year in business that indicated they were returning to a “traditional business model” because their initial efforts only attracted a few dozen rental agents. Unfortunately, that press release or quote appears to have been scrubbed from the internet, or I am showing my age.

With the massive implosion of WeWork a while back (and the recent $500 billion reward to the founder for blowing it up), Compass stopped touting them as a believer in their approach since it was clear that little due diligence was applied to Softbank’s WeWork investment. Compass had to delay their IPO plans and worked hard to dissociate with Softbank, including sending emails out to their agents explaining how to say it.

With the traditional IPO route now in question for them post-WeWork, their recently filed S-1 raises a lot of questions. Both Housingwire and The Real Deal have been all over this filing.

In the Housingwire piece I said…

“They showed a $270 million loss in an insanely booming housing market,” noted Jonathan Miller, a real estate appraiser at Miller Samuel. The S-1’s main sales points, especially an introductory section where Compass walks through its agent-friendly technology, “seems to show how little they understand the brokerage space or are just ignoring it,” Miller said.

And this is the key point made by many over the past several years:

“I do not see any identifiable technology advantages from Compass over other brokerage firms,” said Ken Johnson, a real estate economist at Florida Atlantic University. “Compass appears to be another real estate franchise with a bit more integrated use of technology and aggressive marketing.”

In other words, how does reducing agent clerical efforts slightly, result in billions in valuation premium?

Mike DePrete is offering a webinar on it today. Here’s his chart-heavy analysis from 2019. Here’s a couple of examples:


SPAC talk, of course

There have been rumors of Compass using a SPAC as a workaround vehicle instead of a traditional IPO.

For those of you not familiar with SPACS, and the fact that celebrities are often associated with them, gave me pause – especially when former NY Yankee A-Rod had one. There is a good New York Times piece on SPACS that explains them and my friend Barry Ritholtz has some spectacular quotes:

Anyone Who’s Anyone Has a SPAC Right Now [NY Times]

What is a SPAC (special purpose acquisition company)?

SPACs are shell corporations that list on a stock exchange, with the goal of buying a private business and taking it public. In essence, a SPAC is a way to do an I.P.O. without all the time, expense and regulatory oversight traditionally required. The sponsors of a SPAC typically have two years to identify acquisitions or must return their investors’ money.


And Barry Ritholtz‘s Quotes:

‘Hey, listen, there’s this hot new financial offering. Let’s put your name and celebrity on it,’” Mr. Ritholtz said. “‘You’re going to bring some fairy dust to a SPAC and the potential upside is tens if not hundreds of millions of dollars.’”

“but if it works out, it’s $100 million,” Mr. Ritholtz said. “Humans love asymmetrical risk-reward situations.”

“I can’t believe we haven’t seen a Kim Kardashian SPAC yet.”

Barry also cited Sturgeon’s Law


[click on chart for Barry’s post]

Seems about right.

Appraiserville

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

Risk Management Association’s Chief Appraisers Virtual Round Table

This week I spoke to a group of chief appraisers that run the valuation groups for many of largest banks in the world. It’s an invitation only event run by the Risk Management Association – I was very appreciative of opportunity to present and extremely appreciative of the valuation knowledge of the audience. I spoke about the forms the COVID housing recovery is taking, focusing on the urban/suburban housing tension.

NAR’s EXCELLENT Response To FHFA’s ‘Request for Information on Appraisal-Related Policies, Practices, and Processes’

I can only assume that this NAR Letter to FHFA was crafted by the NAR Appraisal Section of appraisal industry leaders that has been behind other recent excellent thought pieces. This was a spectacular starting point summary on the appraisal industry’s situation today and the overpromise of technology:

Discriminatory bias could be factor with whomever is conducting the inspection of a home, whether it is an appraiser or a third-party inspector. There is evidence that algorithm-based decision-making tools can be designed in ways that create discriminatory outcomes. 4 Likewise, switching out one form of valuation for another sidesteps the necessary work of actively dismantling biased and discriminatory behavior. NAR urges FHFA to work with partner organizations, such as NAR and the Appraisal Foundation, to develop education and materials on bias, discrimination, and other fair housing related issues that speaks directly to the experience of the appraiser to truly address the issue with discrimination in the appraisal process.


Two quick observations on “partner organizations” mentioned in the piece:

Lack of leadership is one of the biggest issues facing the industry today – none of the big appraisal organizations are recognized by the real estate appraisal masses as leaders since they are mired in their problems or are focused on everything but appraisers themselves. I thought it was interesting that NAR didn’t mention the Appraisal Institute. And I found it even more interesting that The Appraisal Foundation was cited. Yet, TAF is the poster child for little to no representation of minorities and women through their three-decade existence. In fact, the TAF head of their diversity initiative is not a minority. The ASA seems like it would have been more worthy of a mention, not to take anything away from this excellent NAR thought piece.

OFT (One Final Thought)

I almost forgot about the Max Headroom phenomenon on the mid-80s. It hasn’t aged well but it was a thing.


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 MAX;
  • You’ll be have more Headroom;
  • And I’ll remeber its go time.

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 26, 2021

Housing Mobility Is Limited (To Six Blocks)

The lack of listing inventory is one of the reasons homeowners can be limited in their mobility. The existence of hills is another reason…


But I digress…

Altos Research Research Shows The Severe Descent In Listing Inventory

My friend Michael Simonsen, the C.E.O. of Altos Research who loves my new housing word “coprimary,” provides some eye-popping data for the New York Times Upshot.

“The supply side is really tricky,” said Benjamin Keys, an economist at the Wharton Business School at the University of Pennsylvania. “Who wants to sell a house in the middle of a pandemic? That’s what I keep coming back to. Is this a time you want to open your house up to people walking through it? No, of course not.”

A majority of homeowners in America are baby boomers — a group at heightened risk from the coronavirus. If many of them have been reluctant to move out and downsize over the past year, that makes it hard for other families behind them to move in and upgrade.



Zillow Has Started To Use Their “Starting Point” Zestimate For Cash Offers

Zillow Starts Making Cash Offers For the Zestimate [Zillow]

For years, Zillow has described the Zestimate as a place to start but it is not an appraisal (to limit their legal exposure). Yet now they are going to use it as a basis for cash offers? Given the Zestimates inaccuracy…what a 5% median accuracy rate means: The Zestimate is within 5% of the actual value 50% of the time and 50% it is not. This seems quite reckless, no? What am I missing?


Chicagoland brokers skeptical of Zillow Purchase of Showingtime

The Showingtime feature on most MLS web sites is pretty cool, but real estate brokers are wary after their acquisition by Zillow. When Zillow was launched more than a decade ago it assured the brokerage community it would not become a competitor – until it was. This began a few years ago with their iBuyer initiative was launched after it saw the progress OpenDoor was making.

Chicagoland brokers skeptical of Zillow deal [Chicago Agent Magazine]

Wall Street Bonuses Won’t Be Stellar Despite High Profits

Wall Street compensation continues to have less and less impact on New York City real estate activity, even with higher profits.


South Korea Continues To Be Obsessed With New York City Real Estate

KBS, the 60 Minutes equivalent on the largest TV network in South Korea interviewed me for segment to be aired sometime next week. This was a shortened version and I’m on for only about 10 seconds. I’m sharing this because I’ve never spoken with a sign translator adjacent to me on screen. Fun!


[click to play]

Getting Graphic


Len Kiefer‘s Chart Handiwork

Barrons Live

Beckie Strum, Mansion Global managing editor, and Jonathan Miller, president and CEO of New York-based appraisal firm Miller Samuel, discuss the nuts and bolts of home value and how appraisers are navigating a fast-moving home market.

During my interview recording today during the writing of these Housing Notes, my brand new installed Gigabit internet cut out and we had to switch to audio only. I’ll publish the link here in. few hours and in next week’s Housing Notes, but to listen to it you have to register.

Appraiserville

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

[Amateur Hour] TAF Used COVID As An Excuse To ‘Expand’ USPAP For One More Year

[This is a teaser to a much larger thought piece for next week, so stay tuned!]
So many questions about this FUBAR decision… While I’m happy about the longer USPAP cycle’s general concept, that’s not what this action really is. This move was purely political, and worst of all, there was no research done on them impact on the stakeholders downstream and the 55 jurisdictions. At the ASB public event last week, David said that this doesn’t mean the three-year cycle is permanent, or that it won’t just revert to two years again, or that it might go to a subscription service or done “as needed” update system. NOTHING IS KNOWN AT THIS POINT. The fact is that TAF has been under tremendous pressure to expand USPAP beyond two years for a long time but has chosen to keep it at two years so that the money keeps rolling into the nonprofit. TAF used COVID as a convenient reason to extend another year, but instead of using this moment to fix the longstanding problem, they’ve created a regulatory monster. Where’s TAF’s leadership on this – wow, this is amateur hour. I’d argue that COVID has had no impact on TAF’s ability to function. I’d argue that COVID made TAF more efficient without all the meetings to exotic places to talk about the same things that don’t change over and over again.

One has to wonder if TAF’s recent love affair with the Appraisal Institute, especially after sending that bat-shit crazy letter to ASC, isn’t the real reason for Dave’s extension of another year. The Appraisal Institute has been hellbent on expanding the USPAP cycle for years, and I’m speculating if that was the actual reason for this ‘out of nowhere’ decision.

Plus, I keep wondering about all that saved TAF travel money along with the $8M to $10M estimated in reserves and their refusal to accept grant money from the ASC as Congress intended. Hence, they aren’t subject to oversight makes their motives for this change incredibly suspect. If TAF cannot project trustworthy behavior to the appraisal industry they provide standards to, how do they expect the appraisal industry to protect the public trust?

Much like the Appraisal Institute, The Appraisal Foundation is collapsing in credibility right before our eyes.

The Academia versus AVM Smackdown Over Value

The best appraisers and appraisal models will often conclude market value is above or below the sale price. – Dr. Norman G. Miller, PhD

There was a total appraisal nerd debate in the Appraisal Journal between Dr. Norman G. Miller, PhD and Isakson, Ecker and Kennedy of Lee Kennedy of AVMetrics, the firm that rates the accuracy of AVM in use today. The only person I know of in the group is Lee Kennedy whom I’ve met at various events in D.C. and elsewhere.

If you can get a copy of the Fall 2020 Appraisal Journal [subscription] you can partake in the “price does not equal value” debate on page 275 – Miller (no relation) makes the point that when AVMs are compared against the results of appraisals, AVMs speak to price and appraisers speak to value. They are not the same.

The fact that selling price is not always market value is the primary assumption in the testing and validation of appraisal valuation models. Experienced appraisers know that sometimes you must adjust a selling price and not take price as a given. My point here is that sale price is not always representative of market value or most probable price. Assuming it is the best representation of market value automatically induces appraisal error, according to Isakson, Ecker, and Kennedy, which then is overstated. Reality suggests that some people pay more than average and some pay less. An appraisal that does not match selling price is not necessarily an error.

and…

These conditions are sometimes not known or not met. Buyers and sellers may not be typically motivated or equally informed. Sometimes sellers are motivated for a quicker sale and intentionally underprice the property to attract more buyers. This can result in a bidding war on occasion or a below-market sale price on other occasions.

and…

They go on to describe several metrics, including the forecast standard deviation (FSD) of the error, again based on sale price not based on most probable price, which they do not know. They suggest that the FSD of appraisal error is likely underreported and that is why we all need someone like a third-party vendor to calculate them for us. They also suggest buckets of “error” to look for extreme errors or compare buckets to price tiers or geography, but none of this is relevant unless you assume that sale price is the only possible correct value conclusion. It ignores inherent price dispersion within the market and the real purpose behind most home appraisals, which is to support financing risk analysis.

AVMetrics counters with this smackdown of the position of academia:

The use of selling prices to calculate sales errors, from which nearly all AVM performance metrics are derived, is ubiquitous in the AVM industry, in spite of Dr. Miller’s concern that these metrics ignore price dispersion within the market. The discussion of price dispersion is an academic exercise that has not been established to provide any real-world usefulness to today’s valuation practitioner. In addition, the proposed foreclosure-based metric for measuring the accuracy of valuations lacks a coherent definition and is unproven in practical application.

It seems to me that while the academic point made between price and value dispersion is spot on, AVMetrics justify the use of AVMs because there is no alternative and the whole world uses price because, well, they just do.

Please feel free to share your wonkiness on this topic with me.

Epic Fail: The Appraisal Institute IRS 990s Show They Need To Do A 180

The following was posted on February 24th over on my Matrix Blog.

As I’ve chronicled in the Appraiserville section of my Housing Notes newsletter since 2016, the scale of Appraisal Institute bureaucratic self-dealing of the executive committee and some members of the AI Board of Directors is breathtaking. Over the past decade or more, AI National has been able to keep a lid on the membership backlash by threatening to remove a member’s credentials for speaking out. Membership has been reluctant to risk losing something they worked hard for in both time and money that they have remained quiet – until the past few years. With the significant devaluation of the SRA designation and growing signs of the MAI designation’s devaluation, more are coming forward.

The FOJs (Friends of Jim Amorin) have been using that freedom from oversight to act with impunity. They are more openly corrupt now than ever because that’s the only institutional memory they possess. However, we are seeing some signs that more AI Board of Directors aren’t interested in rubber stamping FOJ efforts, as illustrated in the previous board meeting results.

The next board meeting is coming up tomorrow and Friday, and it is a seminal moment for the Appraisal Institute. It is where the BOD gets to vote on Jim Amorin’s new contract that the entire board has not seen. As a reminder to board members: your job is to represent your membership, not the executive committee. You can’t vote in favor in good conscience, if you haven’t seen it or been exposed to the key terms. Your role as a member of the AI Board of Directors is critical to the Appraisal Institute’s future and your responsibility is real.

The Appraisal Institute has an IRS nonprofit tax code designation: 501(c)(6) “Defined as Business leagues, chambers of commerce, real estate boards, etc., created for the improvement of business conditions.”

At this point, it is hard to see this organization as “created for the improvement of business conditions.” Given the long-time failure of organizational leadership as measured by the empirical data extracted from the 990s tax filings in public record shared below, this organization needs a complete makeover immediately. It starts with the current CEO.

I hope some in AI membership will use the information shared below to bring an inquiry to the U.S. Attorney’s Office for the Northern District of Illinois.

Over the past few days, a detailed analysis of the Appraisal Institute’s performance from 2006-2019 has gone viral within the industry. The anonymous author(s) analyzed AI National’s 990 tax filings in a series of charts and tables by “Concerned Members,” and you can download it here: The Appraisal Institute as Told by the 990s [click on each to expand].

The results should send an alarm to membership and the AI Board of Directors on the organization’s future. The FOJs have poisoned the leadership culture, which has damaged the value of the designation brands and the organization’s credibility to the business world. None of this would have been possible if designated members weren’t vulnerable to the threat of losing their designations if they chose to speak out. But with the perceived value of membership declining, the fear of the threats by the organization has been diminished.

Here is my favorite chart of the 990s presentation. Current CEO Jim Amorin was made president (for the second time) in 2017. Now, look at the chart.

The following pages are the same found in the full pdf document.

Here are what the numbers tell me, as an outsider to the organization:

  • To offset the steady long-term membership decline (-29.2% from 2008-2019), membership dues as a percentage of total revenue rose steadily over the same period. This action kept revenue coming in. With all that newfound revenue, the FOJ AI executives and AI Board of Directors viewed this as an opportunity to lavish high salaries on all.
  • The data table on page 10 shows that expenses are remarkably flat, yet membership has fallen sharply over the same period. If membership falls another 7,500 over the decade, will expenses continue to remain the same?
  • Jim Amorin has made $1,725,003 from 2007 to 2019, yet membership has fallen 22.7% over that period. Why would his compensation increase, and why is he paid about 50% more than his peers in other organizations? I’ve presented these numbers in past Housing Notes. So many questions.
  • Revenue emphasis is shifting to rely more on dues while education programs, once a promising and prestigious revenue stream (and a cash cow for a handful of instructors that were FOJs), are losing their importance because of virtual continuing education programs. Who has been in charge during this erosion in education revenue, once a key branding strength of the Appraisal Institute?
  • In 2016, I got quite upset with the proposed “taking” of chapter funds, and I became an activist, yet I’m not even a member of AI. Jim Amorin made it happen in 2017 when he became president. Now given all the big salaries and excessive travel, etc., where did all that money come from? I keep thinking about all the chapters who had saved money over decades to the tune of hundreds of thousands of dollars, even more. We should be asking AI National: Since the 2017 “taking,” how many times did AI National dip into chapter funds to plug the deficit? What is the current status of their reserves compared to before the taking? The AI Board of Directors must have the answers to these questions. Membership should demand it.

There has not been a publicly shared strategy to stem the decline in membership. Announcements of committees (like residential appraisers) were faked to quell the discord among residential members, and FOJs had no intention of taking action.

Marketing and branding have been the same old, same old, every year blah, blah, blah, which means that the organizational leadership has filtered out nearly everyone that is not a like-minded FOJ. Look at the last election debacle where the sham petition process was overtly used again by Jim Amorin to get his FOJ “Tank” installed instead of the duly nominated candidate Craig Steinley. Yet, membership pressure on the board stopped it. There is great danger to membership who are here for their designations within an organization with everyone in power being subservient to one person – a monarchy. Any new and creative thinking is not just discouraged; it is impossible.

I hope that ALL on the AI Board of Directors remember that their responsibility is to the membership and to sustain the organization’s future, not the FOJs. I can only assume there may be future legal action on this overt institutional taking, and each current and past board member is exposed. If you want the Appraisal Institute to pivot in the right direction and stop the executive committee’s self-dealing, please do the right thing and DO NOT extend Jim Amorin’s contract. It’s time to hire a CEO to lead the organization in the right direction, responsibly, ethically, and properly. If you do nothing as a board member, this will be your professional legacy as viewed your peers.

Here is a snapshot to memorialize the 2021 Appraisal Institute Board of Directors:

These are the individual pages of the full pdf document.


OFT (One Final Thought)

I’m sure many of you have seen the original version of this before – San Fransisco just before the big fire and shortly after – this updated version is colorized and the frame rate was accelerated using artificial intelligence. I really enjoyed it.

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 mobile;
  • You’ll be more Zestimated;
  • And I’ll wish for a Wall Street bonus.

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 19, 2021

While Seeking More Livable Housing Space, Balconies Can Be Overrated

It’s a good thing that housing with a water view is always in demand.


But I digress…

Ryan Serhant’s Big Bet That Social Media Driven Home Sales Are Scalable

This is a spectacularly written article on the MDL star real estate broker Ryan Serhant in Curbed this week. I tweeted the story and had this question:

The Urban Outbound Narrative Has Been Oversold (It’s Really An Inbound Versus Outbound Story)

We’ve heard the drumbeat since March with phrases like “fleeing the city” and “the exodus” that have framed the result as “cities are dead.” That narrative was born last March and April and has remained in place essentially ever since. But it’s not quite right.

There was a fascinating study by the Cleveland Fed Did the COVID-19 Pandemic Cause an Urban Exodus? that looked at U.S. city and suburban migration patterns.

The reason for the birth of the narrative:

Initially, the urban exodus stories reported that people were afraid of contracting the novel coronavirus in elevators and subways. Then the narratives suggested remote work had freed office workers from long commutes, allowing them to relocate. With both remote workers and students at home full time, a desire for home offices purportedly rose, and low interest rates made buying a larger suburban home attractive. Urban amenities such as restaurants and theaters were shuttered. Later, the protests sparked by the killing of George Floyd and others were cited for motivating some urban residents to leave. Most major cities experienced increases in violent crime during 2020, and crime rates have historically predicted migration changes. The proposed and enacted cuts to police funding were also cited as a reason to leave by some people who feared that crime would increase further.

My take from the study – I think about net-migration as the difference between people coming in versus people leaving. The problem is that until people feel safe, they are less likely to come in and in a growing city, that should be a bigger number. The vaccine distribution over the next 1-2 years is a solvable problem and inbound may normalize faster than outbound. Excess outbound migration is a deeper challenge. The difference between the two is incredibly lopsided right now and won’t resolve itself until the vaccines are at critical mass.


[Source: Cleveland Fed]

For New York City, the new inbound will be heavily reliant on the tech sector who are also scaling up their footprints in urban markets across the U.S. Plunging rents are drawing younger residents which is who tech tends to hire and will likely continue despite remote work growth as discussed in this Wired piece: If Work Is Going Remote, Why Is Big Tech Still Building?


There is a lot of stat junk out these days by moving companies on the migration story. Think of it like a real estate broker doing a market report on their own sales activity. Doesn’t work for you, right?

Now that I’ve teased you, here are a few examples.

The 2020-2021 HireAHelper American Migration Report [HireAHelper]

The 2020 Magnet States Report [Allied]

Newsday Analyzes Q4-2020 Hamptons And North Fork By Hamlet

I provided Newsday with median sales price by East End Hamlet for Q4 2020 and Q4 2019 and the results are fascinating.

Hamptons

You need a subscription to query the tables.
[Newsday]

North Fork

They also released a piece covering the North Fork and data table.


The 2021 Economy Is Starting To Look A Lot Better

Fannie Mae issued quite a startling upbeat forecast for 2021: U.S. Economy Expected to Expand at 6.7 Percent Clip in 2021

The combination of vaccine adoption, companies calling people back to the office and a release of pent-up demand appears to have the potential to make the economy sizzle. I’m more worried about 2022, or even 2023 after the “pent-up” gets used up.

But I’m not fretting about inflation at this point as I’ve discussed here recently. Housing price growth is insane but as I presented previously, roaring housing prices are replaced with their rental equivalent in CPI calculations.


California Housing Market Is Rocking (Like Most Places!)

Low mortgage rates are fueling the frenzy.


Upcoming Speaking Events

Webinar with Jonathan Miller + The Towers of The Waldorf Astoria [Douglas Elliman/Waldorf Astoria]

Feb 25, 2021 11:00 AM in Eastern Time

Appraiserville

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

Dave Bunton Announced That USPAP Will Be Extended For A Third Year

I was watching the ASB public hearing today and heard this:

First, they held a moment of silence for the unexpected passing of Scott Robinson, who was a new ASB member. It was good to see someone of his caliber – an actual real estate appraiser added to the board. Why on earth are there non-real estate appraisers on either the ASB or AQB technical boards? It is a disservice to the real estate appraisal industry who have a bullseye on their backs for state licensing, and personal or business appraisers have no place on these boards.

Dave Bunton announced that TAF would temporarily extend the current 2-year USPAP cycle another year for three years. The ASB has to vote on this change after the meeting, but Dave calls the shots, and I have no doubt the board he picked will favor it.

Dave made these points:

This change does not mean that we are going into a 3-year USPAP cycle – that’s TBD. Dave used COVID as the reason for the extension, but in reality, it is because TAF is under significant pressure on all sides to extend further out than three years.

Other alternatives to a USPAP renewal cycle change might be:

a subscription service (my bet to keep the revenue flowing in since they aren’t taking ASC grant money as Congress originally designed the system) issue the next USPAP with no end date and release them when actual changes are needed.

Dave deftly passed off the two-year cycle requirement to the states, so if the USPAP cycle gets extended permanently to three, four, or five years, TAF still gets the course revenues. Appraisers have to take the same class in the same cycle with no new information. This is the kind of thing that is wrong with how TAF thinks about appraisers.

About Dave’s mention of the GAO investigation he initiated – Dave requested Maxine Waters so GAO would beat up ASC but, in the process, conveniently neglected to include TAF as part of the appraisal system which is absurd. ITAF is the source of most industry key problems like lack of diversity, over-bureaucratization, and lack of new entrants into the profession. TAF’s GAO request was nothing more than another attempted browbeating of ASC after his bat-shit crazy letter fiasco.

However, it is good to see the USPAP cycle extended – it will help the industry reduce time wasted on TAF’s money grab. I assume it will yield mass chaos to the industry—more on this next week.

UPDATE: As already pre-ordained, Dave Bunton, TAF president extends USPAP via their newsletter 14 minutes after the webinar: SPECIAL EDITION NEWSLETTER: ASB Extends USPAP This will introduce chaos but moves the industry away from the two year USPAP cycles. I suspect there would be anarchy if USPAP returned to two years after this experiment.

OFT (One Final Thought)

I have no final thoughts!

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 inbound;
  • You’ll be more outbound;
  • And I’ll shelter in place.

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 12, 2021

The Housing Market’s Slippery Slope

After years of discussion, thousands of hours of intense study, and never-ending efforts to help Housing Note readers visualize the housing market, this is what I came up with to answer all market questions (I have no idea who the video source is):


But I digress…

Record Setting Manhattan (& Brooklyn) New Lease Signings Continue As Rental Prices Plummet

As my Housing Note readers should know by now, I’ve been the author of the expanding Elliman Report series since 1994 for Douglas Elliman Real Estate and it’s my labor of love (had to throw in a Valentine’s Day reference). The rental market continues to see falling prices and other signs of significant weakness which has helped bring in record new lease signings through the combination of tenants playing musical chairs to find a better deal and an influx of demand from outside the city.

The Manhattan & Brooklyn rental markets have been hit far more harshly than their respective sales markets, largely because unemployment is more heavily skewed against lower wage earners.

The state of the Manhattan rental market is of great concern to the securities industry, of which Bloomberg Terminals are a proxy. The Bloomberg piece on the Elliman Report results for the Manhattan January rental market was the 2nd most emailed article on the ±350K Bloomberg Terminal subscribers worldwide. Initially, the story was the 4th most emailed in the morning but I was convinced it would overtake the Crypto Kid story, and it did!


And if that couldn’t be any cooler, Bloomberg has two different versions of the chart in the story.


Elliman Report: Manhattan, Brooklyn & Queens Rentals 1-2021

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“For the fourth consecutive month, new lease signings rose to their highest level for the current month since the financial crisis.”

  • Most new lease signings for a January in thirteen years of tracking
  • Vacancy continues to recede from the October record but was still triple the year-ago rate
  • The monthly concession rental equivalent rose to the highest on record as face rents fell sharply
  • Smaller apartments sizes continued to see a larger percentage decline in median rent than larger apartment sizes
  • New development and existing rental price trend indicators fell at similar year over year rates
  • Doorman new lease signings surged annually by more than twice the rate as non-doorman lease signings
  • The market share of landlord concessions in the luxury market remained sharply lower than for the rest of the market

______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“For the third straight month, new lease signings rose to their highest level for the current month since the financial crisis.”

  • Most new lease signings for a January in thirteen years of tracking
  • The net effective median rent fell year over year at the highest rate in more than a decade
  • The highest landlord concession monthly equivalent rent in more than a decade

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region]
“Net effective median rent fell annually at a record rate this month and was the ninth straight month with a decline.”

  • Net effective median rent fell year over year at its highest rate in more than four years
  • The monthly concession rental equivalent rose to a new record for the third straight month
  • The market share of landlord concessions expanded annually for the sixth straight month


Inflating The Deflationary Story: NYC Metro Saw The Lowest Rent Increases In 60 Years

With the housing market’s dependency on low mortgage rates these days, should we worry about inflation looming in the future? Remember all those hyperinflation cranks of a decade ago? It was terrifying to many.

Newsday published a piece on the NYC metro area as seeing some of the lowest rental gains in six decades.

Rents for apartments, houses and other primary residences in the 25-county region that includes Long Island rose 0.9% in January compared with a year earlier, the federal Bureau of Labor Statistics reported on Wednesday. That’s the smallest year-over-year increase since 1958.

Many who read the headline of this piece probably were confused given the strength of the regional housing narrative. On top of that, the housing component of inflation converts sales activity into their rental equivalent. Here’s a post from 2006 that covered this topic: At The Core Of Inflation, Housing Sales Are Merely Rentals

In other words, we have a booming “for sale” market nationwide and a much more modest rental market (its a train wreck in NYC from the landlord’s perspective), yet the rental market is used to calculate a large portion of CPI (inflation) instead of the sales market.

So our fundamental understanding of inflation is flawed and then this…

My friend and prolific analyst of everything Barry Ritholtz, penned an extraordinary piece in his Big Picture Blog this week called: Stop Stressing About Inflation. Read it.

But Inflation is not inevitable. There are numerous countervailing forces that have been at work for much of the past 50 years. The three big Deflation drivers: 1) Technology, which creates massive economies of scale, especially in digital products (e.g., Software); 2) Robotics/Automation, which efficiently create more physical goods at lower prices; and 3) Globalization and Labor Arbitrage, which sends work to lower cost regions, making goods and services less expensive.

Barry links to his 2014 article Confessions of an Inflation Truther or the same piece on Bloomberg called The Inflation Truther Crank Index

On Matrix: Zillow Gets Pillowed

This post first appeared on my Matrix Blog.

I met Rich Barton, Zillow CEO, at an Inman/Curbed party held during an Inman conference in Manhattan a long time ago, the evening before Zillow’s launch. I asked Rich, a very nice and fascinating person, what he did for a living, not realizing he was the co-founder of Expedia. Ugh. He also said they were launching their latest effort the following morning – a web site called “Zillow,” and he added “as in rhymes with pillow” to the description. Little did I know real estate would never be the same after that.

So this weekend’s SNL skit on Zillow was particularly delicious with all the “pillow talk.” Even Rich got a kick out of it.


Your LOL UPDATE for February 10, 2021

Ted Alexandro Said SNL Stole His Joke, So He Asked for a Million Dollars [VICE]


Plus their purchase of Showingtime shows they are owning the Brokerage Industry space.:

Zillow Group to Acquire ShowingTime, the Industry Leader in Home Touring Technology (PR Newswire)

Barbara Wagner: One Of The Best Publicists In The Real Estate Business Launches Her Own Firm

My close, long-time friend Barbara Wagner decided to strike out on her own with BARBARA WAGNER COMMUNICATIONS, LLC. I worked with her for years through Douglas Elliman for our Elliman Report series and she was an important part of its success. I have always cherished her insights. I don’t need to wish her good luck with this effort because this effort is not about luck – it’s about a proven track record, extensive experience, great judgment – and she is also a very nice person.

[TV] WPIX Covers NYC’s Rising Affordability, But Not Yet Affordable, Rental Market

The NYC rental market is seeing a surge in new leasing signings as consumers are being drawn by newfound affordability.


Housingwire Is Beefing Up Their Real Estate Coverage And Starts By Talking Candidly About Compass

I have friends that are real estate agents for Compass but I have always been clear about my concerns about their branding as a technology company. As far as I can tell in public information and conversations with people who used to work there, Compass looks like a traditional brokerage model, much like Andrew Ross Sorkin concluded on CNBC a few years ago when interviewing Compass co-founder Robert Rifkin.

Housingwire shares a compelling history of the birth and life of Compass as the founders try to cash in on a massive public offering: Inside Compass’s colorful past and publicly traded future

Like an over-budget blockbuster movie, Compass may never make money.

This is how I long described them which was captured in the piece: “Compass is a disruptor by capital, but not by ideas.” Even if the founders are successful in cashing out, what sustainable business model remains?

Perhaps my friends will make some money from the people that aren’t paying attention.

This Week in Aspirational Pricing: Palm Beach Goes Bananas

Palm Beach sees to different record-setting sales this week, both broken by the Wall Street Journal’s real estate scooper extraordinaire, Kathy Clark.


$132 Million [WSJ] [Shiny Sheet] [Bloomberg]
$73 Million [WSJ] [Shiny Sheet]

Why It’s Hard to Buy a House in Detroit, Especially if You’re Black

I found this podcast quite compelling. Incidentally, I listen to this Gimlet-Media-produced WSJ podcast “The Journal.” every business day.


[click to open and play]

Knight Frank: Canary Wharf and Manhattan/Brooklyn See Same Thing: Rising Signings Against Falling Prices

Knight Frank compared our Douglas Elliman rental research with their findings in the Canary Wharf market outside of London and the patterns were the same. The sharp decline in rents is bringing in more tenants.

In the final quarter of last year, viewing numbers in Canary Wharf increased by 124% compared to the same period in 2019, which compared to a London-wide average rise of 53%. Meanwhile, tenancies started in the same period were up by 58% compared to an average increase of 28% across London.

The following charts are Knight Frank’s redesigned version of those that appear in the our Elliman Report: January 2021 Manhattan, Brooklyn and Queens Rentals.

Mentioned For The 19th Time On The New York Times Cover Page is A1

Last weekend our firm got a mention on a New York Times cover story about the pandemic’s impact on Hudson Yards, the massive new project on Manhattan’s west side that was more than a decade in the making.

How the Pandemic Left the $25 Billion Hudson Yards Eerily Deserted

I was walking down the driveway to grab the morning paper last weekend and saw the cover story and remembered connecting with one of the reporters a few weeks prior. It’s the 19th time I’ve felt that rush since 2000 when I had my first mention. Since I am a list maker (and quite a shallow person), I’ve got them all chronicled in my Evernote app. Here was the first one from 2000: Prices Starting to Stabilize For Housing in Manhattan After A Breathless 4 Years.

Appraiserville

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

Fannie Mae Is Serious About Their Noble Videos

It is it just a coincidence that Fannie Mae calls their well-done appraisal video appraisal series, “The Noble Appraiser Series” When Phil Crawford and Lori Noble are about to launch their Continuing Ed for Appraisers Program called “aNoble Education” named after Lori when the business was formed in 2018?

Still, Fannie Mae has done a great job with their effort. I’m not that sharp but I got some nuanced pointers from them.

Noble Appraiser Series #1 – The Myth of the One-Mile Rule

Noble Appraiser Series #2 – The Condition Rating Cloud of Confusion

Noble Appraiser Series #3 – The Quality Rating Trees of Turmoil

Appraisal Institute Execs Are Flagrantly Proposing Self-Dealing To Continue Being Wildly Over-Paid And ALMOST No One Can Do Anything About It

The gist of this 45-Day notice is to allow those being compensated to have the potential or perceived to be in a position of influence to determine what their compensation is. This is a scheme to keep the control of the organization by FOJs (Friends fo Jim Amorin)

The lack of ethics of AI leadership over the past decade has severely damaged the value of the designation brands already and I predict the value of both the MAI and SRA designations are meaningless in 5-6 years. This damage is because those designations are issued by an organization that has unethical leadership for all eyes to see. This 45-Day Notice can’t be any more flagrant and essentially criminal.

45-Day Notice (1Q 2021) [Appraisal Institute]

Like the sham election petition process, this is blatant corruption. Jim Amorin isn’t even hiding it anymore. Membership is outraged. Here is a brilliant summary of what is so wrong about the 45-Day Notice by Mac Bottum, MAI in Texas, a long-time, highly respected, and active member of the Appraisal Institute:

REVISE THE 45-DAY NOTICE by Mac Bottum, MAI

Any board member who doesn’t see the corruption of this salary maneuver needs to step down from the Board of Directors or be subject to potential legal exposure as this devolves into future litigation.

All Appraisal Institute members should send an email on their views to 45daynotice@appraisalinstitute.org. The National Board of Directors will vote on the amendments at its February 25-26, 2021 meeting so time is running out.

Here are some tips shared with me from membership to prevent what transpired at the last Board of Directors meeting and the disrespect shown to AI President Rodman Schley, MAI, SRA who has shown leadership on the board already.

Here are my distilled thoughts from all the feedback I received to Rodman:

  • Take control! – Jeff Sherman, MAI, AI-GRS, Past President, and Trevor Hubbard, MAI, SRA worked hard to take over the meeting from Rodman, interrupting and correcting him constantly. It was embarrassing. Rodman needs to put an end to that at the start of this next meeting. Especially for Rodman to stop Hubbard’s off-topic incredibly long ramblings. Good grief.

  • Follow Roberts Rules of Order – the board must be quiet when one person is speaking. Show some decorum.

  • Protect Your Peers – Craig Steinley and Joe Magz were treated terribly by the FOJs.

  • Don’t let Jim Amorin make up rules during the call – you are in charge. Amorin pronounced that membership comments in the chatbox were not allowed, yet he made this up. I’m told there is no such rule.

  • Get better equipment – it’s unbelievable that the AI Board Meeting with 25 people only have access to 24 video feeds for a call? So much for transparency.

Please take control, your members are counting on you to prevent this self-dealing institutional takeover.

At the last BOD meeting, I was told I got a shout out by name by an FOJ who complained that “Joe Miller” has been writing about the board meeting immediately after they end.

My response: My name is “Jonathan Miller” (my middle name is actually Joseph, so Joe isn’t far off) and yes membership is tired of being ignored and FOJs have not been held accountable for their self-dealing at membership expense.

So much more to discuss 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 slopes;
  • You’ll be more inflationary;
  • And I’ll be on the cover page.

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 5, 2021

The Narrative Is Slowly Shifting For Manhattan Housing And What’s Old Is New

Although I believe I’ve shared other iterations of these, they never get old (pun intended) and they remind me of how rich in character New York City is.



But I digress…

Manhattan New Signed Contracts For January 2021 Double YOY

I’ve been the author of the expanding Elliman market report series for Douglas Elliman Real Estate since 1994 and the most recent report additions, which began during the pandemic are the New Signed Contract reports for regions in New York, Florida, Colorado, and California. I’ve always been so grateful that a large national firm like this enables me to produce neutral market insights because they want to enable the consumer to make more informed decisions.

All of the U.S. regions we cover have shown phenomenal growth after their respective regional lockdowns ended but Manhattan has been the laggard until now.

Here’s a cool chart by Bloomberg on the contract surge (in two color versions!):

And most importantly, interest in this story made it the most emailed article of the day by the ±350K Bloomberg Terminal subscribers who love their Manhattan real estate.

______________________________________________________

New York New Signed Contracts Report

The New York report attached covers Manhattan, Brooklyn, Long Island, Hamptons, North Fork, Westchester County, Fairfield County, and Greenwich, CT.

Elliman Report: January 2001 New York New Signed Contracts

Manhattan
“New signed contracts for co-ops, condos, and 1-3 families combined had doubled year over year for the second annual increase since the lockdown ended. New listing inventory fell sharply year over year for the fourth straight month.”

Brooklyn
“New signed contracts for all three property types combined rose sharply from the same period last year for the fourth straight month of increases. Market-wide new signed contracts for January nearly tripled from the prior year. New listing inventory has continued to expand each month annually since last June, keeping up with demand.”

Long Island (excluding H/NF)
“New signed contract activity for all property types combined increased each month annually since last July. New inventory declined year over year for the second time in three months.”

Hamptons
“New signed contract activity for single families rose sharply year over year since last June. New inventory surged annually each month since last June to meet demand until declining this January.”

North Fork
“New signed contract activity for each property type rose sharply year over year since last June. New inventory surged annually each month since last May to meet demand until declining this January.”

Westchester
“New signed contract activity for all property types combined rose sharply year over year since last July. New inventory fell annually for only the second month since last July.”

Fairfield
“New signed contract activity for all property types combined rose steadily year over year since last July. New inventory declines sharply year over year for the past four months.”

Greenwich
“New signed contract activity for single families rose sharply year over year since last July. In tandem, new inventory surged annually each month over the same period to meet demand.”

Here’s A Better House Than The International Space Station

There’s a crazy looking listing featured in the Wall Street Journal today and the article title tells it like it is: To Malibu and Beyond: A Home That Looks Like the International Space Station Asks $20 Million

The pictures are insane. My basic view of this type of property as a valuation challenge is discussed in the piece – basic thinking is that its uniqueness is limited to a very small pool of buyers which can restrain its potential value – that this uniqueness is probably not an advantage. But I have no idea how this relates to the asking price.

From the WSJ story:

Here’s the google view – its living room looks like a jet engine sideways on the ground, partially buried.

VIDEO The Struggle At Hudson Yards Continues

Spectrum NY1 News does a good overview of the current state of the Manhattan mega-development, Hudson Yards. This was a project that was conceived of about a dozen years and came to market as the super-luxury space was unraveling. Throw in a global pandemic and it gets dire. As developers go, Related is one of the best-managed developers I’ve seen over my 3+ decades in the Manhattan market with one of the best track records around, but it’s going to be difficult.

I’m only in the piece for a nanosecond and my company’s name is spelled incorrectly, but hey, it is always fun to do these and this was a well-done segment on Related’s challenge.


[click on image to play]

Just Because New Lease Signings Are Surging, Doesn’t Mean Rents Stop Falling

Here’s a recent piece on the state of the New York City rental market.

A Preliminary Look At The Manhattan Decade Report – Sales Were Down YOY in 2020, Obviously

The top-level results of the report were released but the full report will be published online next week in a 60 pager!


Crain’s New York did a nice analysis of the results: Manhattan apartment prices peaked in 2017, report says

______________________________________________________
MANHATTAN DECADE HIGHLIGHTS [2011-2020] (Co-ops & Condos)

“While 2020 saw a significant release of pent-up demand after the spring COVID lockdown ended, sales totals fell short of year-ago levels.”

  • Record low mortgage rates helped fuel sales after the COVID lockdown ended last spring
  • While the sales fell short of year-ago levels, the new signed contract volume suggests that closings will continue to close the gap in the first half of 2021
  • With the exception of 2017, the annual number of sales has slipped year over year in the post-financial crisis era since the 2013 peak
  • Median sales price remained above the $1 million threshold since 2015 and has largely drifted sideways
  • Sales with four or more bedroom was the only size category to increase over the decade and saw the largest gain in price per square foot
  • Listing inventory rose more significantly year over year than compared to the beginning of the decade

Even Supertalls Can Have Superproblems

This week, a crazy story broken by the New York Times: The Downside to Life in a Supertall Tower: Leaks, Creaks, Breaks talks about the challenges facing one of my favorite Manhattan supertalls, 432 Park Avenue. The article title almost got me to pronounce “Breaks” as “Breeks.”

We’ve appraised units in the building since it obtained a TCO circa 2016ish. I’ve done a few myself with floor levels as high as in the ’80s and my firm has done a few on floor levels in the 90s. The views are spectacular and I found the apartments to be unusually quiet during my own inspections.

But this story talked about so much more. It reminded me of a story about mold litigation at 515 Park Avenue, one of the best new buildings of its time, that became temporarily nicknamed “The Mold Building” but the litigation and story faded from memory very quickly as I suspect this will too.

A Preliminary Look At The Manhattan Townhouse Report – Showed Lowest Number of Sales In 24 Years

The top-level results of the report were released but the full report will be published online next week and shared in Housing Notes next week! I’m running behind this market report cycle.

Mansion Global provided a nice summary of the top-level results: Manhattan’s Townhouses Saw Largest Price Increases Over Past Decade

The ‘Fleeing The City’ Narrative Is Getting Boring. Here Are Some New Ways To Think About It.

There is a new evolving narrative of what cities will be post-pandemic and this will apply to housing. This conversational change is happening because housing market laggards like Manhattan are actually waking up (but at lower prices).

Recent thought pieces and articles on the outlook for Manhattan and cities.

Here’s the middle of the road argument made last fall:

Here is the doom and gloom argument:

Change In The Narrative: Urban AND Suburban Housing Sales Markets Thrived During The Pandemic

As it turns out, the “suburbs are the future and cities are dead” narrative was wrong at least as it pertains to home sales (not rentals). I think the initial weakness of Manhattan inferred this narrative. But instead, it was late to the party in the context of sales activity. Manhattan sales market is coming back sales-wise as discussed earlier. Ridiculously low mortgage rates will do that. Declining housing prices will also do that.


Richard Florida‘s thread breaks it down:


Palm Beach’s Contract Boom Has Been Steady But Pronounced Since The Pandemic Began

In another monthly new signed contract report we author that was published by Douglas Elliman this week, Palm Beach County continued to be a stand out market.

Demand was even greater in the market’s richest corners. Contracts quadrupled for single-family houses priced at $800,000 to $999,000, and more than $1 million.

Elliman Report: January 2021 Florida New Signed Contracts.

Here’s a chart that shows the sales boom (two different color schemes!):

Apparently I’m A Notable Real Estate Person In New York

Crains New York Business named me as one of the NOTABLES IN REAL ESTATE for 2021. Its always appreciated and fun to be recognized.


Getting Graphic


Our favorite charts of the week of our own making

Appraiserville

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

Public listening session hosted by the Federal Housing Finance Agency on February 11, 2021

Register for this upcoming FHFA event!

FHFA is hosting a public listening session as part of a Request for Input (RFI) on appraisal-related policies, practices and processes. The individual input and feedback received in response to the RFI will be considered by FHFA to determine the necessary modifications needed to ensure Fannie Mae and Freddie Mac (the Enterprises) operate in a safe and sound manner.

This is how we get heard!

More From Voice of Appraisal – Children of the Corn Meets Children of Foreclosures
Phil is back for the new year after dealing with a wild 2020! He covers the “Wall Street Bets” drama and breaks down an appraiser’s perspective of what could be a “deep seeded reckoning” shared by the hive-minded day traders. Did this start in 2008? Are some of this traders “The Children of Foreclosure”? Enjoy the show!!!
Get Ready Jim, Appraiserville will be waking up next week

As you can see by the earlier content, there is a lot going at the moment outside of my appraisal world. But don’t worry, there will be lots to share over the next few weeks.

OFT (One Final Thought)

To get the answer to whether the groundhog saw its shadow or not was live-streamed by ABC news and watched by 152K people. Seems like society is making a statement, no?


And then this, because it made me feel so good on a Friday afternoon.


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 live in a space station house;
  • You’ll be more outer-worldly;
  • And I’ll follow Elon.

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 29, 2021

Lets Stick To Housing Because This Gamestop-Robinhood-Reddit Thing Is Too Confusing

One of my gamer-inclined sons sent me this link yesterday and told me “don’t mess with memers and redditors” and I listened.

This relevant and epic piece on Matt Taibi’s substack lays out one perspective “Suck It, Wall Street” and Andrew Ross Sorkin & Co’s “How Does This End?” in The New York Time’s Dealbook takes us down the rabbit hole. But in all cases I’m rooting for the little guy on Main Street. And don’t ask me to explain SPACs.

Here’s a quicker explainer:

And another (NSFW):

But since I don’t really understand the nuances of all this, I’m going to stick to what makes obvious sense to me: A massive U.S. housing boom with record prices and sales volume against the backdrop of a global pandemic.

So I’ll gladly digress…

The Hamptons Market Soared Like A Coprimary Rocketship

I’ve been the author of the expanding Douglas Elliman market report series since 1994. As I began to cover the Long Island market years ago, it was clear that the East End was joined at the hip with Manhattan and the securities industry. But the housing boom the city enjoyed wasn’t transferred to the East End of Long Island like one would expect although it was part of the remainder of Long Island. Our chart below illustrates how the post-financial crisis pairing broke mid-decade and then the city’s development boom left the Hampton’s behind until the global pandemic. Coprimary is my word to describe the phenomenon where second home housing markets become viewed as a primary or an alternative primary market, largely enabled by the proliferation of remote work during the pandemic.

Normally this type of report result for a Wall Street-centric audience would normally rank high on the Bloomberg Terminals but this week it failed to make the top 20 most read upon its release since all the stories seemed to be related to Gamestop.

Since charts tell a better story than I ever could the Bloomberg coverage of this coprimary trend had some excellent visuals.

________________________________________________
HAMPTONS HIGHLIGHTS

“With falling supply and surging sales, and aided by record-low mortgage rates, the market pace was the fastest recorded since at least 2007.”

  • Median sales price reached a new record for the second straight quarter after fifteen years of tracking
  • Sales surged annually at the highest rate in a decade to the most quarterly sales in at least fifteen years
  • Listing inventory fell year over year for the fifth consecutive quarter
  • Highest market share of bidding wars in nearly five years of tracking

________________________________________________
NORTH FORK HIGHLIGHTS

“With falling supply and surging sales, and aided by record-low mortgage rates, the market pace was the fastest recorded since at least 2007.”

  • Median and average sales price set new records during fourteen years of tracking
  • The largest annual surge in sales on record and the largest sales total since at least 2006
  • Listing inventory fell to a fourteen-year low and the fastest market pace recorded in fourteen years
  • Highest market share of bidding wars in nearly five years of tracking

________________________________________________
LONG ISLAND HIGHLIGHTS

“With falling supply and surging sales, and aided by record-low mortgage rates, the market pace was the fastest recorded since at least 2003.”

  • Average and median sales price surged annually to set new records
  • The number of sales jumped annually to the highest quarterly total in eighteen years
  • Listing inventory fell sharply year over year to the lowest level in seventeen years
  • Single family average and median sales price rose sharply year over year reaching new records
  • Condo average and median sales price surged annually to set new records
  • The fastest paced luxury market in nearly twelve years of tracking

The Economy Began To Run Out of Gas in Q4

This New York Time’s piece: Frail at Year’s End, Economy Looks for a Second Wind. I found the following charts a bit ironic showing the tepid 1% year over year GDP growth given how strong the housing market is for one-percenters.


With the delay in fiscal stimulus during the COVID crisis, the economy is slowly cooling, but housing seems to be oblivious due to record-low mortgage rates, especially the skew to the higher end properties. However, with the potential for another stimulus package, it looks like there could be some sort of economic upswing in 2021, and that should also benefit the U.S. home sale market.

The slump “wasn’t just Covid — it was the lack of fiscal support,” said Aneta Markowska, chief financial economist at Jefferies, an investment bank.

This is why the performance disparity between the rental market and the sales market is so huge:

“It’s the tale of two economies,” said Constance L. Hunter, chief economist at the accounting firm KPMG. Workers who have been relatively unscathed by the recession are eager to resume spending as soon as the public health situation allows. But for the worst-hit groups, she said, “there is significant economic scarring potential.”

Los Angeles Upper-End Housing Market Musical Chairs Benefits From Record Low Mortgage Rates

From the Mansion Global coverage: “Rising prices are in some ways a factor of buyers closing on larger houses”


GREATER LOS ANGELES INCLUDING WESTSIDE AND DOWNTOWN SALES HIGHLIGHTS

“For the fourth consecutive quarter, median sales price rose to a top-three record, despite the pandemic, as the market shifts to larger sized sales.”

  • Median sales price jumped year over year to reach the second-highest level of all time
  • Sales rose sharply year over year for the fourth time in five quarters
  • Average sales size edged higher to the largest square footage on record
  • Listing inventory expanded year over year for the second straight quarter after the lockdown ended
  • Single family median sales price rose year over year to the third consecutive quarterly record
  • Luxury single family median sales price, representing the top ten percent of sales, rose annually for the fourth consecutive quarter

LA SUBMARKETS

MALIBU/MALIBU BEACH – Malibu single family average sales size continued to set to a new record square footage, driving median sales to set a record as well
– Malibu Beach condo sales size surged to their largest average square footage in more than four year

VENICE/MAR VISTA – Venice single family average sales size jumped to a new record square footage, driving median sales to a record as well
– Mar Vista single family average price per square foot jumped to a new record

Superstar Cities Are Lifestyle Cities And Won’t Likely See Much Damage From The Remote Work Phenomenon

Matthew Yglesias recently left VOX to start his own Substack column “Slow Boring” to which I subscribe and highly recommend. I had linked out to this piece last week and it (the article, not me) seemed to inspire this Superstar Cities column.

Here are a few snippets within a long discussion that makes the point.

That’s because superstar cities are not the cities that are superstars. Instead, they are the cities that have a combination of high wages and high rents that cause them to be disproportionately home to labor market superstars. These are completely different ideas, and they mean that giant, awesome, “it would be cool to live here if it weren’t so damn cold” Chicago is not a superstar city, but the smaller, frumpier, also super-cold Boston is.
Matt Damon didn’t pay $17 million for an apartment in Brooklyn because he needs to be there for work. That’s not to say that more companies going remote wouldn’t change the city. Demand for office space will clearly fall, which will let some companies that are currently in New Jersey or White Plains move into the now-cheaper office space in Midtown. The long-term trend toward the Financial District having less office stuff and more residential stuff will continue. But fundamentally, while New York is not for everyone, the people who choose to live there love the lifestyle. There’s a reason super-rich people buy pieds-à-terre there, just like super-rich people buy ski houses in Aspen.
Recall, again, LeBron signing with the Heat. People have been going to Miami for fun for a long time now. But unless you’re an NBA player, it hasn’t necessarily been a great place to find high-paying jobs. Remote work changes that.

HGAR VIDEO – Getting the Deal Done Series – The State of NY Real Estate: Setting Sights on 2021 + Beyond

I recently joined Bess Freedman, CEO of Brown Harris Stevens, and Joe Rand, Chief Creative Officer of Howard Hanna/Rand Realty for a discussion on the state of the market in NYC Metro – even got to talk about my favorite new phrases of 2020 such as “Coprimary” and “Peak Zoom.” Ha.


Here’s the press release from HGAR:

New York, N.Y. (January 22, 2021) – Top New York real estate leaders weighed in on the region’s residential market, from the latest prices in Manhattan to bidding wars in Westchester, and shared strategies for how Realtors can take advantage of the current dynamics, at a virtual panel Jan. 22 hosted by the Hudson Gateway Association of Realtors, Inc. (HGAR) and OneKey™ MLS.

Hundreds of industry professionals tuned in for “Getting the Deal Done: The State of NY Real Estate: Setting Sights on 2021 + Beyond,” which featured Bess Freedman, CEO of Brown Harris Stevens; Jonathan Miller, President and CEO of Miller Samuel Inc.; and Joe Rand, Chief Creative Officer of Howard Hanna/Rand Realty and Executive Director, Broker Public Portal.

“We’ve all had to pivot during the pandemic and we’ve seen tremendous innovation in our industry,” said Richard Haggerty, CEO of HGAR and President and Chief Strategic Growth Officer of OneKey™ MLS, the regional multiple listing service for New York. “Working together is key and we’re so pleased to have Bess, Joe and Jonathan here today to share best practices for the current environment and strategies for moving forward.”

The discussion was moderated by Brian D. Tormey, NTP, president of TitleVest, a leading New York City-based provider of title insurance and related real estate services. The hour-long session focused on market trends, new ways of doing business, the economic impact of the pandemic, patterns to watch in 2021 and whether stability is in sight for NYC.

“Look for a V-shaped recovery,” said Miller. “And by that I mean ‘vaccine.’ True stability doesn’t really happen until people feel safe.”

Miller pointed to trends in NYC’s rental market, noting pricing was down some 23 percent, but also saw an upside – more affordability is creating a “youth renaissance” in Manhattan’s rental space.

Freedman also noted the vaccine’s impact on the market. “Having the vaccine in sight is excellent,” she said. “The path forward is going to be a bit tough but at least we have some resolution.” Freedman said she’s optimistic for 2021. “New York City is going to do very well,” she said. “It’s still a buyer’s market – an opportunity market – rates are low. But theaters are going to reopen, restaurants are going to reopen … I’m doubling down on my prediction for NYC in 2021.”

Rand discussed trends in pricing north of NYC and the types of properties being sold. “Covid is impacting pricing, in the short term, in two ways,” he said. “First, all that migration from NYC to the suburbs, those are higher-end buyers. So, the mix of properties being sold is skewing higher, they’re competing and pushing prices up. Also, the economic impact of Covid is disproportionately hitting lower-income people. And that’s really unfortunate … we should be doing more from a public policy standpoint to help people.”

“Getting the Deal Done” is part of the “Be Your Best” webinar series created by HGAR and OneKey™ MLS, to assist Realtors and agents during the Covid-19 pandemic. The event was sponsored by TitleVest.

Appraiserville

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

Appraisal Buzzcast: Diving into USPAP with Jeremy Bagott and Dennis Scardilli


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 Gamestop;
  • You’ll be more like Reddit;
  • And I’ll focus on housing trends.

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 22, 2021

Housing Has Been Winning Hearts And Minds

Wait for it…


And then wait for it again…


But I digress…

Unfortunately, this will be an abbreviated housing note this week.

But I digress again…

Greenwich Connecticut Breaks Sales Records

I’ve been the author of an expanding series of market reports for Douglas Elliman since 1994. This week Douglas Elliman published our research that covered Fairfield County and Greenwich, Connecticut.

Apparently, the 350K subscribers of the Bloomberg Terminals liked to read about Greenwich, making this the fourth most emailed article on the morning of the release.

________________________________________________
FAIRFIELD COUNTY SALES HIGHLIGHTS

Elliman Report: Q4 2020 Fairfield County Sales

“After the end of the COVID lockdown last spring, price trends are rising to new records as listing inventory falls to new lows.”

  • Highest year over year increase in sales in more than eight years and the most fourth-quarter sales in sixteen years
  • Average sales price and average price per square foot surged year over year to record highs
  • Listing inventory fell to its lowest level in twenty-five years
  • More than one-third of all single family sales closed above the last list price
  • With the surge in sales levels at the upper end of the market, luxury listing inventory fell to its lowest level tracked in our research

________________________________________________
GREENWICH SALES HIGHLIGHTS

Elliman Report: Q4 2020 Greenwich Sales

“Sales surged higher year over year, rebounding quickly from the decline in spring market activity at the onset of the COVID crisis.”

  • Single-family sales surged to their second-highest level in at least a decade
  • Single-family listing inventory fell year over year at its fastest rate in more than six years
  • Condo sales nearly doubled from the prior-year quarter, the second straight quarter with an annual sales surge
  • The Back Country and Mid Country regions showed their fastest-moving pace in nearly six years of tracking
  • Luxury listing average sales size was the third-highest on record

NYT Calculator Shows The Surging Progression of New Lease Signings

In what promises to be a monthly thing, I provided data and insights for the graphics column in the New York Times Real Estate section this weekend. I’m super excited about this. Here’s the first: Manhattan Lease Signings Are Booming. Is It Enough for a Recovery?

Getting Graphic


Our favorite charts of the week

Len Kiefer‘s Chart Handiwork

Appraiserville

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

GoFundMe: Help Scott Robinson’s Family Through a Tough Time

This circumstance is just awful – I can’t imagine how tough it is on his family.

Scott Robinson took a catastrophic fall on January 13, 2021 and sustained a serious head injury. After a week of being in and out of the hospital, Scott is finally home and recuperating. However, he and his family are facing a path of physical therapy and recovery that could last a while.

I hope my readers can help out by going here.

OFT (One Final Thought)

And a pallete cleanser for the weekend…


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 faster;
  • You’ll befaster;
  • And I’ll try not to pull a hamstring.

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 15, 2021

The Shapes of Words In The Language of Housing


But I digress…

Manhattan Apartment Nearly Double YOY

I’ve been the author of the expanding Douglas Elliman market report series since 1994. The December 2020 Elliman Report for Manhattan, Brooklyn & Queens Rentals was published yesterday. The key takeaway pertained to the continued sharp drop in rents creating more affordability, drawing in more demand as well as existing tenants playing musical chairs trying to get better deals.

The Bloomberg piece on the rental report was the fifth most-read article by the 350K Bloomberg Terminal subscribers at one point on Thursday despite the insane volume of non-housing market news.

Most importantly, the article contains the most whacked-out chart of new leasing activity will the plunge in rents (in two colors)!

Elliman Report: December 2020 Manhattan, Brooklyn & Queens Rentals

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“For the third straight month, new lease signings rose to their highest level for the current month since the financial crisis.”

  • New leases rose sharply to the most signed for December in more than a dozen years
  • The vacancy rate slipped from last month’s record to the third-highest on record
  • The monthly concession rental equivalent slipped from last month’s record to the second-highest on record
  • Net effective median rent fell year over year at the second-highest rate in at least nine years
  • Smaller apartments sizes saw a larger percentage decline in median rent than larger apartment sizes
  • The market share of landlord concessions was sharply lower for the luxury market than for the remainder of the market

______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“For the second consecutive month, new lease signings rose to their highest level for the current month since the financial crisis.”

  • New lease signings surged annually to the most signed for December in more than a dozen years
  • The net effective median rent fell year over year at the highest rate in more than eight years and fell to its lowest level in nearly six years
  • The market share of landlord concessions fell short of the prior month record but represented nearly half of all market activity

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region]
“New lease signings showed significant growth as rental price trends continued to tumble.”

  • Net effective median rent fell year over year for the eighth consecutive month
  • New lease signings surged after sixteen months of annual declines
  • The monthly concession rental equivalent rose to a new record

Westchester County Sees Sales Surge From City Demand and Record Low Mortgage Rates

Douglas Elliman published our research this week on the NYC suburban markets of Westchester and Putnam/Dutchess counties of New York.

Of course, there is the ever-important Bloomberg chart on Westchester’s price gains (in two colors)!

______________________________________________________
WESTCHESTER SALES MARKET HIGHLIGHTS

Elliman Report: Q4 2020 Westchester County Sales

“Prices and sales pressed higher as listing inventory continued to fall.”

  • Median sales price surged annually to the second-highest level on record
  • The number of sales in the fourth quarter was the most for a fourth-quarter on record
  • Listing inventory fell year over year for the sixth straight quarter
  • Single family median sales price across all bedroom categories posted large gains, with the highest in the larger sizes
  • More than a third of single family sales that closed in the quarter went to a bidding war
  • The highest number of condo sales of any quarter on record
  • Condo sales surged after three consecutive quarters of significant declines
  • Luxury listing inventory fell year over year at the highest rate in eight years
  • Luxury months of supply showed the fastest market pace in eight years

______________________________________________________
PUTNAM SALES MARKET HIGHLIGHTS

Elliman Report: Q4 2020 Putnam County and Dutchess County Sales

“The market continued to show more strength with rising prices and year over year surge in sales.”

  • The number of sales saw an annual surge at their highest rate in more than four years
  • Largest annual increase in median sales price in twelve quarters
  • Listing inventory fell year over year at the highest rate tracked in thirteen years


DUTCHESS SALES MARKET HIGHLIGHTS

Elliman Report: Q4 2020 Putnam County and Dutchess County Sales

“Price indicators continued to show significant gains as listing inventory fell sharply.”

  • Median sales price jumped annually at the highest rate tracked in thirteen years
  • Listing inventory fell year over year for the fifth consecutive quarter
  • Months of supply fell to the fastest market pace in more than six years of tracking

A Photoshoot On A Terrace Overlooking Central Park

Crain’s New York asked me to do a photoshoot on the terrace of a spectacular apartment overlooking Central Park West to be used with a story on the housing market. I did just that and the photographer was the same person that photographed me for a Crain’s cover about two decades ago.

Here’s what the photoshoot looked while in progress and that amazing terrace:


And this was the photo used in the Crain’s New York piece. This appraisal work is fun!


A Homebuilder CEO Comment From 2007 That Didn’t Suck

This week I learned about this 2007 story about a publicly-traded U.S. homebuilder CEO comment in a public forum:

“Donald Tomnitz, CEO of D.R. Horton (DHI), flipped his lid speaking at a Citigroup investor conference. “I don’t want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year”

And all the business outlet headlines then screamed with glee on the ability to use language typically reserved from conversations among friends.

NBC: D.R. Horton CEO: 2007 will ‘suck’
Fox/AP: CEO of Nation’s Largest Homebuilder: 2007 Is Going to ‘Suck’
CNBC: What’s ‘Tough’ for One CEO ‘Sucks’ for Another

While some outlets couldn’t handle it:

LA Times: Frankly, builder sees slump in ’07
BBC Bleak housing outlook for US firm
Orange County Register Housing slump will linger, D.R. Horton exec says

But this sarcastic WSJ headline response was the best:

WSJ: An Eloquent Oration on the Condition of the Manufacture of Domiciles

Inspired, I did the same thing today and it was fun and efficient but not something I plan to incorporate into all my presentations.


The Best Manhattan Real Estate Dad Joke Ever

Based on the Bloomberg story regarding a 51% discounted resale at supertall One57 that I shared here last week on housing notes, economist/writer Daniel Gross lays this Manhattan-specific humor on us.


Getting Graphic


Our favorite charts of the week of our own making

Our favorite charts of the week


[NYT – click on image for supporting article]


[NYT – click on image for supporting article]

Appraiserville

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

In The Aftermath of the AI Board Meeting, FOJs Double Down On Their Corruption With Another 45-Day Notice

Lots of stuff to discuss here but not enough time to make a living – so I will be posting extensively about the BOD meeting and this new 45-Notice on my Matrix Blog this weekend. I will link back here as well as provide the link in next week’s Housing Notes.

NREP’s Take On FHFA Modernization Efforts And The Public Comment Period

I’ve often said that Appraisal “Modernization” is a codeword for “AVM.”

Some of the coalitions are drafting a response:

Dale Bailey of the South Carolina Professional Appraisers Coalition [SCPAC] said this:

Several Coalitions are drafting a response, for the record, about the change in the process and how we feel about some of those changes. We are hoping to have each Coalition be represented in the final paper. Please send any contributions of issues you may have with these changes to us for incorporating into the paper. It would help a great deal to have input from as many of you as possible.


USPAP Doesn’t Require An Inspection So Why Is It Trying To Determine What An Inspection Is 30 Years Later?

The ASB is struggling with the 4th Exposure Draft and issues of clarifying significant professional assistance and what an inspection means? Why? USPAP doesn’t require an inspection – never has. And good grief…a FOURTH exposure draft in an already over-analyzed two-year USPAP cycle?

The reason why Dave Bunton & Co. (TAF) has been emphasizing the Supervisor position is they are trying to retrofit USPAP back into the position. This is the same institution that felt it was appropriate to send this bat-shit crazy letter to their regulator.

Think about what has been said at every AQB meeting since Plymouth Rock – “trainees” are unable to find supervisors to mentor them to get their experience credits or banks won’t accept their reports and therefore they can’t get work to make a living. This is one of the biggest problems with the lack of diversity in the appraisal profession and it starts with the lack of diversity at TAF. This non-diversified institution, despite perhaps, the best intentions of those that are active are trying to solve the problem of getting more diversity into the profession. Yet the industry is aging and not diverse because the bureaucratic largess that TAF has created in the merry-go-round USPAP cycle gradually made it nearly impossible to join.

Incidentally, Title XI doesn’t require experience! Take a step back and look at other professionals like lawyers and accountants – they are required to take a comprehensive (hard) exam and do not have to have thousands of hours of experience. The public trust of these professions is not damaged by this practice. As a good friend of mine in Oklahoma has told me many times “appraising isn’t rocket science.”

Why is experience a unique requirement by the appraisal industry? TAF has constructed a gatekeeper mentality to the profession, that is manned by appraisers who are not largely diversified either. This is an epic fail and largely has resulted in a lack of diversity and an aging appraisal population.

And by the way, “experience” is always ongoing and appraisers must always continue to learn. The market will decide the value of your experience as an appraiser. Tagging an appraiser as a “trainee” is essentially tagging them as a liability and then artificially derived a number of required hours magically makes them a non-liability. I’ve known residential trainees in my market who were far more competent than experienced MAIs.

Incomes of supervisory appraisers have been squeezed by the AMC mentality of the mortgage industry and therefore most don’t want to take on a “trainee” and dedicate two years of training to someone who can’t sign a report for most clients, provides additional liability, and may leave to go on their own after certification.

Let’s try to focus on the bigger issues that impact the everyday lives of appraisers than on this insane &^&^%$#%^** busywork minutia that does nothing but reduce the wide-scale entry to all into the profession.

Let’s up the industry’s game to be at least as competent as other professional services. After all, the current gatekeeper mentality pushed by TAF on the backs of the supervisors is damaging the public trust. My goodness.

TAF Still Focuses On Money Over Diversity, For BOT Positions

From Dave Bunton’s recent TAF announcement:


TAF’s own press release is seeking candidates that will be FODs (Friends of Dave), they show that financial prowess takes precedence over the appraisal profession. It’s just baked into a non-profit institution with $8 million in reserve.

Our annual call for applicants is a real opportunity to cast a wide net for candidates that bring leadership and non-profit management experience who also have a deep interest in advancing the appraisal profession

Diversity would be great to emphasize given the total lack of it, of course. But considering that their announcement lists serving the profession AFTER non-profit management experience shows their priority remains finances over the profession. The fact that the announcement doesn’t even talk about some of the things facing the profession (e.g., bias, waivers) shows how detached they are from actual appraisers.

OFT (One Final Thought)

Thinking about that Steve Miller song and where that word Pompatus came from…


Then stroll through this list.


Brilliant Idea #1

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

  • They’ll be cruder;
  • You’ll be cruder;
  • And I’ll use crudeness to improve the narrative.

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 8, 2021

Housing Has A Runway In Front Of It

2021 so far…wait for it…and think about taking some Dramamine.


But I digress…

The Manhattan Sales Market Continues To Claw Out Of The Hole COVID Dug

I’ve been writing the expanding Elliman Report series for Douglas Elliman since 1994. One of the first reports we undertook covered the Manhattan sales market. This week we published the Elliman Report: Manhattan Sales Q4-2020 that showed market activity surging after the lockdown ended but still falling short of the prior-year quarter. Sellers are pricing better to drive more deal flow and based on the results of the New Signed Contract Report covered later down the page, there is a possibility that year-ago parity will be reached by the spring.

Coverage of note (in no particular order):

Bloomberg: Manhattan Home-Shoppers Aren’t Finding Huge Covid Discounts Yet
New York Times: New York real estate begins to recover after a grim year.
The Real Deal New York: Manhattan’s condos get year-end sales boost as inventory balloons
Crain’s New York Business: Manhattan ends 2020 with stronger residential sales

Here’s the same Bloomberg chart two different ways.

______________________________________________________
MANHATTAN SALES MARKET HIGHLIGHTS

Co-ops & Condos
After lagging the region’s sales trends during the COVID era, Manhattan sales levels surged from the prior quarter but remained short of the level reached in the same period a year ago.

Elliman Report: Manhattan Sales Q4-2020

  • The number of sales surged from the prior quarter but fell short of year-ago levels
  • The market share of cash buyers fell to a new record low as mortgage rates plummeted
  • The price trend indicators showed mixed results from prior-year levels as sales activity improved at the upper end
  • Median resales price slipped for the fifth time in six quarters
  • The number of co-op sales jumped from the prior quarter but fell short of year-ago levels
  • There was a significant year over year uptick in condo sales above the $5 million threshold, particularly new development
  • Luxury median sales price rose annually for the second straight quarter skewed by the rise in sales size
  • The market share of new development closings exceeded the quarterly average for the decade

A screenshot from my internal spreadsheet shows the jump in high end sales as seller’s dropped prices to the new market level:

______________________________________________________
NORTHERN MANHATTAN SALES MARKET HIGHLIGHTS

Elliman Report: Northern Manhattan Sales Q4-2020

“Apartment sales surged from the prior quarter while townhouses shifted to larger sized sales.”

Co-ops & Condos
– The number of sales surged from the prior quarter but remained short of year-ago levels.
– Listing inventory fell from the prior quarter record but remained sharply higher than the same period last year.

Townhouses
– Overall price trend indicators rose above year-ago levels, skewed by the shift to larger sized sales.
– Listing inventory continued to fall sharply along with the number of sales.


New Signed Contracts Are Up Everywhere

The New “New Signed Contracts Report” series we launched for Douglas Elliman in the early days of the lockdown has been showing growth across the four regions we cover:

Elliman Report: New Signed Contracts New York December 2020
Elliman Report: New Signed Contracts Florida December 2020
Elliman Report: New Signed Contracts California December 2020
Elliman Report: New Signed Contracts Colorado December 2020

Most notably, Manhattan exceeded year-ago levels for the first time since the COVID lockdown.

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New York New Signed Contracts Report

Elliman Report: New Signed Contracts New York December 2020

Manhattan
New signed contracts for co-ops and condos rose annually for the first time since the lockdown ended while townhouses have continued to exceed year ago levels since September. Co-op and condo new listing inventory have fallen year over year for the third straight month.

Brooklyn
New signed contracts for all three property types were more than triple the levels seen in the year-ago period, continuing the streak since July. New listing inventory saw significant gains but was overshadowed by new signed contract growth by a multiple of three to four times.

Long Island (excluding H/NF)
New signed contract activity for each property type rose year over year for the sixth straight month. Modest new inventory gains were significantly overpowered by robust new signed contract growth.

Hamptons
New signed contract activity for each property type rose year over year for the seventh straight month. The significant gain in new inventory continued to exceed new signed contract growth in recent months.

North Fork
New signed contract activity for each property type rose year over year for the seventh straight month. Overall new inventory declined year over year for the first time since May.

Westchester
New signed contract activity for each property type rose sharply year over year for the sixth straight month. Modest new inventory gains were significantly overpowered by robust new signed contract growth.

Fairfield
Single family new signed contract activity rose year over year for the sixth straight month while new inventory fell year over year for the third straight month, keeping the market pace brisk.

Greenwich
Single family and condo new signed contracts continued to show gains of roughly triple the levels of the same month last year. While new listings for both property types were up over the same period but growth remain significantly below the rate of new signed contracts.

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Florida New Signed Contracts Report

Elliman Report: New Signed Contracts Florida December 2020

Palm Beach County
New signed contracts for single families and condos nearly doubled from year ago levels with greater growth seen at the upper price tranches. New inventory for both property types continued to slide, keep the market pace brisk.

Broward County
Condo new signed contract annual growth continued to outpace single family growth. larger year over year gains were observed in the higher price tranches. Overall new inventory for both property types showed modest change.

Miami-Dade County
New signed contracts for condos rose at nearly three times the rate of single family new signed contracts with generally more gains at higher price tranches. New listings for condos fell sharply.

Pinellas County
Single family new signed contracts edged up year over year with more significant gains seen in the higher price tranches. Condo new signed contracts fell year over year but growth in most of the upper price tranches remained strong.

Hillsborough County
New signed contracts for single families showed stability while condos showed modest annual gains. The upper price tranches for both property types showed significant year over year gains.

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California New Signed Contracts Report

Elliman Report: New Signed Contracts California December 2020

Los Angeles County
Year over year gains for condo new signed contracts continued to outperform single family new signed contract growth. New inventory for both property types fell sharply, helping maintain the robust market pace.

Orange County
New signed contracts for single families and condos continued to decline year over year. New inventory for both property types fell sharply, helping maintain the robust market pace.

San Diego County
New signed contracts for single families and condos continued to decline year over year. New inventory for both property types fell sharply, helping maintain the robust market pace.

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Colorado New Signed Contracts Report

Elliman Report: New Signed Contracts Colorado December 2020

Aspen
New signed contracts for single families showed large annual gains while condo new signed contracts doubled over the same period. Single family new inventory fell sharply for the second straight month, overpowered by new signed contract gains.

Snowmass Village
New signed contracts for single families pressed higher year over year but at the lowest rate since tracking began in July. Single family new inventory fell sharply year over year for the third time in four months.

With a 51% Price Drop, One57 Has New Definition of “Value”

About a month ago, I worked up this chart but never used it – the units are sorted by apartment number with the resale following the original sponsor sale. The blue rows denote resale closings in 2020 At some point, the developer of One57 claimed that the May closing of unit 88 was not an “arm’s length” transaction and its 40.9% discount, therefore, wasn’t real.


However since that May closing, there were four additional closings by August 2020, and three of the four showed discounts in excess of 40% with the outlier only dropping 18.9% in value.

Today Bloomberg reported an additional resale that closed for a 51% discount in December.

The developer who indicated that the 41% discounted resale in May wasn’t “arm’s length” was the same developer who said this in today’s Bloomberg article.

“Clearly, over six years ago the buyer understood the value of this unit,” Gary Barnett, chairman and founder of Extell, said in a statement. “Unfortunately, this was an estate sale and they decided to just dump it.”


Here’s my translation of what was said:

“When prices go down, developers rationalize it by thinking people stop recognizing the value.”

Yet what Extell is really saying is:

“The seller’s definition of value is “what I want it to be or need it to be.”

The reality here is that market value is a moving target and condo development is one of the riskiest property types to speculate. I take my hats off to developer’s in this regard because I don’t have the stomach for it. Just look at what prominent developer HFZ is going through now. This is because a boom like we just went through has a short shelf-life yet the development window is often much longer, taking 2-4 years or perhaps even a decade, like Hudson Yards. Timing and luck are considerable components of development.

It is important to understand that value is not the highest number that can be achieved. That’s really something else. Value is always defined by a moment in time.

The Pied-a-Terre Tax 2 is Blinded By Politics And Devoid Of Critical Thinking

Habit Magazine’s Proposed Pied-a-Terre Tax: Windfall or Boondoggle? provided a good overview

Intentions were good, but the overzealous Housing Stability and Tenant Protection act of 2019 removed any upside for landlords or investors which will lead to a 1960s and 1970s gradual decay in the rental housing stock. It’s already begun. Maintenance has dropped and construction staff had been let go well before the pandemic.

Now the threat of the return of “PAT2” in a multi-edited version of the proposed Pied-a-Terre Tax is more or less personal – based purely on principle without consideration of sustainability. If a tax is proposed that brings in little to no net revenue, then what is it? It’s just a personal attack on the real estate economy that drives more than 50% of New York City’s tax revenue. Cut revenue drastically, on top of the aftermath of the pandemic impact and you cut even more revenue to the city and then see a cut in services. Once you remove yourself from the fog of politics, why would anyone want that?

Getting Graphic


Our favorite charts of the week of our own making


Appraiserville

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

This week’s Appraisal Institute Board meeting was bitterly disappointing because the BOD showed cowardice in hiding how they voted. That cowardice was driven by the FOJs whose corruption is wiping out this institution’s legacy. I’ve got a slew of commentary queued up but will publish it next week because of my heavy market report release schedule and appraisal volume.

OFT (One Final Thought)

I won’t be placing my phone on the table ever again.


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 likely to claw out of a hole;
  • You’ll be value-oriented;
  • And I’ll be overwhelmed with work.

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 1, 2021

Not All Housing Billiard Tables Go Unused


Oh, and get ready for this coming week – some blockbuster Douglas Elliman housing market reports are being released.

But I digress…

From My Matrix Blog: Peak Suburb Has Passed

Here’s something I wrote over on our Matrix Blog last week… The New York Times got the market nuances right in their epic end of year The Real Estate Collapse of 2020.

And including epic charts makes it even better.


I noticed that the Streeteasy median rent chart used in the piece shows the same pattern as my recent chart in Bloomberg. That drop in rent is gigantic.



[Source: Bloomberg – click image to open article]

From My Matrix Blog: TRD Quick Question: Jonathan Miller “What’s Happening in the NYC Real Estate Market?”

Here’s another something I posted over on our Matrix Blog last week…

I recently completed a quick interview with Stuart Elliott, Editor In Chief & CEO at The Real Deal who asked me questions with a uniquely mellow intensity. The Real Deal is required reading for anyone in the real estate profession or interested in real estate. Fun.


Mortgage Rates End The Year With A New Record Low

Mortgage rates fell prior to 2020 due to the Fed trying to mitigate the damage caused by the trade war with China and 2020 continued the trend as the economy was walloped by COVID. U.S. housing activity boomed on the purchase side as a result while rental prices plunged, reflecting the disproportionately heavy damage unemployment was causing to lower-wage workers.

I’ve been saying that this might make the economy much more vulnerable to a modest interest rate increase although it sure seems like rates aren’t going much of anywhere for a long time.


How The Home Of The Future Was Imagined In 1967


And if you can get past the blatant sexism, here’s another view – although the toaster still hasn’t changed.


Appraiserville

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

My 2020 was a year of inward reflection on my profession which, for all its flaws, I love. I took the Appraisal Institute’s blatant election corruption personally and then reassessed what The Appraisal Foundation stood for with its blatant bureaucratic monarchy.

The inherent corruption of both organizations, two that have had arguably more impact on the U.S. appraiser than most, is the source of many flaws in the profession. Because of the potential for punishment or lack of access, and the “lone wolf” nature of our profession, appraisers have only recently begun to push back.

I can promise you this dear Appraiserville readers: 2021 will be a year to remember for the industry and I will be bringing you relentless coverage of the self-dealing in the leadership of both of these organizations. I hope you’ll help throw shade and help change their focus to actual appraisers instead of themselves.

Happy New Year to all.

OFT (One Final Thought)

“Following your passion” is not the answer to happiness.


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 passionate;
  • You’ll be happier;
  • And I’ll just be happy.

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


December 24, 2020

The Holidays Are Not For Housing Our Frustrations: 2021 Is Gonna Be Lit!


But I digress…

It’s Been Quite A Year!


[NY Times – click to open article]

I’m glad it’s coming to a close but 2020 has been a fascinating time to track the housing market. I’m very glad so many of you have joined me in this weekly endeavor.

The year 2020 was one to remember, just as much as it was one to forget. I can’t remember a previous year where optimism was widely viewed with skepticism.

But whatever your take on next year is, my best wishes to you right now for a happy holiday season!

Jonathan

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 ready for 2021;
  • You’ll be waiting for 2021;
  • And I’ll be looking forward to 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


December 18, 2020

The Year-End Massively Excessive Use of Housing Charts Edition

Consuming housing-related data via charts is like consuming too much chocolate via music. Wait for it…


But I digress…

The Weirdness of a Weakening U.S. Economy Versus Rising Housing Market Might Mean A Rapid Recovery

Please read this excellent NYT visualization this week: How the Economy Is Actually Doing, in 9 Charts

Though the pandemic has altered Americans’ day-to-day lives, it hasn’t halted their spending as much as some feared it would. Rather, consumption has shifted toward goods over services — buying alcohol from stores instead of from bars, for example — bucking a generational trend toward a service economy.

And this.

Countless businesses have been forced to close over the course of the pandemic. However, a sign that the economy may be adapting rather than totally halting is the increase over last year in new business applications.

The takeaway appears to be that the economy has adapted quicker to the change in economic conditions than expected but at the same time, the recovery process has been even more unequal.

NPR Radio: Commercial Real Estate Weakness Will Cause Stress To Their Lenders

I was interviewed for Marketplace for a quick piece on the NYC commercial real estate market that provided a good overview of the look on the front lines.

The Backlash Over Streeteasy’s Real Estate Listing Monopoly Begins

New York City is seeing a listing battle like never before. Gabriels is the disrupter here, battling the former disrupter Streeteasy (Zillow) to become the defacto MLS in Manhattan. After Streeteasy killed their listing competitors and won the consumer, they began to charge significant fees to the brokerage industry to hold their listings and are acting like a monopoly and the quality of their data and features has continued to erode. One of the ways Streeteasy (and Zillow) makes money is to deflect the consumer from the actual listing agent and push them to an agent who paid Streeteasy to receive the leads. Also, Zillow is now also a brokerage firm and is, therefore, a competitor with the brokerage community such as their iBuyer effort.

Zillow deflects leads away from listing agents nationwide and absolutely screws the actual listing agent by having an “imposter” poorly represent the property and provides a blatant disservice to the consumer.

It is going to be interesting to see how the Real Estate Board of New York (REBNY) navigates this, having been ineffective in pushing out RLS, their failed attempt to win consumers back from Streeteasy.

REBNY is not happy with the entrance of Gabriels into the mix and hit them with a cease and desist. I think this makes REBNY look bad to their members as all of the big Manhattan firms except Corcoran seem to be on board. Why would Corcoran not be on board? Curious.

Gabriels has been in this space for decades (remember the Gabriels guides in the books stores?).

Visualize How Housing-Related Sectors Compare To Others (Hint: Better)

The employment within industry sectors that touch housing all seem to be near the top of Howmuch.net’s visualization: financial services, construction, and professional & business services.

The Risk of Eviction and Foreclosure Across The U.S. By State is Quite High

Visual Capitalist has quite a chart this week.

According to a recent survey by the U.S. Census Bureau, of the estimated 17 million adults who are not current on their rent or mortgage payments, a whopping 33% of them could be facing eviction or foreclosure in the “next two months”.


[click to expand]

The Fed’s Business Leaders Survey for NYC Metro in December Shows Growing Weakness

Like the Fed’s Beige Book, I take a look at the Federal Reserve Bank of New York’s Business Leaders Survey as they are released. The December report shows the dire mood about the economy right now.

Activity in the region’s service sector declined at its fastest pace since June, according to firms responding to the Federal Reserve Bank of New York’s December 2020 Business Leaders Survey…Looking ahead, firms expect little improvement in business conditions over the next six months.

In other words, the vaccine is the lynchpin for regional economic growth to resume.

Video: The Manhattan Rent Plunge Caused The Most New Lease Signings For A November Since The Financial Crisis

The renewed rental affordability pulled consumers into the rental market from the suburbs and reflected the efforts of many in the city to move around to find better deals. Here are the Fox5 New York article and clip on the results of our November rental report for Douglas Elliman.


Unemployment: Big Cities Have Been Hit Harder Than Small Cities

My friend Jed Kolko over at Indeed posted a fascinating analysis of the job posting data his firm has amassed.

The disparity of job postings by wage levels is something we have seen but this confirms – higher wage earners haven’t seen the same economic damage as lower wage earners. This is another reason why the sales market is faring better than the rental market.

And big cities have been hit harder, showing fewer job postings than smaller cities on a consistent basis during the pandemic.

Getting Graphic


My favorite charts of the week of our own making


My favorite charts of the week

Len Kiefer‘s Chart Handiwork

Appraiserville

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

Southern California Appraisers See Over-priced Home Risk But Nowhere Near 2013-14

Prolific real estate writer Jonathan Lanser at Orange County Register wrote about the Real Estate Research Council of Southern California’s appraiser survey that began about 70 years ago.

I wonder what any of my California appraiser colleagues think of this survey? This doesn’t appear to be like the amazingly misleading Quicken Loans monthly survey that plots trends of biased borrower estimates against appraisers. This chart junk index was put to death in 2019.

TAF’s Lack of Diversity Made It Vulnerable To Being Ignored By The Industry

After the poor performance of the “diversity” panel last week that introduced concepts that have nothing to do with the valuation of collateral for the global bond market (I mean, wow), I am calling on TAF to announce solutions to their own diversity problem immediately. It is hard to imagine the diversity problem being turned around given Dave Bunton’s 3+ decade tenure. Even worse, if he continues his transition to auto-pilot and follows the widely understood rumor-mill that names Kelly Davids as acting president in 2021 until his term is up in about four years.

Remember that this is the leadership, including the personal property appraiser Board of Trustees Chairperson that signed the bat-shit crazy letter, a self-absorbed diatribe, to the Appraisal Subcommitte (ASC).

Friends of Jim Amorin (FOJ) Are Making It Impossible To Be Considered For Office Unless You Are An FOJ

Here’s a reminder to all members of the Appraisal Institute that there is real corruption in national leadership: The proposed changes to the AI Bylaws will not allow people nominated to executive positions to provide any outside recommendations for the second vice president position. If they are submitted, they will be discarded. Why? It’s absurd and can only be explained by the stranglehold Jim Amorin and his posse have on AI executive leadership. This was clearly done to keep honest appraisers like Craig Steinley from doing what he did and submit an overwhelming number of letters of recommendations from leaders in other organizations. Doesn’t AI want to have relationships with other professional trade groups? Why would a recommendation from a non-AI executive be banned? If you’re an FOJ focused on controlling who gets to be an executive to keep the self-dealing financial party going, then that’s why.

This sham bylaw modification is being done because Jim Amorin wants to make sure the next second vice president is of the same political loyalty to him as Jim Tankersly shamefully showed in the recent application of the sham petition process.

Jim Amorin and the rest of his loyal followers are being relentless in shutting out the best the Appraisal Institute has to offer and stick with the current corruption composition of national leadership. I thought Jeff Sherman brought new honesty into the organization but I now realize I was wrong.

At one point when does someone whistleblow to the U.S. Attorneys Office, Northern District of Illinois to have them investigate this institutional takeover. My goodness. If this isn’t corruption, then I don’t know what is.

Just read what’s happening in Region X! They are furious with the corruption in the sham election process initiated in Chicago. My goodness.

Investigation Request re: Events Associated with the November 30, 2020 Special Meeting of the Appraisal Institute Region X

Corruption is everywhere within the organization on the national level.

Oh, and Merry Christmas to all.

OFT (One Final Thought)

This will take your breath away (in a good way).


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 make charts;
  • You’ll be more chart-friendly;
  • And I’ll chart the market.

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

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#Housing analyst, #realestate, #appraiser, podcaster/blogger, non-economist, Miller Samuel CEO, family man, maker of snow and lobster fisherman (order varies)
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