- Miller Samuel Real Estate Appraisers & Consultants - https://www.millersamuel.com -

April 30, 2021

In Life And Death And Housing, There Is Always Music

This video showcasing the amazing talent of Prince [1] playing my favorite Beatles song, has over 100 million views (unreal!). I imagine most Housing Notes readers have seen this clip before, but it’s worth watching again if you want to feel really good, especially the second half. This is an analogy for the euphoria most of us in housing market businesses are feeling right now.


But I digress…

Masters in Business on Bloomberg Radio: Jonathan Miller on the state of real estate (it’s fun)

This is my fourth appearance with my friend Barry Ritholtz, a prolific columnist/blogger, radio show host/podcaster [2], and wealth management firm [3] head on his Masters In Business show for Bloomberg Radio [2]. He previously interviewed me in 2014 [4], 2016 [5] and 2020 [6].

Barry also posted the interview on his essential Big Picture blog: MiB: Jonathan Miller, Appraiser Extraordinaire [7] in addition to the Bloomberg Masters In Business [8] landing page.

To say we talk a lot about housing and valuation in a crazy market wouldn’t do this fun conversation any justice. I am always thrilled to be in the company of his never-ending incredible lineup of guests [2].

To listen to the entire one hour and 49 minute show (sorry about that), you can go here:

[8]

The Journal Podcast: The Strange Economics of the Lumber Market (retail prices skyrocket while raw prices fall)

When we think about a “long-term” asset like growing trees, the broken economy of lumber is not what you think. This is a fascinating look behind the scenes on a key resource for housing.

[9]

Housing Is A Winner Coming Out Of The Pandemic

Residential investment is up 14.4% YOY. Wow. There’s a great UpShot/NYT Piece on who wins and loses.

[10]

The People That Left Cities Generally Didn’t Move Very Far

New York City is seeing a reduction in outbound and the inbound is just getting started as vaccine adoption really ramps up. This is from a really great Bloomberg piece: More Americans Are Leaving Cities, But Don’t Call It an Urban Exodus [11].

[11]

[11]

When You Look At All The Housing Records Being Set, Affordability, Not ‘Bubble’ Strangely Applies

There was a terrific Bloomberg piece last week: The Most Important Number of the Week Is $329,100The median price of an existing home in the U.S. rose to a record in March, but don’t call the housing market a bubble. [12]

Many are confused about why sales have continued to surge long after last year’s lockdowns ended. Affordability is driving this seemingly unsustainable demand…

[13]

…despite all the records being set…

[14]

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[Elliman Webinar] A Deep Dive Into The Structural Shift In Hamptons Housing In Two Parts

Douglas Elliman Real Estate held two sessions on the state of the Hamptons housing market. It was a discussion about how this booming market started out of the pandemic, what the state of the market is now, and addressed the question of sustainability of conditions in the future. Excellent and different insights were shared by both panels. I enjoyed moderating both panels equally!

The links to watch each session have been made available by Douglas Elliman.

Panel 1: April 29th 9:30 am [17]

Panel 2: April 29th 11:00 am [18]


If You Love Disney World, Have I Got A Place For You To Live

Apparently, the construction mortgage underwriters were big fans of Disney theme parks.

[19]

Kitchens are a key component to a homes value, but Microwaves are the neediest of all appliances

Here’s the proof [20].

[20]

Getting Graphic


My favorite charts of the week of our own making

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My favorite charts of the week made by others


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Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC [31] site.)

The USPAP Ethics Rule States That It Is OK To Discriminate As Long As You Have Good Data

One of the more amazing aspects of the recklessness of The Appraisal Foundation’s management of USPAP is their lack of legal review of the revisions they churn out every two years. As I’ve written about their misinformed modification of the word “misleading” that has placed every appraiser in jeopardy, the hits keep coming. With an estimated $8M to $10M in reserve, you would think a not-for-profit with such a small staff would invest in a legal review of the very appraisal standards they are responsible to maintain, yet they don’t. USPAP is embedded into state laws and yet, a bunch of volunteers who are responding to the organizational culture of finding something wrong every two years so the organization can sell books and classes is not protecting either the public trust or looking out for the appraiser. This is the same organization that writes bat-shit crazy letters [32] demanding they deserve no oversight.

Let’s look at the Ethics Rule, something that has been embedded in USPAP for years. It’s not an Advisory Opinion (AO). It has literally been part of USPAP for years. (Page 7 in USPAP – page 18 of the app [33])

An appraiser (highlight my emphasis):

must not perform an assignment with bias;
must not advocate the cause or interest of any party or issue;
must not accept an assignment that includes the reporting of predetermined opinions and conclusions;
must not misrepresent his or her role when providing valuation services that are outside of appraisal practice;
must not communicate assignment results with the intent to mislead or to defraud;
must not use or communicate a report or assignment results known by the appraiser to be misleading or fraudulent;
must not knowingly permit an employee or other person to communicate a report or assignment results that are misleading or fraudulent;
must not use or rely on unsupported conclusions relating to characteristics such as race, color, religion, national origin, gender, marital status, familial status, age, receipt of public assistance income, handicap, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value;
must not engage in criminal conduct;
must not willfully or knowingly violate the requirements of the RECORD KEEPING RULE; and
must not perform an assignment in a grossly negligent manner.

Now re-read the part I have made bold. If you look at the point being made closely, it is saying an appraiser can’t use unsupported racist data. In other words, the text is conveying that you CAN use supported racist data for “conclusions relating to characteristics such as race, color,…”

If these ridiculous lapses in judgment were reviewed by a lawyer, this kind of thing wouldn’t happen over and over again. It’s not that the writers of the Ethics Rule were racist, it’s that they are in their own bubble and typically not lawyers.

This is the same organization that has formed a “diversity” task force that is not led by a person of color and went without an African American on their Appraisal Qualifications Board for more than three decades. Only because of external pressure by people like myself and others did they address this particular lapse of board composition.

This is inexcusable and should be edited immediately for its tone-deaf look at systemic racism. The industry is in the early days of a rigorous external examination and all of us will be mischaracterized. It is already happening. No amount of complaining about how unfair this is in posts in Appraisers Blogs and other outlets will stop the shifting momentum against us if our industry leaders are oblivious to it.

Just like the “misleading” fiasco, the problem with our profession does generally not lie with the appraisers themselves, but our ineffective and insulated leadership.

I still can’t get over how dumb the error in the ethics rule is.

Good grief!

[Buzzcast Podcast] Jonathan Miller: The State of the Appraisal Industry

I had a fun and productive conversation with Joan Trice on her podcast about the appraisal industry.


Appraisal Industry Versus Appraisal Profession

Ann O’Rourke, the appraiser pioneer of mass communication, publishes an essential publication, Appraiser Today [34] (I’m a subscriber). She was enthusiastically promoting my above interview on Appraiser Buzz and made the observation:

I don’t like the term “appraisal industry” and prefer “appraisal profession.” I’m an “old-timer” of 45 years and have always thought of myself as being in a profession.

[35]

When I reflected on Ann’s comment I thought I’d provide an explanation of why I agree with the title of the podcast. I get where Ann is coming from but let me play devil’s advocate. I too like to think of myself as an appraisal professional, one that works within the appraisal industry. I am proud to be an appraiser and proud of the skills I have amassed over my career. The appraisal industry is comprised of entities and individuals that intersect or overlap with an appraisal professional: software companies, big data, AVMs, AMCs, regulators, banks, loan officers, mortgage underwriters, mortgage brokers, etc.

I’ve had a number of Appraisal Institute members tell me they are NOT part of a trade group but representatives of a profession. It makes sense that a member of an organization would upsell what they represent. After all, that’s the very definition of a trade group [36]. On the other hand, the objection to using “trade” and “industry” suggests it is a comedown from the “profession” image that is projected on the public.

In danger of going down a rabbit hole, words like “trade” and “industry” infer physical labor combined with technical skill like a plumber, an electrician, or an arc-welder on a deep-sea oil drilling platform [37] yet the act of appraising (the type of appraisals I am referring to) really is half physical (walking the property, town hall, driving around to view comps) and half analytical (the “grid”, adjustments, comp selection, historical references, etc.)

As a good friend and long-time Oklahoma appraiser Tom Allen once told me, “appraising isn’t rocket science.” Using that logic, it’s a skill and therefore a trade, and trades are part of an industry. That’s a key problem with the bureaucratic largess of the Appraisal Foundation – it has set up a byzantine set of rules and procedures that don’t match the profession and actually hold it back. Carpenters (at least the carpenters I’ve met), don’t describe themselves as carpentry professionals.

And yes, as I climb 6 flights of stairs in a Manhattan walkup co-op apartment building on the hottest day of the year, to enter a filthy foreclosed apartment with all the windows shut, I consider switching to that arc-welding gig on an oil platform in the Gulf of Mexico.

OFT (One Final Thought)

As we come out of the pandemic, I am much more appreciative of the little things in life. When I think back to 9/11, being in Manhattan at the time, I assume I’ve heard it all by now. Yet I just stumbled across this must-watch clip: “A lesser-known rescue effort is the historic maritime evacuation that took place that day – one that was greater even than Dunkirk. In this episode of “I Was There” VICE meets civilian mariner Pete Johansen who assisted with the world’s largest boat lift that rescued half a million people stranded on the seawalls of Lower Manhattan.”

View this post on Instagram
[38]

A post shared by VICE (@vice) [38]

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 [39]. And be sure to share with a friend or colleague if you enjoy them because:

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 [40]
President/CEO
Miller Samuel Inc. [41]
Real Estate Appraisers & Consultants
Matrix Blog [42] @jonathanmiller [43]

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