August 7, 2020

Despite The Distracting Hairstyles, 1989 Got 2020 Housing Reasonably Correct

It’s hard to believe we started our real estate appraisal company wearing hair and clothing styles like in the video below, but hey this video isn’t completely wrong:


But I digress…

The NYC Suburban Contract Activity Woke Up Faster Than Manhattan

I’ve been the author of the expanding Elliman Report series for Douglas Elliman since 1994. Recently we introduced a new type of regional report that tracks several of U.S. housing markets by “new signed contracts” and “new inventory” each month with 3-8 submarkets in each.

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

The New York regional market (with newly added Westchester County, Fairfield County and Greenwich, CT has been especially interesting for two reasons:

  • Suburban sales are surging around Manhattan while Manhattan still falls short by half of year-ago levels.
  • The broader high-end (plus luxury) suburban markets have been outperforming the starter market based on year over year growth of new signed contracts.
  • Its Manhattan that is showing weakness relative to the suburbs, not the overall city. Brooklyn new sign contracts for co-ops and condo are up YOY by nearly a third and townhouses are up by more than double.
  • Manhattan lags because it has the most wealth and mobility of all the boroughs and a reported 40% of Manhattanites exited in March/April when the lockdown began.

All this activity got Wall Street interested and the story ranked #13 most emailed yesterday on the 350K Bloomberg Terminal subscribers.


And now that I’ve got that out of the way, the Bloomberg piece ran an incredible illustration of the Manhattan/Westchester variance while using the color blue. My work is done here.

Redfin: We’re running naked through the jungle with a Bowie knife clenched between our teeth

For a little levity, read the second to last paragraph of Redfin CEO Glenn Kelman’s comments in the transcript of their Q2 2020 quarterly earnings call. h/t to Ivy Zelman.

THE CON Episode 1 Debuted This Week And It Was Compelling Because Good Appraisers Lived That Hell Too

Although I’ve shared the following CNBC clip before, it’s worth showing again given my 15-year ago hairstyle. In 2005, I was interviewed by CNBC in the midst of the Housing Bubble and said that 75% of the appraisals being done then weren’t worth the paper they were written on (hey it was 2005 and they were done on paper, not pdf). They found me because I had just started my Matrix Blog because no one seemed to be listening to appraisers. Incidentally as of this week, Matrix is 15 years old!!!

And the October Research stats presented indicating that 55% of appraisers felt pressure to hit the value rose to 90% in the next year! The outlook was dire.

When I was interviewed, I was trying to keep it together because I assumed my business and my livelihood would be gone by 2008 if things continued. Thoughts about supporting my family of 4 sons and making my mortgage payments loomed large, but I couldn’t be morally flexible unlike many of my local peers who thrived as a result. Most lenders and mortgage brokers didn’t care about valuation quality, just hitting the numbers to make the deal. The appraisal profession became seen as one of “deal enablers” instead of neutral valuation benchmark setters. My big competitors at the time (who were part of the 75%), told me essentially: “Aw Miller, You Don’t Get It.” No, I didn’t. All my “75% competitors” during that era lost their licenses and/or went out of business after Lehman collapsed in 2008.


This is why this new documentary “THE CON” means so much to me. It tells the story that “good appraisers” like me and my firm have never been able to tell. Instead, good appraisers have been lumped in with the bad appraisers who are long gone.

Watch for my appearance along with several of my colleagues around the country in this week’s episode 2!

Think too much risk was the reason for the 2008 financial crisis? Nope. Unmitigated greed and systematic fraud are the real issues — and no one’s discussing them…. Until now. @theconseries is now available on virtual cinema: thecon.tv/watch #TheCon

Beginning now, you can watch entire THE CON series, episodes 1-5 through a network of independent cinema outlets.

Watch Last week’s Episode 1

PODCAST The Global Impact of Covid-19 On Housing Has Been Far-Reaching


I spoke with Anna Ward of Knight Frank, host of the Intelligence Talks Podcast on how Covid-19 has impacted home buyers in New York. Other guests included Kate Everett-Allen, Head of International Residential Sales at Knight Frank and author of Global Buyer Survey – 2020, Head of International Residential Sales at Knight Frank, Mei Wong; and Global Head of Research, Liam Bailey at Knight Frank.


Appraiserville

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

Quid Pro Quo: The Right Candidate Got Elected And Corrupt Leadership Got To Keep Their Sham Election Maneuver

Yesterday’s AI Public Airing Of The Sham Election Process was a dark day for the institution but a bright day for the good guys. The actual selection of Craig Steinley after he won the national nominating committees’ endorsement took literally thousands of members to apply pressure to the BoD. Thankfully it worked.

However, in order to enable the Board of Directors to do the right thing, they’ve got to keep the sham petition process in place. Membership will have to go through this all over again next year and every year that Jim Amorin stays as CEO. Look for Tankersly to shame himself again next year.

The feedback I received from membership who watched this carnival was patently negative. The Board of Directors meeting came across as disorganized, tech-averse, and embarrassing. At the moment, they have shown they are clearly not our industry’s leader.

The presentations by Tankersley and Steinley couldn’t have been more different.

Tankersly

First, Tankersley’s bloviating about how tight he is with the board was really awful. I still can’t get over that someone with his credentials doesn’t appear to have any shame for agreeing to be a player in the sham petition process. It’s only purpose is to overrule the vetting by the NNC so that Amorin can get his lackey’s in. At no time in the five weeks, I’ve been chronicling this debacle has AI Leadership provided a specific reason for the need for this sham petition process.

Here were a few nuggets from this Amorin lackey.

“Times like this bring out the best in people or the worst in people” LOL

“Open your eyes to what the possibilities are for this organization” LOL

How embarrassing.

Tankersly emphasized he is a team builder which is obviously false for the fact he is a candidate in this sham election process. He wants to expand the education delivery yet that ship has sailed. He wants to examine the financial structure to which I ask, why? The whole purpose of this sham election is to keep the yes-men like him in the pipeline so they can travel first class with wives, friends, and family around the world. The lack of ethics here is absolutely unconscionable.

It should be noted that Tankersley criticized Steinley directly which revealed that he is not a teambuilder. The feedback has been that the Execs/BOD gave him pure softball questions so he could answer them and even with that, he was cringe-worthy.

Steinley

Why bother going into details? The man was relaxed and the consummate professional. His performance was clearly proof as to why he was selected by NNC over Tankersley. He is what the Appraisal Institute needs to finally get AI National moving in the right direction.

Steinley was announced as the winner by the Appraisal Institute yesterday:


Tackle Appraiser Moral Dilemmas with Live Online Business Practices and Ethics

The wording of this morning’s AI email is laden with a:

Word Salad of Irony



Voice of Appraisal Covers The CON, TAF, and AI This Week

Episode 244 from Phil Crawford’s New Studio. Who’s that on his t-shirt?


Real Estate Brokers Are Starting To Complain About Turn Times

Here we go again. Mortgage brokers are beginning to complain about appraiser turn-times given the massive surge of mortgage appraisals needed right now. Get ready for AMCs and mortgage brokers to dust off the false “appraiser shortage” narrative.

Lori Noble, appraiser for FindMyAppraiser.com, said she is seeing urban areas with high volume feeling the strain of high turn times with suburban areas holding steady. Covey stated he saw higher turn times for unique properties and those outside of metro areas that create a challenge for appraisers to get to.

Surging mortgage volume puts pressure on appraisal turn times [Housingwire]

OFT (One Final Thought)

It is hard to believe we have to say this but until mask-wearing and social-distancing are ubiquitous, we won’t get to the other side of this global crisis. Here’s a snippet to consider.


Brilliant Idea #1

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  • They’ll wear a mask;
  • You’ll wear a mask;
  • And I’ll wear a mask (and vote).

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

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

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July 31, 2020

Tennis Love And Housing

Sometimes, we all need a break…set…match…and love.


This is going to be an appraisal-heavy issue of Housing Notes today…

But I digress…

THE CON Documentary Goes Live On August 5th at 8PM EDT

This 5-part series tells the full story of the housing crash and the appraisal industry gets to tell their side for the first time. Here’s the trailer for THE CON. Please mark your calendars!

True or False: the homelessness problem in California is only because of Big Tech and a surge in drug use?  False! Massive foreclosure and evictions following 2008 are one of the biggest contributors. Join the Aug. 5 global live premiere + Q&A: thecon.tv/event @theconseries

NPR: Housing Numbers Show Strength But The Economy Is Struggling

From one of my favorite regular podcasts: The Indicator: The Coronavirus Housing Boom


Pushing ‘Coprimary Homes’ Into The Housing Lexicon

My friend Mike Simonsen, founder of Altos Research, continues to try to get me into the Urban Dictionary with my phrase “Co-Primary.” Click on the following tweet for the thread and a lot of other suggestions for the phrase.


Mike’s Altos Research metrics seem to confirm that it is a pattern we are seeing now in the housing market.


Appraiserville

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

Please Donate to the Ryan Lundquist Go Fund Me Effort If You Can


Appraisal Institute Is Opening Their Sham Election Process For Us To See The 2 VP Candidates Present

The following note was sent out yesterday by the Appraisal Institute. Their new effort seems to be an attempt to misdirect that AI National overruled the publicly announced candidate Craig Steinley (vetted by the National Nominating Committee (NNC)) in a sham petition process. Michael Tankersley was not the nominating committee choice but now, somehow, he is on equal footing with Craig Steinley despite the NNC not thinking so. Shouldn’t Tankersley be ashamed of himself? This sham self-dealing election to keep Jim Amorin in power is unethical and morally wrong. This now officially broken organization thinks that its membership will assume that operational executives are being transparent by sharing this event with the public. The decision has already been made and this is just theatre, as I have chronicled in prior posts. You can catch up on all of it here. I hope the Board of Directors does the right thing and votes for the NNC choice and not become responsible for AI National’s further demise.


The Appraisal Institute Board of Directors will hold an election for the 2021 vice president during the morning session of its third quarter meeting Aug. 6 and host a general open session in the afternoon. Registration is open for both meetings.

The meeting will begin at 9 a.m. CDT, and the vice president nominees will make their presentations to the Board at the start. Once the presentations have concluded, the Board will go into Executive Session. AI professionals who have registered to attend this meeting will be able to rejoin it at approximately noon CDT for the election of the vice president.

AI professionals must register for all meetings they wish to attend. If you wish to attend the vice president presentations and election beginning at 9 a.m. CDT and the general open session beginning at approximately 1 p.m. CDT, you will need to register for both. Please note that space is limited.

Register to attend the vice president presentations and election.

Register to attend the afternoon general session.

You will receive a confirmation email with your own unique link to join a session once you have registered.


AI Professionals with Past Service as Directors of the Appraisal Institute Show Support For Craig Steinley

This July 29, 2020 letter was written from AI Professionals with Past Service as Directors of the Appraisal Institute to express their support for Craig Steinley, the only vetted and selected candidate by the nominating committee. They give many reasons for their support of Craig, but this one stood out to me:

The current petition is even more damaging and detrimental to the nominee and the organization because, for the first-time ever, it is cloaked in anonymity and secrecy. And, it is diminishing, rather than enhancing, our external image and influence at a time when other far-reaching issues demand the Board’s attention and action.

Here is the letter [PDF].

ASC Extends the North Dakota Waiver for Another Year

This week the Appraisal Subcommittee voted to extend the North Dakota waiver for another year with a 6 to 1 vote. The overarching reason to extend was because of the COVID outbreak prevented them from meeting in person this year. HUD was the only agency to take issue with this and I have to say I agree with their reasoning. North Dakota had 7 months to come up with a solution before COVID hit. I’m not taking ASC to task on this though because there is some validity to the COVID excuse.

My assumption is that there is no solution beyond simple economics. North Dakota is largely a rural state and the economics of inadequate fees make it very difficult to have timely coverage. This is a challenge across all rural markets yet North Dakota claims they are different and were unable to come up with why and how to solve it over seven months. And that’s because this is purely a political ploy for the ND banking lobby who got the governor to opt-in because the banks don’t want to pay market rates for appraisals. Well, that’s not how the economy works. Prediction: 1 year from now North Dakota still won’t have a solution and they won’t get an extension.


The Appraisal Foundation Seems To Be Claiming They Don’t Need Oversight?

There was an email passed around by Jeremy Bagott recently about the TAF’s collection of PPP funds that caught my attention. Bagott, the author of “Dispatches from the Cosmic Cobra Breeding Farm” that came out earlier this year was essentially a takedown of the Appraisal Foundation (TAF) via “incorporation by reference.” Initially, I was intrigued when the book came out but the author came across too strong on Dave Bunton’s compensation to which TAF responded and it took a lot of the wind out of the sails of the book marketing process.

The author sent the following email about the TAF acceptance of PPP money which seemed problematic to me, especially since all the meeting travel is not occurring right now because of the pandemic.


Bagott’s recent email made me concerned so I opted to surf the ASC web site (hey, I also watch C-SPAN in my free time) and I stumbled across two documents posted in July:

2020.07.01 – EML and attachments from J. Park to TAF – ASC Monitor and Review of TAF Guide and Policy

2020.07.16 – TAF Response to ASC Monitoring and Review Policy Guide_Redacted

The first was an email from ASC Executive Director Jim Park, providing a practical guide to TAF on what they will be looking for. After all the ASC is the link between Congress and TAF and ASC is responsible for TAF’s oversight. This is clearly and succinctly outlined in Title XI.

Here’s the summary page of Title XI on the ASC web site as it relates to the relationship between ASC and TAF.

(b) Monitoring and reviewing Foundation. The Appraisal Subcommittee shall monitor and review the practices, procedures, activities, and organizational structure of the Appraisal Foundation.

Here’s Jim Park’s July 1st email.


I bring all this up because of what I read after the Jim Park email.

TAF is strongly pushing back with the argument that “monitor and review” do not equal “oversight.” In other words, they are saying that Congress created TAF to be on its own and not be accountable for its actions to the public/taxpayer/consumer yet they set the standards for valuation across the U.S.

Here’s the TAF letter:


This rationale really alarmed me.

The TAF opines against having oversight…

While putting safeguards in place, Congress refrained from being too intrusive into the operations of the private, non-profit organization by limiting the federal government’s role to a level of “monitoring and review” instead of giving it expanded “oversight.”

Even more distressing is that TAF gets very personal against Jim Park and his team – the reading of this following section was an out of body experience. I’ve met and spoken with Jim Park and his staff at many meetings and find everyone very professional. I’d like to see these TAF claims made under oath.

[The following in Bold, my emphasis]

Here’s an excerpt.

Over the past year, the Foundation has witnessed an increasingly heavy handed and authoritarian approach from ASC staff while performing monitoring activities. The policy and guide purport to ratify that approach and codify it for the future. Their unprofessional behavior has become commonplace including:
Giving unsolicited opinions during private work sessions about decisions the ASC staff would like the Board to take.
• Disrupting private work sessions with ongoing chatter inappropriately laced with expletives.
• Confronting board members at breaks during in-person meetings with veiled threats emphasized by finger wagging.
• Making calls to Foundation board members and support staff prying into issues unrelated to Title XI and circumventing Foundation leadership.
Making false statements in an attempt to strong-arm Foundation decisions to conform to staff wishes.

And look at who TAF cc’d in the letter? My goodness.

Now absorb this lecture on ASC expected conduct at the end of the letter:

When attending Foundation private meetings, sessions, or briefings,
o ASC staff shall refrain from speaking unless specifically requested to do so by the Chair or President.
o ASC staff shall not state or imply directives.
o ASC staff shall not attempt to exert undue influence on the issues discussed.

The tone of this letter is completely unprofessional and frankly, bizarre, yet was signed by the Board of Trustees, Leila Dunbar and TAF, David Bunton. I don’t know Leila but this letter’s tone doesn’t sound like David to me.

TAF is an organization that sets standards for appraisers nationwide and to behave this way is unacceptable. I’ll be interested to see how they navigate going forward. I think TAF’s world just got a lot more difficult.

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 in love;
  • You’ll be more like the wind;
  • And I’ll be knee-deep in appraisal politics bogging our industry down .

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

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July 24, 2020

Grooving On Bass As Our Housing Speakers Blow Up

My market reports have “matrix” tables and my blog is called “Matrix” and the former Curbed SF once proclaimed: “Jonathan Miller’s blog Matrix. Completely Keanu Reeves-free real estate economics, not for beginners.”

So with that, groove now to his bass lines.

But I digress…

Hamptons housing showed an intensity it lacked for the past three years

This week Douglas Elliman posted a lot of my firm’s research in the final week of the 4-week second quarter gauntlet. I’ve been chronicling housing markets through an expanding Elliman Report Series for Douglas Elliman since 1994.

The record price trend was well-chronicled in this essential Bloomberg chart:


________________________________________________
HAMPTONS HIGHLIGHTS

New Yorkers Tend To Obsess About The State of The Hamptons (in no particular order)

  • Escape From New York Pushes Hamptons Home Prices to 13-Year High [Bloomberg]
  • Home prices in the Hamptons hit record as wealthy New Yorkers flee to the beach [CNBC]
  • Hamptons Home Prices Break Record as New Yorkers Flee City [WSJ]
  • Hamptons home prices skyrocket due to demand from NYC coronavirus fleers [NY Post]
  • Exodus From City Pushes Hamptons Home Prices 13 Year High [Crains NY]
  • As New Yorkers flee city, Hamptons median home price soars past $1M [Inman]
    Single-Family Home Prices Soared in the Hamptons in the Second Quarter [Mansion Global]

Elliman Report: Q2-2020 Hamptons Sales

“Despite the COVID-19 shutdown, the decline in sales was more modest than much of the region.”

  • Highest median sales price recorded in more than eight years of tracking
  • Listing inventory fell year over year for the third straight quarter
  • Number of sales declined annually for the first time in three quarters
  • Lowest second quarter sales total in eleven years


________________________________________________
NORTH FORK HIGHLIGHTS

Demand from NYC buyers cushioned falling sales on East End and Long Island [Brick Underground]

Elliman Report: Q2-2020 North Fork Sales

“After a robust first quarter, the COVID-19 market shutdown during much of the second quarter caused sales to see substantial declines.”

  • The number of sales declined annual at the highest rate in six quarters
  • The lowest second-quarter number of sales in eight years as the market shutdown
  • The most substantial rate of annual decline of listing inventory in at least thirteen years of tracking
  • Median sales price declined year over year for the first time in three quarters

When Half A Garage Is Not Better Than One

When in Maine


[click image to read article]

Long Island Continues To Be The Suburb That Won’t Quit

After the financial crisis, the housing market in Nassau and Suffolk Counties excluding the East End markets of Hamptons and North Fork, have shown steady price growth and sales growth. Inventory remains limited as discussed in this Newsday article:

________________________________________________
LONG ISLAND HIGHLIGHTS

Home prices rise on LI as buyers compete for scarce supply, report shows [Newsday]

Elliman Report: Q2-2020 Long Island Sales

“Despite the large decline in sales due to the COVID-19 shutdown, many price records were set during the quarter.”

  • Median sales price tied the record set in the third quarter of 2019
  • The number of sales fell at the largest annual rate in seventeen years of tracking
  • Listing inventory declined year over year at the largest rate in sixteen years of tracking
  • Condo median sales price slipped from the prior-year quarter for the first time in twenty-three quarters
  • Single family median sales price tied the record set in the third quarter of 2019
  • Luxury listing inventory declined at the largest rate in more than seven years

Mortgage Rates Straddle 3% As Stimulus Payments Come To An End


After exploring the world below 3% last week, rates were up slightly but still straddle the 3% demarcation line. Remember that rates are falling because the economy is weakening.

One of the biggest reasons is the combination of the second wave of the virus and that stimulus money in the form of enhanced unemployment benefits stops flowing to consumers after July 31 with no apparent replacement in sight.

As a result, the rental market is expected to see additional weakness – very soon.

This survey is nearly 3 weeks old and yet…:


“As of the end of the month, we’re screwed,” she said. “There’s just no two ways about it.”


And some thoughts on a potential foreclosure crisis unless Congress acts.

LA Was Caught In The Covid-19 Pandemic And Then Released

While the West Side and Downtown markets of LA cooled during the second quarter lockdown and made a strong comeback afterward, that progress is all in question again after a strong second wave has hit the market.

_____________________________________________________________________________
GREATER LOS ANGELES INCLUDING WESTSIDE AND DOWNTOWN SALES HIGHLIGHTS

Elliman Report: Q2-2020 Los Angeles

“After a robust first quarter, the COVID-19 market shutdown during much of the second quarter caused sales to see substantial declines.”

  • Median sales price edged higher year over year to the third-highest on record
  • Average sales price, average price per square foot and average sales size set new records
  • The lowest number of second-quarter sales in eleven years after the market shutdown
  • All single family price trend indicators reached new records this quarter
  • The lowest number of second-quarter single family sales in eleven years
  • The largest rate of annual condo sales decline in more than twelve years
  • Luxury median and average sales price for single family sales set new records

LA SUBMARKETS

MALIBU/MALIBU BEACH

Elliman Report: Q2-2020 Malibu/Malibu Beach

“Despite the COVID-19 shutdown, the decline in sales was more modest than much of the region.”

VENICE/MAR VISTA

Elliman Report: Q2-2020 Venice/Mar Vista

“After a robust first quarter, the COVID-19 market shutdown during much of the second quarter caused sales to see substantial declines.”

Houston, We Have A Solution – A New Houston Market Report Is Born

Douglas Elliman published our first Houston quarterly report this week as it officially became a part of the quarterly Elliman Report Series. As Douglas Elliman expands into Texas, so will this series.

Much like nearly all the markets we cover, year over year Houston sales fell as the market was shut down. The real concern is how the impact of the second wave of COVID is going to impact its recovery.

_____________________________________________________________________________
HOUSTON SALES HIGHLIGHTS

  • Pent-up demand followed plunge in Houston home sales [Houston Chronicle]
  • Houston’s housing market stumbled after Covid-19. But it’s better off than many major cities, report says [Houston Business Journal]

Elliman Report: Q2-2020 Houston Sales

“After a robust first quarter, the COVID-19 market shutdown caused sales and listing inventory to decline. This is what a spring housing market looks like when it is shut down to fight a global pandemic.”

  • Due to the market shutdown both single family and condo sales saw the largest year over year decline in more than a decade
  • Overall median sales price trends showed stability for single families and modest gains for condos despite the pause in the market
  • Listing inventory declined year over year as would-be sellers delayed placing their homes on the market


Appraiserville

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

The Previous Victim Of The Appraisal Institute Sham Election Maneuver Shares What Happened

Here’s a shoutout to Jim Amorin and Leslie Sellers as you are reading this right now – – here’s a refresher on Appraisal Institute history…

Like Craig Steinley, the 2007 victim of the unethical petition process I’ve covered over the previous two weeks, Anne L. Johnson was selected by the nominating committee to be Vice President after being vetted against a number of candidates. This sham petition process was implemented to get Leslie Sellers (he voted for himself after not making the cut with the nominating committee) on track to later become President and then led AI to exit TAF without a legitimate explanation – it caused me to quit and accelerated the deterioration of the once-great organization, essentially screwing its own membership by fostering its growing irrelevance.

To be clear, I want the Appraisal Institute to either thrive or get out of the way of the appraisal industry. This corrupt behavior is going to continue and the operations executives will keep overruling the voice of the membership, so that leadership can keep enjoying high pay and expensive perks, inappropriate to an organization that has lost a third of its membership over the decade, a steeper decline than credentialed U.S. appraisers. There is one thing they are doing now that should be good for appraisers – more on that next week. But any good continues to be overshadowed by current behavior that is corrosive to organizational credibility.

Unless this petition process is removed from the bylaws, the deterioration in credibility will continue.

To current Board Members, please pick one:

Are you:

A. simply sheep that sit on the board to pad your resume and remain afraid to make any move that gets the operational executives mad? or
B. an industry leader who knows right from wrong and can see the corruption right in front of you and are willing to do something about it to rebuild long-term organization integrity?

But I digress again…

Anne L. Johnson lays the situation out in her July 21, 2020 note that was sent in support of Craig Steinley, the current (only legitimate) nominating committee choice. I’m sure all board members are aware of this dark moment in Appraisal Institute history more than a decade ago and now is the time to start asking questions and demonstrate integrity. Fingers crossed.


So I’ve made my case. Now here is how members of the Appraisal Institute can take action NOW.

A plan of action has been laid out professionally by the North Texas Chapter and is not being critical of the Board of Directors.

Clicking on the image will take you to the CALL TO ACTION web site.


[click on image to go to the CALL TO ACTION link]

OFT (One Final Thought)

Sometimes you have to try something new…

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 groove more;
  • You’ll groove more;
  • And I’ll dust off my guitar.

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


July 17, 2020

Listen Closely To The Housing Narrative

We all have the ability to filter out distractions…

…in many ways [Warning – NSFW]

But I digress…

Greenwich and Fairfield County Buck The NYC Trend And See Less Sales Impact

I’ve been writing this expanding Elliman Report Series for 25 years. This is one of the first times in recent years that Connecticut showed a stronger performance than New York City. Elliman published our research this week and here is some of it.

First, it is important to note that I remain very shallow because I need to mention the coverage of our Greenwich research featured in a Bloomberg story was the #1 most emailed for the day by the 350K± Bloomberg Terminal Subscribers, beating out a story about China’s economy and stocks snapping a two-day rally.

And a chart!

And here is a chart I whipped on the growing importance of Greenwich pools during a pandemic.


GREENWICH SALES HIGHLIGHTS

Elliman Report: Q2-2020 Greenwich Sales

“Despite the regional slowdown in sales due to COVID-19 outbreak, outbound migration from New York City drove more activity “

  • Single-family sales moved higher, in contrast to regional trends, benefiting from New York City’s outbound migration
  • Single-family median sales price rose annually for the third straight quarter
  • Condo price trend indicators and sales declined year over year
  • Luxury listing inventory fell annually for the fifth consecutive quarter
  • Luxury price trend indicators pressed higher from the year-ago quarter


FAIRFIELD COUNTY SALES HIGHLIGHTS

Elliman Report: Q2-2020 Fairfield County Sales

“Despite the ongoing COVID-19 crisis, sales in the county did not see nearly the degree of decline observed in New York City.”

  • The overall county price trend indicators rose annually for the second straight quarter
  • The number of sales declined year over year but not nearly as much as the region
  • Listing inventory fell annually by the largest rate in more than fourteen years of tracking
  • The fastest single-family market pace recorded in more than fourteen years of tracking
  • The most significant annual decline in condo listing inventory in nearly five years
  • Luxury listing inventory dropped sharply year over year for the fifth straight quarter
  • Luxury average square footage jumped sharply year over year to the highest level in three years

Downtown Boston Saw Sharp Sales Decline During Covid-19 Shutdown

This urban market performed much like other cities were have tracked. Not much movement on price but distinct declines in sales during the market shutdown. No real surprises there.


DOWNTOWN BOSTON SALES HIGHLIGHTS

Elliman Report: Q2-2020 Downtown Boston Sales

“The quarter represented a market that was largely shut down by COVID-19.”

CONDO – Median sales price declined at the same rate as average sales size suggesting price stability – Sales declined year over year at the highest rate in nineteen years, reflecting the near market shutdown – Listing inventory moved higher for the first time in three quarters as compared to the year-ago quarter

TOWNHOUSE – All price trend indicators declined year over year, bracketing the drop in average sales size – The year over year decline in sales was at the highest rate tracked in nineteen years – Listing inventory rose annually at the highest rate in more than four years

30-Year Fixed Falls Below 3% And That’s Not A Good Thing

There was a great Wall Street Journal story on record low rates: 30-Year Mortgage Rate Reaches Lowest Level Ever: 2.98%: Coronavirus has upended markets around the world. Its effect on the 30-year mortgage is especially significant.

Initially, rates plummeted because the Fed was managing the economic damage caused by the trade war with China even though the economy seemed to be booming. Now the narrative has pivoted to managing the economic damage of being in a recession and the global pandemic. Even with the plunge in rates, mortgage applications are down in three of the last four weeks.

Fareed: Coronavirus Won’t Be The Death Of Big Cities

Loved the perspective presented here.

Appraiserville

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

A July 16 Update To The Sham Election Process Over At The Appraisal Institute

I have received many tips and thanks from current and former members who continue to be outraged about the corruption of the officer election process over at the Appraisal Institute. Even when corrections are sent to me because of limited transparency, I am at the same time being thanked for bringing more transparency to the AI and the sham election process, something AI leadership has shown they want to keep hidden from their members. Why?

It is important to remember that the nominating committee vetted the current remaining candidates “Steinley and Tankersley” and did not select Tankersley. Yet despite this vetting process, Tankersley is still a candidate. Why? The AI/Sherman “fogging” letter did not address this. Why?

What a shame. If Tankersley is magically selected over Steinley (who has already been publicly announced), I recommend that the nominating committee be dismantled because it serves no purpose. I also expect to see a much lower caliber of candidates apply in the coming years that will agree to be subservient to the operational leadership of Jim Amorin, enabling him to remain in power indefinitely and retain all the trappings he presumably enjoys that AI membership is not privy to know about because it is not disclosed. Why?

‘The Con’ is on!

To View Episode 1, Mark your calendar 8/5 if you want to learn about THE CON and root out corruption. More details on how to view this are coming soon.

I am very excited because the documentary crew came to #Appraiserfest in San Antonio in the fall of 2018 to interview many of the appraiser attendees to get their side of the story. Until now, the appraisal industry has received an unfair amount of blame, largely for self-serving reasons by the AMC and mortgage broker industry.

Here is the trailer [or click on the image]…

OFT (One Final Thought)

Hazmat suits will become the new Haute Couture until all of us practice social distancing and wear masks until the crisis passes.

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 suit up;
  • You’ll wear a mask;
  • And I’ll continue to social distance.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

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

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July 10, 2020

Housing Walks The Walk With Or Without The Bubble Talk

This is the only bubble talk I want to address today. Whoever said you can’t see a bubble when you are in the middle of one was wrong (and probably needed a bath when they said it). Moms clearly don’t understand what Dads are all about.


But I digress…

The New York City Rental Market Is Showing The Damage Toll Before Opening

Real estate firm Douglas Elliman published our rental market research this week and the numbers were quite weak. This report is part of a growing Elliman Report series I’ve been the author of for 25 years. These report release generated a lot of good writing about the historic situation.

CNN focused on our report results to illustrate the move to the suburbs during the pandemic as well as how it was limited to only those that could afford it. The New York Times focused on how thousands of renters had left the city due to the pandemic and that rents were finally coming down after a long run of gains.

CNBC focused on the record vacancy rate and large drop in new leases signed during the pandemic.

In fact, there were a lot of interesting takes using the same data set this week. For more, you can read here.

The Bloomberg story on the rental market was the number 2 most emailed by the 350K Bloomberg Terminal subscribers and stayed in the top five all day, keeping ahead of the Brooks Brothers bankruptcy.

And because I insist on being shallow, that Bloomberg rental piece was the 13th most read of the week.


And I give props to Bloomberg for three different color versions of the same chart:

Black & White

Blue & Black

Yellow & Black

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

Elliman Report: June 2020 Manhattan, Brooklyn & Queens Rentals

“The state mandate to that prevented real estate brokers to physically show property was removed before the last week of the month, not enough time to have a material influence on market conditions for the month.”

  • The highest vacancy rate in nearly fourteen years of tracking
  • The lowest number of June new lease signings in a decade
  • The fall in median rent reversed all gains seen in 2019 and 2020
  • The market share of concessions in each price segment surged
  • New development median rent increased as existing median rent declined annually


______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

Elliman Report: June 2020 Manhattan, Brooklyn & Queens Rentals

“With the lifting of the lockdown that prevented real estate brokers from doing in-person showings in the last week of the month, there will be greater transparency in the market.”

  • Listing inventory surged as new leases continued to decline
  • New leases declined annually for the ninth straight month
  • Net effective median rent rose at the lowest rate in 18 months

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

Elliman Report: June 2020 Manhattan, Brooklyn & Queens Rentals

[Northwest Region]
“While the decline in new leasing activity remained well below last year, the removal of ‘shelter-in-place.’ restrictions in the final week of June that prevented in-person showings, is expected to expand activity.”

  • New leases declined annually for the eleventh straight month
  • The market share of landlord concessions rose annually for the third straight month
  • Median rent declined year over year across all bedroom categories

Westchester On Lockdown: The Actual Meaning Of The Frenzy

Douglas Elliman published our research on Westchester County yesterday, the residential suburban community north of New York City. The public narrative has been people are flying out of the city and brokers are busier than they ever have.

Except that’s not quite what is happening. Yes, there is outbound migration and a lot of it, it seems. And yes, the market is in a frenzy, except those two factors are being a bit conflated to explain it. Here is why. Looking at county-wide new contract data by month showed us that activity bottomed in May. And what would you expect given the state-mandated shutdown that prevented in-house showings by brokers? The New York Times broke down the contract logic for you. As the re-opening enabled by phase 2 in early June occurred, the month of June enjoyed a 53% month over month surge and you get this general narrative:


That 53% feels like a frenzy or a boom to those that have been sitting under lockdown for over 100 days. But new signed contracts are down in June 2020 from the prior June by 13%. That 53% surge is being explained as coming from the outbound migration generated by the city. I have no doubt that this is part of it. There was no actual spring market during COVID in Westchester by state mandate. With the spring being moved on top of the summer season, it will feel like a housing boom. And comparisons against the previous summer will make this summer look like a boom, but this is really a comparison of Spring 2002 versus Summer 2019.

The real market will be presented when the pent-up demand and supply from the spring market gets fully satiated. That moment should be in early September. The federal election, a damaged economy, a possible second wave (although New Yorkers seem to have their sh*t together with mask-wearing and social distancing.)

The actual quarterly Westchester, Putnam, and Dutchess Elliman report that we released shows us what a housing market looks like that was closed under state mandate for three months.

______________________________________________________
WESTCHESTER SALES MARKET HIGHLIGHTS

Elliman Report: Westchester Sales Q2-2020

“State-mandated ‘shelter-in-place’ rules prevented in-person property showings for much of the quarter, distorting sales and inventory trends.”

  • County overall price trend indicators were skewed higher by the rise in single-family market share
  • Largest year over year decline in countywide sales in eleven years
  • Listing inventory declined by the largest amount in fourteen years
  • Sixth straight year over year rise in median sales price
  • Single-family sales fell by the largest percentage in more than eleven years
  • Condo listing inventory fell annually by the largest amount in a decade of tracking
  • Luxury listing inventory fell year over year at the second-largest rate in eight years

_____________________________________________________
PUTNAM SALES MARKET HIGHLIGHTS

Elliman Report: Putnam & Dutchess Sales Q2-2020

“Price trend indicators and sales slipped from year-ago levels. ‘Shelter-in-place rules were modified in early June to allow in-person showings by real estate brokers, but this transparency came too late to be reflected in the results.”

  • The number of sales declined annually for the second time in five quarters
  • Listing inventory fell sharply year over year and was the first decline in six months
  • All price trend indicators slid from year-ago levels

______________________________________________________
DUTCHESS SALES MARKET HIGHLIGHTS

Elliman Report: Putnam & Dutchess Sales Q2-2020

“The number of sales and listing inventory fell sharply. ‘Shelter-in-place rules were modified in early June to allow in-person showings by real estate brokers, but this transparency came too late to be reflected in the results.”

  • The number of sales declined year over year by the most significant amount in six years
  • Listing inventory fell sharply, the third straight annual decline
  • All price trend indicators pressed higher from the same period last year

I ran out of time to include Brooklyn, Queens and Riverdale reports released this week – they are on the web site though.

[Bloomberg TV] Bloomberg Markets 7-6-20: A Busy Housing Market This Summer

Had a wonderful, nearly 7.5-minute conversation with Vonnie Quinn on Bloomberg Television’s Markets this week discussing how the housing market will likely look over the summer. The interview touched on the analysis in the Douglas Elliman Report series I author.

Some ‘inside baseball’ fun. I was connected to Bloomberg via Zoom from my home for this. If you look closely at the 5:15 mark, you can see my garage door open as my wife drives in. My wife panicked when watching this clip, thinking she would be on TV as she walked out of the garage, but she randomly ended up using the other door.


[Spectrum TV/NY1] Stuy Town Vacancies Surge 7/6/20

Michael Herzenberg of NY1 did a great story on the exodus from Stuy Town after the landlord provided terms for people to break their leases. The story was inspired by a press release from CHIP (I haven’t seen) which talked about the pandemic exodus as the reason for the rising vacancies. I thought that was a bit of hyperbole since the other key factor has been the inability of the real estate brokerage industry to do in-house showings by state mandate until June 22nd. The lack of mobility has also been a key factor in driving vacancy higher.


Ivy Zelman On The State Of The U.S. Housing Market (It’s Pretty Strong)

My friend and Superstar housing analyst Ivy Zelman talks with TD Ameritrade. If you love numbers, you can go deep into the national story. Love the nuance here.

She also referenced the Pew study on why people moved because of Covid-19


Click on the image below to play the segment.


When The Alphabet No Longer Explains The Economy And Car Tumbling Does

I enjoyed this basic WSJ tutorial on Alphabet Economics. I’ve long used U, V, and W as labels for future periods. Now it’s about shapes.

…or something else. I think the following GIF best describes our economic cycle over the next 6 months.


Appraiserville

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

The Appraisal Institute Has Missed The Opportunity To Come Clean With Its Members

UPDATE JULY 13, 2020

The Appraisal Institute felt it was necessary to write a letter to respond to my original July 3rd post: The Appraisal Institute Ignores Its Membership For Third Time In Sham Election Maneuver. Their response letter was surprisingly amateur and showed how little they respect their membership. Read on.


UPDATE JULY 16, 2020

I have just been told that Michael Tankersley did NOT serve on this year’s Nominating Committee. He was a candidate for the Vice President position. The note below has been updated to reflect that.


Although Steinley was the – SOLE – duly vetted and selected candidate of the nominating committee, somehow the board had to go through a secret, 6-out-of-24 “process” to place Tankersley back onto the ballot after not being the selection of the nominating committee. Why?

The Appraisal Institute at a crossroads. To all those who have nothing to hide, hide nothing. The sham petition process was hidden from the Appraisal Institute’s membership. In response to my initial call out of this sham election process last week, the Appraisal Institute attempted slip this by membership using a highly disrespectful “fogging” letter from the current president. It insultingly omits all the critical issues that have roiled membership while rambling on and on about process and assuming the membership isn’t very smart. No matter how much they try, AI leadership behavior in this sham election process is unethical and does not serve the membership whatsoever.

Here’s a reminder to the Board of Directors: you serve the membership, no matter who you pledged your allegiance to when you signed up for this gig. Please honor your commitment to them and your commitment to honor and integrity as leaders of the industry. For at least the last decade, this once-proud organization is a shadow of its past because of self-dealing from the same people we are witnessing now. It is up to you to do the right thing and act like the leaders you can be.

______________________________________________________________

Original Post

Today, all (I assume) members of the Appraisal Insitute received a letter from current AI president Jeff Sherman, with whom I’ve met and spoken with on several occasions during his tenure and liked him and what he represented. MAI members from around the country have forwarded it to me and expressed their profound disappointment in this organization that they used to love.

Here is the consensus feedback by members who received this letter.

It just makes me sad that this is the way it is. I think many of us are a bit dumbstruck by this.

I found the letter mind-boggling and a simply attempt to fog the issue at hand. I have to assume that this was written by AI counsel because it reads like a lawyer’s writing with a little softening from other parties. I will also assume this response was directed by the current CEO in an attempt to stop the viral membership backlash of the sham election process that has rattled the organization so he can continue to control who future presidents are. So I am very confused as to why Jeff signed off on this letter since its contents contradict what I have been told by past presidents, past board members, and current members. It hurt to read it.

For now, I am going to chalk this up to “fogging” so that the actual logic gets buried in the debris. This is how lawyers do this. By the way, has anyone ever considering sending the details of this action and the past ten years of self-dealing to federal prosecutors in the Northern District of Illinois? If this is how their executives run the organization, and all the perks I keep hearing about, it makes me wonder about the state of their finances. The handling of the FMC debacle comes to mind.

But I digress.

Here is my running commentary on the letter that is presented below:

  • This sham election maneuver has not been in place since 1991 – Ask the former president who made this happen (I have the name) under oath to get Sellers on the ladder in the first place and ruin the career of a star female nominee.
  • An 11 member nominating committee gets to vet candidates recommended by the membership to review and they are charged with picking the best one and then announce it. They vetted 3 this year and picked one. It’s literally that simple.
  • The winning candidate’s name was announced by the nominating committee.

And then magically…

  • The sham maneuver was made to get the CEO’s pick inserted which should never happen.
  • Tell the membership right now why there is a second candidate.
  • I’ve been told repeatedly that a board member can vote for themselves in the petition process and as of today, some current board members are fighting like hell to keep any such votes hidden from membership, presumably so potential self-dealing will not be exposed.
  • To repeat, one person was selected by the nominating committee and two weren’t. There is no disagreement on this. Why does the CEO get to pick a candidate that was not selected to run against the person who was selected?

Why are there suddenly two nominees without any transparency? This letter does not address this point at all yet it is the entire point. The rest of the letter is faux transparency. Give the membership the actual reason there are suddenly two candidates, one picked by the nominating committee and one picked by the CEO (and that CEO-blessed candidate should be ashamed of themselves).

  • As many as 3,000 members will get to watch the 10-minute presentations of two candidates – one vetted by the nominating committee and one hand-picked by Jim Amorin. The act of showing this on video isn’t transparency at all. It’s a charade. The most deceitful part of the petition process has already occurred before the camera was turned on. There is no explanation of how the second candidate was selected.

The fogging part that is most distasteful in this letter is that it is laden with process gobblygook but contains zero transparency, something the membership is demanding right now.

Here is the closing paragraph of the letter.

I now offer to you, and to each Board member, this is not about style or personality; it must be about the best interests of the Appraisal Institute. I have supreme confidence that the trust you have placed in your elected representatives will be confirmed, regardless of the person chosen.

The problem with this closing statement is this sham election process is not being done in the best interests of the membership, but rather it is being done in the best interests of the operational executives running the show.

This is truly a sad day for the Appraisal Institute. If the board does not fight for the rights of the membership and respect the selection process, then the organization as we know it is just a monarchy, largely like when it began to be a decade ago with the same cast of characters.

Appraiser Talk Is Fascinating

Here’s a conversation I had with my good friend from Australia!

OFT (One Final Thought)

Although I argue that pie beats cake every time, this is madness.


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 outbound;
  • You’ll be in a frenzy;
  • And chronicle a sham election.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

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

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July 3, 2020

The Housing Shut Down (Bi)cycle Goes In Circles

Since there is no Tour de France this year…


But I digress…

State Mandate That Shut Down Manhattan Market Caused Largest Annual Sales Drop in 30-Years of Record Keeping

I’ve been the author of the expanding Elliman Report series for 25 years. This week, Douglas Elliman real estate published our research on the second quarter sales market and the results were beyond bad. The firm also published our June new signed contracts and new listings research that was also beyond bad. But that is what happens when a market is turned off from an external source. The New York state mandate to combat COVID-19 prevented the real estate market from in-person showings, which essentially paused the housing market. While the shutdown was necessary, we hope for everyone’s sake our second wave isn’t like what we are currently seeing in Florida, Texas, and California. The reports represented an asterisk in market data timeline because of the shutdown.

The number of sales fell by the largest annual rate in more than three decades of our data series (have I really been doing this for so long? Good grief). Median sales price fell by more than a decade but the

Consumers weren’t buying homes without a physical interior inspection. Virtual showings were used to supplement the sales effort but not a replacement. In fact, the vast majority, an estimated 90% of closings in the second quarter had a pre-COVID connection including a previous interior inspection.


______________________________________________________
MANHATTAN SALES MARKET HIGHLIGHTS

Elliman Report: Q2-2020 Manhattan Sales

Co-ops & Condos
“As “shelter-in-place” rules took effect in the final weeks of March, real estate brokers were not permitted to perform in-house showings and uncertainty loomed over the market. As a result, Manhattan was effectively shut down throughout the second quarter until the final week. The unprecedented shutdown skewed the results.”

  • With the market shut down due to Covid-19, sales fell annually by the largest percentage in 30 years
  • Median sales price fell year over year by the highest amount in a decade
  • Listing inventory fell by the most significant annual rate in nearly seven years
  • The market share of cash co-op purchases fell to its lowest market share in over six years
  • Condo negotiability has reached its highest level in more than five years
  • All new development price trend indicators moved higher year over year by a similar increase in average square footage
  • Luxury listing inventory rose nominally from last year versus declining numbers for the balance of the market
  • Luxury median sales price declined annually for the sixth straight quarter

______________________________________________________
NORTHERN MANHATTAN SALES MARKET HIGHLIGHTS

Elliman Report: Q2-2020 Northern Manhattan Sales

“As “shelter-in-place” rules took effect in the final weeks of March, real estate brokers were not permitted to perform in-house showings and uncertainty loomed over the market. As a result, Manhattan was effectively shut down throughout the second quarter until the final week. The unprecedented shutdown skewed the results.”

Co-ops & Condos
– The number of sales fell year over year by the largest amount in more than a decade
– The market share of borough sales edged up from year-ago levels

Townhouses
– A sharp drop in sales to the lowest level recorded in at least five years
– Listing inventory posted a large decline from year-ago levels

______________________________________________________
New York New Signed Contracts Report

Elliman Report: June 2020 New York New Signed Contracts

  • The New York report attached covers Manhattan, Brooklyn, Long Island, Hamptons, and the North Fork

Manhattan & Brooklyn
“While the June new signed contracts saw a slight increase from May and remained sharply below year-ago levels, New York State didn’t allow brokers to physically show the interior of properties until the last week of June.”

Long Island (excluding Hamptons/North Fork)
“With Long Island brokers allowed to do in-person showings in the second week of June, new signed contracts and new listings surged from May.”

Hamptons
“New signed contracts and new listings for single-family properties surged at nearly all price points year over year. Consumers who found themselves under New York City ‘shelter-in-place’ rules in the early spring pressed to find summer rentals and make purchases at a much higher rate than last year.”

North Fork
“With Long Island and North Fork brokers allowed to do in-person showings in the second week of June, new signed contracts and new listings surged from May.”

______________________________________________________
Florida New Signed Contracts Report

Elliman Report: June 2020 Florida New Signed Contracts

  • The Florida report includes the counties of Miami-Dade, Broward, Palm Beach, Pinellas, and Hillsborough

“With the market opened in June, there was a surge in new signed contracts far exceeding year-ago levels, with excess demand coming from the Northeast. New inventory level gains have not kept pace with the growth in new contracts.”

______________________________________________________
California New Signed Contracts Report

Elliman Report: June 2020 California New Signed Contracts

  • The California report contains the counties of Los Angeles, Orange, and San Diego

Los Angeles and Orange Counties
“May and June new signed contracts continued to bounce upward from the April bottom as the housing market opened up. New signed contracts and new listing levels remained short of year-ago levels, but the market has nearly clawed back from the shutdown.”

San Diego County
“New listing inventory remains well short of year-ago levels, struggling to keep pace with sharp rebound in overall new signed contracts, which have surpassed the numbers realized last year.”

Don’t Confuse The Short Term Sales Surge With A New Housing Boom

The Manhattan market just re-opened for business on June 22nd, allowing real estate brokers to do in-person showings. Consumers, as a rule, aren’t buying homes without physical interior inspections. Yes, on the margin there may be a few examples, but those are outliers.

It is important to note that the housing market was basically closed from mid-March to the last week of June. The market is just awakening and may feel like a boom, but it’s really a release of pent-up demand from the spring market that never was.

This is not limited to Manhattan. Any housing market, when artificially closed during the traditionally busiest times of the month, will see a surge when it re-opens. Once the excess demand is satiated over the next month or two, then we get to see the underlying market.

The Work/Home Tether Just Got A Lot Longer

One of the biggest changes in the housing market we may see is more weakness in rents within U.S. urban markets. New technology like Zoom has become ubiquitous, aided by the global pandemic. However after (hopefully) we get beyond this crisis someday with a vaccine and many more people start wearing masks to reduce the spread, the technology will still remain in place. Workers won’t need to be in the office every day as this crisis made it apparent they won’t need to be in the office every day. That will allow for longer commutes and will take off some of the rental price pressure. Of course, this doesn’t make offices obsolete but rather this disruption will force a complete rethinking of office space.

This Bloomberg piece shows us that this disruption is already happening in San Francisco.


FEMA Flood Maps Wildly Underestimate Risk of Flooding

I’ve always wondered why the federal government encourages the building of a property in high flood risk areas by charging rates so low that the private sector can’t compete. And this risk is not just on the coastline. Based on the analysis by Flood Factor, FEMA also underestimates the risk of flooding by a significant margin, shifting the risk to the federal government.

Here are some great visualizations in the New York Times.

Search for your home’s flood risk, here.

The Spec Home Mega Mansion Phenomenon Is Probably Over

And it probably was never a thing. Since 2014 there has been a wave of super-luxury mansion listings across the U.S. and most never actually sold. I’ve always contended that this market was never as wide and deep as originally thought. The flood of capital looking for higher returns in a low-interest rate world after the global financial crisis combined unprecedented price hubris I dubbed “aspirational pricing” created a crowdsource mentality. There were simply so many of these houses built that it reinforced the validity of the trend. Every once in awhile there are sales in the high 8-digits or 9-digits and we will always see them dotting the landscape periodically, but these sales represent not as much of a market as it they are one-off anomalies.

One of the most visible of these developers was profiled in The Wall Street Journal, most known for his “The One” which is a $500 million off-market LA listing. If I lived this guy’s life I’d have 8 ulcers and would cave under the years of stress. After all, he hasn’t sold anything since 2017 and has 6 unsold megamansion spec developments with $700 million in mortgages outstanding.

I live in a 200-year-old historic home in Connecticut, but I have to admit, I really love this open modern look.


Appraiserville

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

RAC Cancelled Its Fall Conference Due To The COVID-19 Shutdown

One of my favorite conferences of the year is the Fall RAC conference, usually held in Dallas. In my opinion, it is a group of the best residential appraisers in the country and I will really miss getting together with my colleagues and industry clients.

The Appraisal Institute Ignores Its Membership For Third Time In Sham Election Maneuver

_________________________________
July 4th UPDATE
When the Board of Directors convenes in August they need to:
– Discuss the current sham petition process and should either remove it from the bylaws altogether or modify it by raising the petition process requirement from 6 votes to a supermajority (2/3) of the Board of Directors. A simple 50% vote requirement to invoke the petition process would under-represent and undermine the efforts of the 11-person nominating committee who work hard to vet the candidates.
– Discuss the transparency of the petition process: Why do the board votes on the petition process get to be concealed? Given the self-dealing that has occurred three times due to the lack of transparency, the votes made for the petition process need to be 100% transparent to convey credibility to the membership that is absolutely required.
– Discuss the potential damage to the candidate’s reputation: The process of leaving a publicly announced and thoroughly vetted nominee to twist in the wind while this petitioning process is invoked is completely unethical and unprofessional. Why would a professional organization allow something like this to happen to its own members when it can damage and humiliate a candidate who is the best the organization has to offer? It is unconscionable to me that the organization has allowed the petition process to exist without significant protections to the determinations of the nominating committee and without ANY protections to the selected candidate? How will the organization be able to attract standout candidates in the future instead of self-serving political hacks who don’t care about the membership?
_________________________________

One of the most unethical actions against AI membership is about to take place (for a third time), and the uproar is just beginning. I’ve had many appraisers reach out to me over the past week, conveying how upset they were. I’m not even affiliated with the Appraisal Institute, and I’m furious because it brings down the entire industry in the eyes of others.

Back in 2016, I unleashed a flurry of commentary criticizing the Appraisal Institute executives who had a plan to take all chapter funds for no justifiable reason. The membership reacted by calling leadership to task, which is a challenging, scary thing when they are threatened by leadership and might lose their designations, which could impact their livelihood.

Now we are facing something much darker and maybe the final downfall of the Appraisal Industry as an organization.

Here is what someone said about this election sham:

“Why not next year instead of this year, why are you doing this when you know that in the middle of a pandemic and that it will tear the Institute apart from the top?”

A well-regarded and nationally-known appraiser and Appraisal Institute member, Craig Steinley, won the backing of the national nominating committee, and his name was submitted publicly because confirmation is essentially a rubber stamp. Craig was thought to be the best choice this year by the national nominating committee. The confirmation is supposed to take place in the first week of August (more details later on).

Here is a rough overview of how the nominating process works:

  • The ten regional areas of the Appraisal Institute provide recommendations of individuals that wish to be considered for the national chain of command, beginning with the Second Vice President, the Vice President, and then President, who serves one term. It is the track to become the national President. The national nominating committee vets the recommendations that are submitted by the membership and announce their recommendation, followed by a board confirmation.

Here is how the sham ‘petition process’ bylaw works:

The key to the petition process is to disregard the nominating committee recommendation. This was inspired by at least four former presidents more than a decade ago: there are only 6 national board member votes needed to override the nominating committee recommendation. With those 6 votes, Amorin, the current CEO, can control the future presidents and officers indefinitely. Doesn’t that seem to be against the interest of the membership? The Board of Directors needs to close this unethical loophole if there is any hope of the Appraisal Institute rising again to claw back the greatness it once possessed.

By the way, the current Appraisal Institute national Board of Directors is comprised of 27 members, with 23 men but only 4 women. Twenty of the board members are the chair and vice-chairs of the ten AI regions. Only 6 board members are needed to vote in favor of the petition to insert a new Amorin lackey to enable lavish expense accounts and travel as I’ve previously written about, funded by hard-working appraiser members who have invested a considerable amount of time and money for their Appraisal Institute designations.

First Time Petition Process – Created and Implemented
Now there is uncertainty on Craig’s nomination because the petition process that was created back more than a decade ago when a female from Wyoming was publicly nominated like Craig and was replaced by a board choice through the petition maneuver, ignoring the nominating committee results.

Leslie Sellers was on the board then and was quite upset that he did not get the nomination but was able to vote for himself using this maneuver. Industry feedback suggests that AI Presidents from 2007 to 2010 seem to have been behind the petition process, inserting it in the bylaws to get Sellers into the ladder to ascend to the presidency two years later. I’d invite any of these former presidents, to refute this with credible, verifiable evidence to counter my own experiences and what many members have told me over the years.

Then 2010 president Leslie Sellers was the reason I disassociated with the Appraisal Institute in 2010 after he withdrew AI from the Appraisal Foundation for no stated reason that made sense. My tipping point was that he had posted a video saying to the effect that he was thrilled about the future opportunities that awaited the organization. Well, a subsequent 30% drop in membership, over the next decade, a steeper decline than licensed/certified appraisers in the national registry, and a collapse in credibility in Washington seems to refute that.

Second Time Petition Process – Was Implemented

Jim Amorin became the first two-time President in the Appraisal Institute’s history using the petition process election maneuver to bypass the nominating committee’s decision. There were other very worthy candidates who were not considered at all. He went on to somehow obtain his current CEO position without a real effort by the organization to look outside when the former CEO essentially left in the middle of the night – I knew one highly qualified CEO applicant that wasn’t seriously interviewed – when the Appraisal Institute was bleeding relevance and needed to bring in new blood.

Third Time Petition Process – Being Implemented

Craig Steinley earned the backing of the national nominating committee and his name was submitted publicly because confirmation is essentially a rubber stamp. Craig was thought to be the best choice this year by the national nominating committee.

AI CEO Jim Amorin ($450K/year) disagreed and used the petition process to make Michael Tankersley the Second Vice President and doesn’t have to give a reason. Mark Linne stepped away from being considered. In other words, the membership nomination process that is supposed to be separate from the executives running the organization is wildly compromised. I am not critical of Michael Tankersley as an appraiser because I know nothing other than his credentials, but I am certainly disappointed that someone with outstanding professional credentials would be willing to circumvent the membership-driven process for personal advancement.

The following text is the email that was sent by National to members about the election. Notice how they do not explain that the petition process occurred and how the TWO candidates came about? Shameful.

Greetings:

On August 6-7, 2020, the national Board of Directors will elect the 2021 Vice President of the Appraisal Institute from two nominees, Craig Steinley and Michael Tankersley. You submitted a communication to the National Nominating Committee regarding one or both of those nominees. The purpose of this email is to ask whether you would like us to provide a copy of your communication to the Board of Directors for consideration. The nominees, even though they serve on the Board, will not receive a copy of the communication if you choose to release it to the Board. Please respond to aielection@appraisalinstitute.org letting us know of your wishes by July 13, 2020.

We look forward to hearing from you.

Jeffrey E. Liskar, Esquire
General Counsel
Appraisal Institute


To recap this election petition process sham:

The national membership submits candidates to their regional heads for the three-year path to the presidency of the Appraisal Institute. The national nominating committee, which is supposed to be separate from the operations executives for ethics concerns, vets the nominations and selects the one they feel is best qualified and then announces the choice to the public. The petition process created and inserted by former AI presidents over a decade ago subverts the word of the membership by only requiring 6 board votes and can include board members who can vote for themself, to what can only be viewed as self-dealing, violating the separation between operations and annual appraisal executives as well as shaming nominated executives – the best and brightest the membership has to offer – for their own self-dealing.

This is the problem with the current AI leadership and something I have been writing about since 2016: The national leadership is not thinking about their members, and they need to be, or the organization will die faster than it already is. I hope this is a wake-up call to current board members to do something about this internal corruption.

I want nothing less than for the Appraisal Institute to return to its former glory or get out of the way to stop damaging the livelihoods of its members and the industry’s reputation.

How to do something about this
If you want to do something about that, please reach out to the regional heads who are also board members to voice your dissatisfaction and be heard. Either let your voice be heard about this sham election or agree to let this mark the end of what was the gold standard in property valuation organizations before the pivot circa 2007.

Since I am not a member I don’t have access to the ten regional chair contact info to voice your complaints but you can see them on the Board of Directors landing page. There truly are a lot of good people on this board and they need to hear your voice and stop this corruption of the election process.

Incidentally, here is the letter that went out to the Board of Directors. Note that 492 signed the letter, 392 AI people, 6 of the 10 NNC members, and Mark Linné (3rd Candidate).


OFT (One Final Thought)

If you want to have a feel-good wonderful weekend, please read this entire thread. Please. Wow.


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 bicycle orientated;
  • You’ll be more electable;
  • And I’ll transition from historic to modern.

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


June 26, 2020

And Most Important Of All To The Current Housing Market…Oh, Never Mind

I plan on showing this commercial to my kids to prove how tough we had it with technology back in the day. Good grief what a primitive interface compared to today’s standards, plus I’m on an overdue Monty Python kick, now listening to the John Cleese audiobook “So, Anyway…” immediately after finishing Eric Idle’s delightful “Always Look on the Bright Side of Life: A Sortabiography” audiobook.

Wait for it…


But I digress…

The Jumbo Mortgage Market Might Be Starting To Open Up […a bit]

There was a terrific Wall Street Journal piece The Jumbo Market Shows Signs of Heating Up

Loan activity went into a deep freeze following the onset of the pandemic, but lenders seem to be loosening their purse strings again…a bit

The most important aspect of this article is the “…a bit” reference in the article subtitle above.

While it is too soon to call it a full-scale “reopening” of jumbo markets, there are some emerging signs of life. One measure is the gap between average conventional loan and jumbo rates: In April, conforming 30-year mortgage rates averaged 3.4%, while jumbos averaged 3.7%, according to data provided by mortgage technology company Optimal Blue. That gap narrowed in early June, to 3.3% for conforming loans and 3.5% for jumbos. Another measure is the return of jumbo loans for self-employed borrowers served by niche lenders.

Even with falling mortgage rates and an unemployment catastrophe that has skewed away from upper-end salaried employees, jumbo lending has be largely restrained due to the looming uncertainty about the economy over the next few years. Most of the jumbo lenders we interact with for our appraisal assignments seem to be focusing on existing client relations, especially with refinancing properties we’ve already appraised in the past.

Still, I suspect that part of this uptick now is the release of pent-up demand from a non-existent traditional spring market later in the calendar to overlap with the slower summer months.

My Forbes Column: Keeping Housing Market Results From The Public Is Never Justified: An Expansive View

Transparency is always the right strategy

When the Covid-19 crisis began halfway through March, the Manhattan housing market was placed on “pause,” as were many housing markets around the country. New York State “Shelter in Place” rules prevented the in-person showing of a property by a real estate broker. That was the beginning of the problem this crisis posed for the industry that lives and dies on sales and rental transactions. Then a startup agent trade group (NYRAC), made up of some of the most productive agents in the market and includes many of my long-time industry friends, pushed to hide the days on market metric from the public for what turned out to be a self-serving reason. I love what they stand for, but this was a strategic error that I could not support.

While I have been a real estate appraiser and market analyst for 35 years, I dipped my toe into real estate as a sales agent in Chicagoland for six months in the mid-1980s.

Lesson learned

From my experience there it was clear to me that the accuracy of the information our office possessed was critical to all parties for the market to function. I still have my old monthly MLS books and remember logging on to the MLS from one ancient (even then) terminal in the office – talk about delayed market information!

Days on market during Covid-19

The days on market (DOM) metric is significant to sellers because they don’t want their home to be perceived as overpriced if it sits unsold too long. DOM can be measured in several ways, but the one I see used the most is the average number of days between the last price change, if any, and the contract date (or today’s date if it has not sold.) When a potential home buyer looks at a listing on a public-facing web site, they look at DOM as one way to determine whether the listing price is reasonable. The longer a listing sits on the market as compared to other listings, the more likely it is over-priced. Sellers look at DOM too and become concerned when their listing sits too long relative to the competition, typically blaming the agent for not marketing the property enough. However, the asking price is usually set by the seller who is slow to recalibrate their asking price if the market is weakening. I’ve found it takes one to two years for a typical seller to capitulate on price in a downturn and not feel like they left money on the table.

Hiding DOM as a marketing strategy

When the government ordered lockdown hit New York City, and real estate agents were not allowed to provide in-person showings, market activity immediately stalled. NYRAC pressured various platforms to hide DOM information from listings. They still wanted users to be able to drill down and uncover the details, but at first glance, the DOM information was to be hidden.

Streeteasy (owned by Zillow), the de-facto Manhattan multiple listing system in the eyes of the consumer, and the Real Estate Board of New York (REBNY), the leading real estate trade group with their own platform known as RLS, initially balked at the manipulation but eventually caved to NYRAC pressure. NYRAC made a strategic error that further damaged the long-term credibility of the real estate brokerage industry with the consumer. Not all brokers agreed with this strategy either, but this group placed enough pressure on these platforms to make the change happen.

Only sellers matter?

The incentive to “partially” hide DOM comes down to this:

1) Give the sellers a “break” after two years of softening price trends.

2) Address the sellers’ concerns about extended marketing times during the pandemic.

3) But the primary reason is that real estate brokers didn’t want to lose their listings if the sellers removed them from the market and returned to the market later with a new agent.

Why this effort was wrong

NYRAC and several real estate agents said to the effect, “the buyer or seller can still look at the listing history to know how long a listing has been on the market. That data was never removed.”

I always respond with “Then why hide it in the first place?” To brokers in favor of this temporary rule who wonder why I appear to be obsessing about a nuance I say, it is never appropriate to manipulate data, made even worse by the primary motivation behind this action.

Ignoring the buyers

This “solution” ignores the buyer’s position in a sales transaction and yet last time I checked, buyers are on the other side of every sale. Any effort to partially or fully hide DOM results or any other market metric conveys the wrong message and smacks of the old “information gatekeeper” mentality, no matter the state of the market.

Recently, the official word came down that all days between the shutdown and the reopening will count as “one day” for the DOM calculation presented to the public.

Going forward I have the following questions:

  • Are we to anticipate a suspension of DOM anytime there is an unexpected external event that impacts the housing market (9/11, The Lehman Brothers bankruptcy, Super Storm Sandy)?

  • Who makes the call to do this? A trade group, a regulatory body, a for-profit platform?

-Do we think that buyers and sellers of real estate are unaware of the 90+ day COVID-19 market shut down? Will a new listing added today as the market opens with 1 DOM will sell differently than an identical property with a 91 DOM listing that sat through the 90+ day COVID-19 lockdown?

The market doesn’t care what the brokerage community thinks (or what I think). The act of intentionally hiding or partially hiding data from the consumer is never justified in any scenario.

Bloomberg Podcast: Two Homes Are Better Than One, for Some

More on my “Co-Primary” housing market theory:


Cheddar TV: Setting Expectations On The Market After Many Residents Left Manhattan

How many will come back?

Douglas Elliman President Scott has his “Big Cheese” moment on Cheddar (sorry), discussing the New York new signed contracts report we had just released. The June report comes out next week.


CNBC TV: Exploring The Covid-19 Discount

It seems that most buyers want to know what “the Covid-19 discount” will be. People were telling CNBC that for NYC it would be around ten percent. While it seems reasonable to assume that the pricing would softer post COVID with an 80% YOY drop in newly signed contracts now, THERE IS NO DATA YET. We have plenty of anecdotal that indicates there is a discount and we have plenty of anecdotal there is not a discount. I have plenty of real estate brokers and closing attorneys telling me both, so which is it?

The market opened back up four days ago (Monday, 6/22) and we will see the return of transparency in market data with brokers able to do in-person showings. I expect it will become much more evident within the next month as transactions ramp up. Until then, chill.

If you look close enough, you can see a shoutout to my firm as a data source in the CNBC segment. Yay! Click on the image to play the clip or down below.


CNBC Video: Big Jump In Homes Not Even Started

New home sales were pressed higher from urban to suburban but largely because of the lack of supply of existing homes. This is May data and it is important to recognize that sales surging has more to do with a release of pent-up demand from “shelter in place” limitations than some sort of new housing boom.


A Conversation About Opening Of The Market: ‘Connecticut Rising’

In an event sponsored by Connecticut Cottages & Gardens with Douglas Elliman, I was brought in as stated in my intro, to provide a reality check. It was a fun conversation, with some candid conversations about the urban to suburban narrative. It began with single-family rentals and morphed into home purchases.

Click on the image for the video. If prompted for a password, it is 4n.&@Qmk


[click on image, password is 4n.&@Qmk ]

Getting Graphic


Our favorite chart of the week of our own making

This is a Hamptons market excerpt from the new Douglas Elliman New Signed Contracts Report for the New York region:

Len Kiefer‘s Chart Handiwork

Appraiserville

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

A Growing Kerfuffle At The Appraisal Institute: News At 11 (soon)

And it’s an election year…

My 34-Year Record of Not Driving A Car To An Appraisal Is Officially Over

As promised, this week I drove from my home in CT to do an appraisal inspection in Manhattan. This was the first interior appraisal inspection since the COVID-19 lockdown began in March. Since then its all been desktops and drivebys. Since I am under an NDA for this assignment I can’t disclose my location despite the request to memorialize the special moment by Ryan Lundquist. For the uninitiated, this was the first time in my 34 year career, I drove to a property inspection. I should also note that my 37-mile drive to get there was my longest drive since early March. Surprisingly, I don’t feel bad about my streak being broken but I was incredibly encouraged to see about 99% of all people walking around were wearing masks. Smart people.

This is yet another reason why I love NYC.

This is my official appraisal inspection vehicle.


OFT (One Final Thought)

Areas of the country that initially saw very public pushback from using masks and practicing social-distancing are now experiencing a significant rise in the infection rate. The idea that this pandemic was ever a “density” issue as many people once viewed the infection rate in NYC, has been proven unequivocally false. Critical thinking is needed to defeat this pandemic and this second wave calls into question whether we see much of an economic rebound over the next year.

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 wear masks;
  • You’ll sign a contract;
  • And I’ll get a new watch.

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


June 19, 2020

The Lockdown Has Relegated Housing To Background Noise

Ugh, I miss the sound of baseball so much – my always-on background comfort noise – this time of year:


Yet I won’t wax poetic about this:

And while this was before my time, I prefer the keeping the sanctity of the playing field in all sports:


But I digress…

New Signed Contracts and New Listings in Three New Reports

I’ve been working on this project for several months, even cramming in some additional time I found just laying around the house. It will be an ongoing monthly effort, to be published in the first week of each month. By tracking “new signed contracts” and “new listing inventory” added to the market, I am attempting to convey the “pulse” of activity by property type, by 8 list price tranches, by county, borough or area, etc.

I hope you find them helpful:

New York: Manhattan, Brooklyn, Long Island, Hamptons, & North Fork


[cover page – click to open report]

Florida: Palm Beach County, Broward County, Miami-Dade County, Pinellas County, & Hillsborough County


[cover page – click to open report]

California: Los Angeles County, Orange County, & San Diego County


[cover page – click to open report]

Manhattan Newly Signed Contracts Fall Sharply With Lockdown

This coming Monday, June 22nd, New York City real estate brokers will be allowed to show properties in person. Until that moment, the market is not transparent and there is no price discovery. Here is what the market activity looks like in Manhattan now (note the pink line in the Bloomberg chart – how cool is that?).


New in the Real Estate Lexicon: Co-primary Residence

I spoke with Denise Pelligrini of Bloomberg Radio about the potential for change in how we see the second home market. During an economic downturn, the second home market is usually more vulnerable. However, in the aftermath of this crisis, we may see the second home market be recast as an alternative primary home.


[click on image to play]

Mortgage Rates Fell To A New Record Low

Well, we are getting closer to zero. Freddie Mac reported that the 30-year fixed-rate mortgage fell to a record low of 3.13% so mortgage applications surged by 8% from the prior week.

But keep that 8% surge in context.

With the chronic shortage of supply, this rate drop is actually going to make housing less affordable as the surge from “shelter in place” continues. I view this pattern as a “short-term gain” for housing but will leave us with “long-term pain.”

Getting Graphic


Our favorite chart of the week of our own making

Concessions, concessions.

Len Kiefer‘s Chart Handiwork

Appraiserville

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

Scheduled for my first interior inspection in 90+ days for next week

I hope I remember how to do them. Please feel free to remind me.

This will be historic since I will be driving a car to an appraisal inspection for the first time in my 34 year career of 8,000+ assignments. Buses and subways and cabs are not yet safe.

In other words, it took a global pandemic to get me to drive to an appraisal inspection!

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 sign a new contract;
  • You’ll get a lower mortgage rate;
  • And I’ll be driving to my appraisal.

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


June 12, 2020

We’re Not Even Thinking About Thinking About Higher Rates As We Race Downhill To The Other Side Of This Crisis

The following video is an excellent analogy for the current state of housing and the economy – the title of this week’s Housing Notes is a take off on the Fed chair’s comments shared this week in a video further down. The uncertainty illustrated here is quite stressful.

But I digress…

Manhattan, Brooklyn & Queens Rentals Continue To See A Plunge In New Leasing Activity As Brokers Are Still Not Allowed To Physically Show Property

I’ve been the 25-year author of an expanding series of market reports for Douglas Elliman Real Estate, now covering more than 35 U.S. Housing Markets. This monthly rental report series covers three of the five boroughs of New York City: Manhattan, Brooklyn, and Queens.

Since the COVID-19 lockdown in NYC, real estate agents/brokers have not been allowed to physically show properties and as a result, new leasing activity has plummeted and most of the price action has occurred on the renewal side of the market which is estimated to be about 2/3 of all transactions and is not shared with the public.

Elliman Report: May 2020 Manhattan, Brooklyn & Queens Rentals

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“With the inability of real estate agents to physically show property per state’ shelter in place’ rules, there has been a sharp drop in new lease signings and limited price discovery during the Coronavirus crisis.”

  • The lowest total of new leases recorded for the month of May in a decade
  • The second-largest year over year decline in new leases in a decade
  • The largest year over year increase of listing inventory in forty-five months
  • The first year over year decline in median rent for non-doorman apartments in seventeen months
  • New development median rental price declined year over year
  • Luxury market rents retreated from their year-long price growth
  • The starter (bottom 10%) reached a new median rental price record


______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“The challenge of a near-record decline in new leasing activity and the recent gain in market share of landlord concessions have been amplified due to COVID-19′ shelter in place’ rules for real estate agents.”

  • The number of new leases fell annually for the eighth straight month
  • Listing inventory expanded for the first time in eleven months
  • The market share of landlord concessions rose annually for the first time in seventeen months


______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region]
“New leasing activity continued to see significant year over year declines as state “shelter in place” rules during the COVID-19 crisis have limited new rental transactions and price discovery.”

  • Median rent fell year over year for the first time in eight months
  • The market share of landlord concessions set a new record over four and a half years of tracking
  • Nearly two-thirds of 1-bedroom rentals had some form of landlord concession, a new record



VIDEO State of the City II: Navigating Through COVID-19

Reuveni Real Estate’s President and CEO, Shlomi Reuveni moderated a panel discussion on COVID-19’s effects on market conditions in NYC and Miami. The panel consisted of:

  • Hall Willkie, President at Brown Harris Stevens
  • David Von Spreckelsen, Group President at Tolls Brothers City Living
  • Edgardo Defortuna, President and CEO at Fortune International Group
  • Jonathan J. Miller, CRE, CRP, Member of RAC, President and CEO at Miller Samuel Inc.

You can watch it here:


Existing Home Sales Don’t Reflect COVID-19 Yet

It is almost the middle of June so why am I charting the NAR Existing Home Sales Data (EHS) published a few weeks ago (at the end of May)?

Because in a crisis that is changing on a daily basis, the report doesn’t really reflect the COVID-19 crisis yet which technically began in mid-March when it was declared a global pandemic. I wanted to make that point.

The NAR May EHS Report reflects closings from April which generally reflect contracts signed from February and March. Therefore the June Report, which reflects closings in May, which will generally reflect contracts from March and April. Even then, the first half of March was not within the confines of COVID-19. Also, remember, this: While existing home sales currently account for 90% of all home sales, the NAR sample size only reflects 40% of all MLS data.

In creating the following charts, I avoided seasonally adjusted data and only looked at the actual data. I gotta tell you, the housing market has been incredibly consistent for years:

  • Seasonality has been maintained
  • Listing inventory has fallen
  • Prices have risen


And mortgage rate trends have sort of drifted lower…

And it looks like fluctuations in mortgage rates have had no impact on seasonal price trends.

Inflation-adjusted wage growth didn’t start rising until halfway through the 2007-2020 period which correlated with price trends.


It looks to me that wage growth drove prices higher but the lack of inventory intensified the consistency and steepness of price growth. Mortgage rates don’t seem to be the direct driver of price trends.

MiB Podcast: Jonathan Litt on Real Estate Investments – How To Create Value In Real Estate

My friend Barry Ritholtz is a prolific provider of high-quality, all over the place content and his Bloomberg ‘Masters in Business‘ podcast stream is no exception.

This week he speaks with Jonathan Litt, who is the founder and chief investment officer of Land & Buildings. I highly recommend listening to this interview if you are in the business of real estate.


[click on image to play]

VIDEO Interest Rates Don’t Seem To Be Going Anywhere

This week the Federal Reserve provided some insights on how they see the world for the next two years in this WSJ piece: Fed Officials Project No Rate Increases Through 2022:

Watch this clip.


Getting Graphic


My favorite chart of the week of my own making


Len Kiefer‘s Chart Handiwork


Upcoming Speaking Events

June 16, 2020 – Curbed/Streeteasy ‘The Neighborhood’ Virtual Panel “Don’t Call It a Comeback: Patterns in NY Housing Market Recovery

Since the pandemic necessitates a virtual event, notice the menu item for breakfast on the upper right corner of the event landing page. It looks like we self-serve, self-bake in this virtual world.


[click on image to register]


June 18, 2020 – Urban Land Institute (ULI) New York Webinar Series: Assessing NYC’s Residential Real Estate Market


[click on image to register]

Appraiserville

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

Inspection Stories: Vertical Air Conditioning

How do you present this in your appraisal report?

OFT (One Final Thought)

The AppleWatch can’t do all that.


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 virus-free;
  • You’ll buy an old watch;
  • And I’ll think about thinking about skateboarding again.

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


June 5, 2020

Catch You On The Housing Side Of This Crisis


But I digress…

Millennials Have Continued To Be Economically Screwed Yet Are Buying Homes

This article was a fascinating read: The unluckiest generation in U.S. history.

There are a bunch of great charts in the Washington Post piece but the following 3 were my faves.

MBA: Apartment Rents For Upper End Is Still Being Paid

Since 50% of U.S. apartment landlords are small businesses and the record unemployment rate is skewed to hourly wage earners and the gig economy, this dataset reflects the mid to upper end of rental apartment product. So for that segment of the economy, collections are high.


Source: BLS, NMHC, MBA

What explains the disconnect? In all likelihood, the substantial stimulus from the federal government. The CARES Act and other federal programs have provided unprecedented financial support to households. In April, U.S. personal income jumped a massive 10.5% on a monthly basis, more than double the previous record – even while compensation fell 8%. Government social benefits jumped 90% to a record (by far) $6.3 trillion seasonally adjusted annual rate.

VIDEO: Why Long Island? Real Estate In Uncertain Times.

I joined Maria Babaev, a top real estate broker at Douglas Elliman and Mark Spector, Architect to a panel moderated by attorney Jamie Heiberger Harrison. We discussed the new dynamics in real estate and architecture in anticipation of the wave of buyers moving from NYC to the suburbs.

Some of the topline questions that were discussed:

  • Are you seeing a surge in demand from NYC-dwellers looking to move to the burbs?
  • Do you think this is a knee jerk reaction or a bigger long-term trend?
  • Can you tell us a few examples of the financial benefits of living in the burbs?
  • What would you say to people who believe that living in the burbs is boring?
  • Is there an upside to the commute?

0528LongIsland from Heather DeRosa on Vimeo.

The Real Deal’s The Interview: Teri Rogers addresses New Yorker’s Biggest Pandemic Pain Points

My friend and journalist/bloggerzengoddess who taught me the value of links, Teri Rogers of Brick Underground talks virtual co-op interviews & New Yorkers’ biggest pain points during the pandemic. Interviewed by The Real Deal’s Hiten Samtani, who always gets to the point and knows a good story when he sees one.


No Matter Where You Live, You Need To Understand Where Housing Segregation Came From

This is a spectacular NPR video short on the birth of housing discrimination (h/t The Real Deal)


2020 Has Already Been Longer Than The Jurassic Period


When “It” Is On The Patio

I’m sorry, but I hate clowns. I never recovered after reading Stephen King’s “It” – but nobody does clowns better than the Terrible Real Agent Photographs Blog.

Upcoming Speaking Events

Appraiserville

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

Appraiserville was quiet this week…

OFT (One Final Thought)

Wait for 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 catch you on the phone literally;
  • You’ll be a millennial for a day;
  • And I’ll keep Zooming.

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


May 29, 2020

At Some Point Housing Has To Fly On Its Own

Flying in circles doesn’t necessarily beat not flying at all.

But I digress…

The Plural of Anecdotal is not Data

I have found the past several months exceedingly challenging because everyone wants to know what the number is. You know, the discount that should be applied to every single property in the Manhattan market to reflect the COVID-19 discount.

Well, I’m here to tell you it doesn’t exist yet in a credible way. Current numbers being shared are quite misleading because they reflect closings and we know that most closings have linkage to the pre-COVID19 world prior to mid-March. In an amNY article, factual information is presented by two data providers commonly used by market participants but they are clearly out of context:

Streeteasy results

Driven sellers, however, weren’t afraid to lower their prices in April. The Manhattan price index that StreetEasy monitors fell 2.7%, to $1,075,336. Brooklyn’s price index was down 1.8% to $689,989, while the price index for Queens remained relatively flat at $510,345.

I don’t disagree with the results, here, it’s just that they don’t reflect the COVID-19 world. I would speculate that nearly all sales that closed in April had linkage to the world before Covid-19 whether that was the inspection, negotiation, or contract signing. In addition, Manhattan housing prices were sliding since the beginning of 2020 so sliding in April means nothing, actually. Their index uses the repeat-sales methodology found in Case-Shiller so the lag time of this methodology is longer than relying on aggregating closings. Streeteasy brought me in to look at the index before it launched years ago and I had experience with a now-defunct index that competed with Case Shiller.

Property Shark results

The median sales price in May also stabilized at $700,000, which marked a 2% gain over the May 2019 median price. Even though pricing trends have been “firmly positive throughout the crisis,” PropertyShark’s report noted that the 2% May gain represented “the smallest year-over-year price growth” in 2020.

This analysis using closed sales suffers the same problem as discussed for the Streeteasy results. The vast majority of May closing prices reflect pre-COVID19 conditions since the average number of days between contract signing and closing is around 90 days. In other words, a large swath of their May closings were contracts that occurred in February or March. Again, likely accurate results but provide no indication of actual market conditions post-COVID19.

MANHATTAN IS STILL DEVOID OF EMPIRICAL EVIDENCE. ALL WE HAVE IS ANECDOTAL.

I suspect the data-picture will change quickly once real estate brokers are allowed to physically show real estate in NYC. Virtual inspections are occurring but their success rate for causing a sale by someone who has never physically inspected the property remain as outliers.

COVID-19: The difference between “Density” and “Overcrowding”

Since the crisis began in mid-March, I’ve been obsessed with the misuse of the word “density” as a driver of the virus. Manhattan has been continually described as a hotspot because of its high population density, yet Manhattan had the lowest infection rates in the five boroughs of NYC but has the highest density.

The same pattern is occurring in LA. Density is certainly a factor, but not THE reason. poverty and overcrowding are also significant factors.


[City Obervatory]


[City Obervatory]

But neighborhoods in South LA and the San Fernando Valley are epicenters of the pandemic, despite not being very dense. And some relatively housing-dense areas, like Santa Monica and Venice, have low COVID-19 case rates. It’s a more complicated relationship than “more housing equals more COVID”.

Why does this matter?

Since many people are prognosticating the death of cities and the boom of the suburbs it is hard to continue to make that argument when the rural Texas panhandle is a hot spot.

And then consider the mindset and our collective memories if a vaccine is developed in 2021. Will the market recover as a “V” or a “Swoosh?”

And then consider the states where social distancing protocols are few and far between as everyone is anxious to get back to business as usual. This restaurant trend suggests a second infection wave in the fall, no?

REFA:”Suburban Green Shoots” Panel Discusses The “Urban to Suburban” Upside

I presented and moderated a fascinating discussion with Randy Salvatore, CEO & President of RMS-Companies, a large development firm in Fairfield County and Jim Fagan, Executive Director at Cushman & Wakefield in Westchester and Fairfield Counties.

Copy the password 1C*%x&9R and then click on the image to see the discussion.


Paraphrased from the REFA web site: The Real Estate Finance Association assists real estate finance professionals by communicating industry information, providing continuing education and networking opportunities and offering venues for members to exchange experiences.

I have worked with REFA in the past and found the organization to be an energetic proactive networking group.

And The Big Manhattan Sales Keep Happening

To escape the COVID-19 talk, I returned to the once tired subject of record-setting housing prices as a respite to the current nightmare. I was nudged to this shift after reading the Amy Rose piece in Forbes: ‘Covid-Pricing’ Hits High-Profile Homes Across U.S. And Billionaires Are Snapping Them Up.

And I chuckle every time I say this, but I had to move my company logo to the left on the following chart to accommodate last year’s record sales price. I will continue to update the year 2020 results but here is what I have for record closings by property type for the year 2020 so far (none are all-time records):

Co-op | $43,000,000 | 4 East 66th St 8
Condo | $56,258,312 | 220 Central Park South 65
Townhouse | $38,000,000 | 8 East 75th Street


[click to expand]

Year over Year April Hamptons Sales Down 73.7%

There was a good read on the state of the Hamptons market in the WSJ. The Hamptons experienced a massive surge in rents in March and April as NYC residents flocked to safety while sales are down sharply.

“It was really a panic,” said real-estate agent Susan Breitenbach of the Corcoran Group. As a result, very few rentals remain available for either the spring or summer, and those that do become available get snapped up quickly. Ms. Breitenbach said last week she arranged a rental for a house that was asking $900,000 for the summer; there was a bidding war and the house rented at close to that amount.

I would imagine that rental landlords are going to be anchored to these “panic” numbers” next year yet conditions post-COVID19 will likely be different.

Here are the numbers we saw for the sales market that I define the Hamptons as the hamlets from Westhampton to Montauk that were used in the story.

WSHU: Will The Aftermath of COVID-19 Push The Suburbs Ahead?

For many real estate participants in the suburban markets surrounding NYC, there is a sense of hope that the suburbs will see the long-term benefits of the “urban to suburban” shift that seems to be occurring in the short-term. Click on the image to play the clip.


[WSHU]

Forbes: In A Quickly Changing Market, Pending Sales Are The Best Indicator We Have Despite Flaws

I’m trying out this Forbes thing. Can you support me by following me on Forbes? Just click “follow” under my name at the top of this page.


Original Article: In A Quickly Changing Market, Are Pending Sales A Lagging Indicator?

As I read through available housing stats during this COVID-19 era to get a general sense of where the overall market is going, it is notable how difficult that task has become. Everything we look at seems to require an asterisk. While such punctuation was required before this global pandemic, the need for fresh insights makes the qualitative aspects of information more critical. We know that closing price trends are lagging indicators, but tend not to think of current contract trends as a lagging indicator, yet that assumption has always been wrong. The day to day nature of the COVID-19 pandemic has made the need for qualifiers more evident.

The National Association of Realtors (NAR) metric known as the Pending Home Sales Index (PHSI) is regarded as the fastest moving barometer of market direction. Still, its flaws tend to be overlooked, especially when compared to closed sales.

Meeting of the Minds

The “meeting of the minds” process is where the buyer and seller negotiate general price and terms, usually facilitated by listing and buyer brokers. Once the parties are in sync on price and terms, their respective attorneys work out the written language, which leads to the signing of the contract. Once the contract details are ironed out, both parties sign, and it then appears as a written deal in the MLS.

NAR posits that closing trends follow contract trends by two months.

The Pending Home Sales Index is a monthly release

The April 29th release by NAR is the most current version available as of this moment, and it reflects the market data of March that includes “meeting of the minds” data from February. This PHSI release represents a two-month lag, and the following chart using non-seasonal YOY% change patterns is pretty terrifying. And that’s just the data through March.


NAR Pending Home Sale Index compiled from publicly shared data and charted by Miller Samuel. JONATHAN MILLER

The May PHSI report that uses April contracts will be released on May 28th (four days from now), but I deliberately wrote this beforehand to show the potential lag in contract data.

Pending Sales (Contracts) Is Less Backward Looking

NAR publishes the PHSI monthly and always describes it as “forward-looking,” yet it is not. I think of their PHSI index as “less backward-looking” because it is only forward-looking in the context of closed sales, and we know closing sales are lagging indicators. Closed sale dates generally lag contract dates by 30 to 90 days, the latter being markets like New York. Sales contracts can lag the “meeting of the minds” by a few days or more than a month, depending on the market location and condition.

Contracts Can Blow Up

There are specific periods, especially in quickly deteriorating markets, when large swaths of contracts don’t close. I recall that about one-third of pending sales blew up shortly after the housing bubble burst more than a decade ago. Just prior to the Coronavirus crisis, the contract failure rate was in the single digits. I haven’t found fresh post-COVID19 data on this yet (because it is lagging).

In New York City’s situation where I am based, closing attorneys tell me that written contracts lag the “meeting of the minds” by a month or more right now. Buyers are trying to cut better terms, and sellers are trying to keep the deal together. However, in a rapid market, especially those markets that have recently eased restrictions for real estate brokers to physically show properties, that delay might only be a few days.

The Contract Coverage Area Is Very Broad

NAR says that the PHSI report covers about 20% of the market and we’re not sure what 20% it covers in any given month. Hopefully, most of us know that there is no “national housing market.” Contract activity is much more useful as a local trend indicator but it can give us a sense of the U.S. housing zeitgeist.

Typical Report Timeline

“Meeting of the Minds” – price and terms agreed to

[Less than a week to more than a month]

“Written contract” – parties sign

[A month]

PHSI Reported By NAR “Contracts”

[Two months]

Existing Home Sales Reported BY NAR “Closings”


I still look at pending home sales data as a broad market trend indicator because it is the most recent we have, but it is more useful in local market conditions. But either way, its use often needs an asterisk.

UPDATE Pending Home Sales Slump 21.8% in April


Getting Graphic


Our favorite charts of the week of our own making


Appraiserville

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

USPAP will no longer be ‘Misleading’

Back in early February here in Appraisalville, I questioned a new definition that appeared in USPAP for the term “misleading.” Many others took to their platforms to criticize it, such as Phil Crawford of the Voice of Appraisal podcast and Dave Towne, a prolific writer of all things that keep appraisers sane.

Dave writes today:

Gad zooks…..I (and lots of others) hope and wish the Appraisal Standards Board would QUIT making changes to USPAP every friggin’ two years! There is no way to satisfy everyone’s individual perspective as to how USPAP should be written.

Here is the problematic definition from the current version of USPAP.

While I didn’t question the intent of TAF (the irony of this statement doesn’t escape me), I felt they had overstepped their bounds and the determination of the qualitative nature of intent was for only for the courts to decide. This situation is likely a result of the too frequent two-year updates. After three decades, there isn’t much to update in our industry and therefore the operating boundaries of TAF are more likely to be inadvertently crossed as reasons for changes become harder to find.

The definition of “misleading” unleashed a wave of criticism because it meant that if an appraiser made an inadvertent error (think about the 800+ fields on a URAR), they were essentially a criminal. This exposed appraisers to a potential tsunami of litigation and real estate attorneys were excited about the prospect.

There is always the usual good-faith attempt to rationalize the pretzel logic but all this did was heighten the confusion and angst of appraisers. For what purpose?

Thankfully it looks like the definition of “misleading” has been scratched in the Second Exposure Draft 2022-23 of USPAP:


I am thankful that the industry response has influenced this edit and appreciative that The Appraisal Foundation listened.

Please don’t forget to submit comments to the other proposed changes by July 30, 2020.

OFT (One Final Thought)

I’ve had three.


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 virtual;
  • You’ll be more viral;
  • And I’ll be more visceral.

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


May 22, 2020

How Many Zoom Calls Does It Take To Stabilize A Housing Market?

I’m doing 3-5 Zoom calls per day and while it is cool to bring your message to as many as 1,500 people in one shot, the number of them many of us are doing is a bit soul-draining. Plus I want to wear t-shirts and not shave, but my sense of professionalism is overpowering the casual impulse.


But then again, Goats make the world tolerable.

But I digress…

Where Are New Yorkers Going During The Pandemic?

The New York Times does a brilliant visualization on Where New Yorkers Moved to Escape Coronavirus.

Miami and Philadelphia are the two top destinations. There are a bunch of other visualizations in this piece but here are some of my favorites. Wow!


[NYT]


[NYT]

AUDIO New York Real Estate: How Low Will Prices Go? (Not Sure Without Data)

This was a terrific event I was fortunate to participate in. The moderator and the other panelists were really great. More than 1,500 people listened to the event when it was live. They’ve since placed the recording on their web site – you can listen online now.


‘The Con’ Documentary on the Financial Crisis Launches This Summer!

Many of my friends and appraiser colleagues around the U.S. were interviewed by Bill Black’s documentary team in San Antonio in 2018 at “AppraiserFest 2018.” One of the event organizers and who is an appraiser, Phil Crawford, invited him because appraisers have a story to tell and were generally victimized in the post-financial crisis narrative.


I hope I made the final cut!

The following is an interview with Bill Black, a former federal regulator, and author of The Best Way to Rob a Bank is to Own OneThe Best Way to Rob a Bank is to Own One and his team of accomplished documentary filmmakers is coming out with a new film this summer called ‘The Con.’

The Con is a 4-part series that was inspired by Patrick’s own experience during the 2008 Great Financial Crisis. He was a successful producer and entrepreneur who had built a business and owned a home for his young family. The financial crisis wiped him out.

Here’s the interview with the filmmakers. I can’t wait until its release!


VIDEO De-Mystifying the Data Conversation Webinar Was Fun And Had Little Data To Work With

This was a super fun data-wonk fest without the data by Chief Economist Greg Heym of Terra Holdings, Urban Digs founder Noah Rosenblatt and myself, moderated by Eric Barron TripleMint CRO. We had the conversation earlier this week.


VIDEO CBRE Panel: Exodus From NYC? Probably Short Term

I enjoyed the conversation platform CBRE created here – a mix of residential and commercial insights for NYC metro. I especially enjoyed the content surrounding the drop in rents for the commercial office market in NYC in the second half of the zoom call.


The Magic of Softbank Has Been Exposed As a Unicorn Pipe Dream

The Japanese venture capital fund Softbank posted massive losses this quarter as it looks like many of their unicorns are hemorrhaging. That in itself is not the point since many companies are hemorrhaging right now due to the economic collapse. The thing is, they’ve been exposed since the WeWork collapse as providing little to no due diligence for backing Unicorns. Remember Wag?..the $300 million dog-walking app-maker that lasted two years? What once was a bragging right of association, is now something being hidden, especially after the founder just compared himself to being misunderstood like Jesus Christ and The Beatles.

I’ve been openly critical about Compass for years, the real estate brokerage company, more recently for downplaying their connection to Softbank here in these Housing Notes, an about-face from prior actions. Of course, I am not criticizing their brokers, just the odd nature of the business model. How will a traditional brokerage company get a valuation as a tech company so the founders can cash out now that the Softbank hoopla has cooled off? I was on a call yesterday and was told that the number of Compass software engineers is now upped to 500? Really? That comment seems oblivious to the wildly silly number it represents. And how will leadership behave now that their IPO hopes may have been dashed for years?

Payment of Rent Is Distorted Higher

The data below from the National Multifamily Housing CouncilNational Multifamily Housing Council covers 11.5 million apartment units nationwide, and it shows that:
1) the share of people paying their rent on time in April and May 2020 is not dramatically different from what we saw in April and May of 2019, and
2) the share of people paying their rent for May 2020 is ahead compared with the same time in April 2020.
In sum, the story that “everyone is falling behind on their payments” is not correct. In fact, we are seeing an improvement in the rent payment profile from April to May.

This chart has been making the rounds of social media over the past several days but it is pretty misleading and needs to be clarified. About half of the multi-family building owners are small businesses and are not included in this dataset. It follows that unemployment has been heavily skewed towards hourly wage earners, the gig economy, and independent contractors rather than mid-level salaried workers. Therefore, the non-payment of rent nationwide is much worse than these rosy projections.

Using A Price Index To Adjust Inflationary Impact On Monthly Mortgage Payment Is Sobering

From John Wake at Real Estate Decoded


This Week in Aspirational Pricing: A $350K Monthly Rental Ask

A developer is betting that wealthy LA urbanites will flock to rentals like this.

Cue the music:


VISUALIZATION – Generally Speaking, Central Banks Seem To Be Doing Their Job

Visual Capitalist publishes a doozy.

Getting Graphic


Love this use of Apple mobility trend data!



Upcoming Speaking Events

What is happening with Long Island Real Estate?

When: Thursday, May 28th, 11:00 AM Eastern Time (US and Canada)
Topic: What is happening with Long Island Real Estate?

For this week’s Real Estate Community Forum please join me in welcoming Maria Babaev (Douglas Elliman Long Island), Jonathan Miller, President and CEO of Miller Samuel, and Marc Spector, FAIA, Principal of Spectorgroup who will discuss new dynamics in real estate and architecture in anticipation of the wave of buyers moving from NYC to the Long Island.

Moderated by Jamie Heiberger.

Register in advance for this webinar:

https://us02web.zoom.us/webinar/register/WN_S76pTT52TR-lxgqgHh4khA

Per Jamie: As my forums are FOC, we do ask that you meet the minimum suggested donation of $10 to help support Northwell Health. https://www.northwellcovid.com/index.cfm?fuseaction=donorDrive.participant&participantID=17784

Appraiserville

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

RAC’s Extraordinary Webinar Series: Immediate Past AI President Steve Wagner

I got a lot out of Steve’s presentation this week to our RAC members and thanks to RAC member Allen Gardiner for setting this up.Stephen Wagner Town Hall Meeting Slides.

One of the points made that hit home was replacing the word “anecdotal” with “qualitative” when describing market conditions. Initially, my firm was talking about the market conditions “post-covid” as an extraordinary assumption but have since changed our thinking. Stephen’s presentation made the case for that approach when informing the client.

OFT (One TWO Final ThoughtS)

Yes, this is such a great upbeat video. I love OK Go.


And here is some of my chalk artwork as we move into the holiday weekend mode:

View this post on Instagram

Since the mid-90s, I wrote a chalk message to our four sons at the end of the driveway on their first and last day of school. One year I ran out of chalk so I used masking tape and one year it was pouring so I made a poster and hung it on our door, but I never forgot those days (ok, sometimes my wife reminded me). I believe in traditions, even the quirky annoying (to them) kind – it makes mundane things in life special and shows you care. Our youngest son is away at college taking online classes and today is his last day of school and he has completed his undergrad degree. Super proud of him and his brothers too. Of course if any of my followers need some chalk, I have some leftover.

A post shared by Jonathan Miller (@jonathanmiller) on


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 work with chalk;
  • You’ll work with chalk;
  • And I’ll chalk it up to experience.

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

Get Weekly Insights and Research

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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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