Solving The Housing Crisis With A Wonderful Idea
Unfortunately, I don’t have one. More ideas later, so for now I’ll simply digress.
One of my guilty pleasures has been the band OK Go . It started when my oldest son left the band’s first CD in my car in the mid-1990s and I was hooked. Then this  and they morphed into incredible video-makers. And I wondered…how do they come up this stuff? Or better yet, how can I creatively address a challenge.
Here’s a fun TED talk that explains how. OK, go!
But sometimes coaches just need to go full matrix and get out of the way.
Either way, there is a lot to cover today so let’s get to it.
November 2017 Elliman Report: Manhattan, Brooklyn & Queens Rentals
As my Housing Note readers know, I’ve been authoring an expanding Douglas Elliman market report series since 1994. One of the reports is a monthly take on the rental markets of Manhattan, Brooklyn and Northwest Queens. Douglas Elliman published my research  on those markets for November this week.
Heavy concession usage remains, shifting of housing stock towards luxury skewed (kept overall) prices from falling. The market remains soft towards the top and tighter in the middle and bottom price bands. But a lot of larger units are entering the mix. For example, the average square foot of a Manhattan rental at or above $10,000 per month was 2,426, up 13.7% year over year (3.1% of overall new leases). And for apartments above $15,000 per month, the average size was 3,075 square feet, 19.8% larger over the same period, accounting for 1.4% of overall leases. Yet the non-luxury or first 90% of the market average square footage was 835, down 2.2% over the same period. There is simply too much luxury rental product  coming online.
Here are the matrix tables and some charts outside of the report for the three rental markets covered in the November 2017 Elliman rental report :
Talking The Federal Tax Bills With NY1’s Pat Kiernan
Last Wednesday morning I joined Pat Kiernan on NY1’s Mornings on 1  show to talk about the proposed tax GOP tax bills agree to by the House and the Senate. Pat is a local broadcasting legend so it was great to actually meet him in person.
Later that day a couple of sticking points separating the two versions of the bills were addressed in the congressional committee. Once they agree to the terms, they’ll probably hold a vote next week and then send to the president for signature.
How the GOP Tax Bill Might Impact U.S. Residential Real Estate
(Breaking :…now there is some concern that a sure thing is being disrupted right now.)
Both houses of Congress have passed far-reaching tax bills with a lot of common ground between them. The U.S. Senate  and U.S. House of Representatives  are in the process of merging their versions into a single bill that will be voted on, and if it gets out of committee, it will be submitted to the president for signing.
Unlike the 1986 tax reform bill , which took six months of public hearings and discussion on both sides of the aisle, this tax bill was worked on for a year by the GOP and was passed very quickly without most of the signers knowing what was actually in it. Therefore I anticipate an ongoing procession of additional insights that impact the housing market as more people read the bills or the eventual law.
This lack of transparency and vetting alone is not great news for housing, which is very dependant on an “uncertainty-free” environment. In addition, there is a “get it done before Christmas” deadline .
Here is what I mapped out but this is only what we think we know by reading many interpretations with source links presented at the bottom of the table below. Here’s the pdf version of the table .
Luxury Housing Market Update Around The U.S.
Here are a bunch of charts that I created to identify interesting housing metrics across markets I cover for Douglas Elliman . The pages below (click on image to expand) can also be found in the Winder edition of Elliman Magazine .
Is There A Retail Apocalypse Or Not?
Here are points of view from two different columnists on Bloomberg View (both were guests on my old “The Housing Helix Podcast” a while back).
Justin Fox (short podcast): Justin Fox on Why the Retail Job Apocalypse Has Been Postponed 
Barry Ritholtz (column): Retailers Still Haven’t Caught Up to Millennials 
Oh, Canada, It’s The Third Consecutive Monthly Price Decline. A Trend?
Canada never saw the housing price collapse that the U.S. did a decade ago. Sure they saw a short-term drop in sales, but not prices. As many wise journalists have told me, it takes three data points to make a trend and now we have one. The Teranet–National Bank National Composite House Price Index  showed a 3-month decline.
In November the Teranet–National Bank National Composite House Price IndexTM was down 0.5% from the previous month, the third consecutive monthly decline and the largest for a month of November outside of a recession. Indexes were down for four of the 11 metropolitan areas surveyed: Toronto (−1.4%), Hamilton (−1.6%), Ottawa-Gatineau (−0.8%) and Edmonton (−0.7%).
Bitcoin, etc. Has Exploded Onto The Scene And May Be Here To Stay
When it comes to the concept of Bitcoin and other crypto-currencies (see Phil C., I actually used that word), it is all about blockchain. If I was in the title insurance business, I might be worried. Here’s a great explanation of Blockchain by Bloomberg :
I’ve provided a bunch of links on the topic in the links below. It’s time to at least be aware of crypto-currencies, of which Bitcoin is the most well-known. Oh yeah, a Miami condo unit is for sale only to buyers using Bitcoin  (a super gimmicky marketing angle but worth watching).
Assessed value vs. market value
My friend and colleague Constantine Valhouli, founder of NeighborhoodX  pens a mini-tome on two different types of value that often confuses real estate market participants.
Many real estate listings breathless announce that a particular property is “priced well below it’s assessed value!” as if this were a bargain not to be missed. This made us realize that most people seemed to misunderstand the difference between ‘assessed value’ and ‘market value’ – and why this is very significant for buyers.
AMC Is Broadcasting Orders But They’re The One Without Expertise
I was listing to the December 13, 2017 Voice of Appraisal  podcast this morning and heard the “Skap Report” with Mark Skapinetz – an appraiser out of Georgia who manages the 100% Real Estate Appraiser Group on Facebook. He and Phil Crawford were talking about an AMC in Colorado that was broadcasting an appraisal order to many hundreds of Colorado appraisers but forgot to blind copy the appraisers’ email addresses. This is the same AMC that complained of an “appraisal shortage.”
Three key points come out of this event:
- There is no “appraisal shortage” in Colorado as this AMC claims.
- The role of AMC’s is to carefully match appraisers that are best suited as experts for that particular assignment.
- For the AMC to exhibit this skill (as noted above), they are paid 50% or more of the appraisal fee paid by the applicant who thinks it is all going to the appraiser who is valuing their home. As an added bonus, the mortgage process intentionally hides this fact from the borrower. REVAA lobbies heavily against this. That way the appraiser, not only isn’t paid customary and reasonable market-based fees from an institution that may have a monopoly on their market, the appraiser gets to be blamed by the borrowers as being very expensive. This, in turn, enables further discussion by banks and AMCs saving the borrowers money from high-cost appraisals by trying to substitute other products such as AVMs.
More on Section 103. Access to Affordable Mortgages.
Dave Towne addresses another part of Section 103 I discussed in the prior issue of Appraiserville :
From Dave Towne:
This section provides a tailored exemption from appraisal requirements under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for certain mortgage loans with a balance of less than $400,000 if the originator is unable to find a State certified or State licensed appraiser to perform an appraisal after a good faith effort to do so.
This is a way for the de minimus to be raised, from its current $250,000, without having to go through the normal hearings process to make that change.
But the difficulty of the wording is ‘balance of less than $400,000.’ We, appraisers, are not privy to that figure as it relates to a loan balance. Dumb wording.
The Appraisal Industry Responds to the Tristar Bank Appraisal Waiver Letter
The Appraisal Institute and American Society of Appraisers spearheaded a response letter to the Tristar bank letter sent to the ASC. The letter is a sharp and well-written response.
Looks like Jim Park from ASC, just got another waiver request letter .
Firefighting Looks Different When Its Your Son
Note top photo with “Miller” on fireman second from left – that’s our son. He was up in the bucket in the bottom photo for 3 hours. He saw the 3rd floor collapse on the 2nd floor and then instantly on the 1st floor. The guy on the controls swung the bucket away immediately in case the facade collapsed on them. Click to expand both images. Its incredible.
A Brilliant Idea
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. They’ll play a music video, you’ll leap over danger and I’ll put out another year end appraisal fire.
See you next week.
Jonathan Miller, CRP, CRE
Miller Samuel Inc. 
Real Estate Appraisers & Consultants
Reads, Listens and Visuals I Enjoyed
- Justin Fox on Why the Retail Job Apocalypse Has Been Postponed [Bloomberg View] 
- Long Island City Hanging In Limbo [Bisnow] 
- How the Final Tax Bill Will Affect Families, Homeowners, Businesses and More [NYT] 
- America's Rental Housing [Harvard University] 
- Republicans forge tax deal, final votes seen next week [Reuters] 
- Republicans reach compromise tax plan, expanding tax cuts for the wealthy [Washington Post] 
- There's a one-bedroom condo for sale in Miami — and the seller will only accept bitcoin [CNBC] 
- Explain Bitcoin Like I’m Five [Free Code Camp] 
- Retailers Still Haven't Caught Up to Millennials [Bloomberg] 
- House Price Index – Developed by Teranet in alliance with National Bank of Canada [House Price Index] 
- How the Tax Cuts and Jobs Act Might Affect U.S. Housing Markets – [Trulia's Blog] 
- What’s behind NYC’s literal sidewalk sales? [TRD] 
- A Fed Rate Increase Is Expected. But What Comes Next? [NYT] 
- London Property Market Likely to Continue Price Drop in 2018 [Bloomberg] 
- Realtors Predict Tax Bill Will Cause Housing Prices To Drop In Every State [Forbes] 
- What's the Value of Bitcoin? Who Knows [Bloomberg] 
- Who Makes Up The Working Class, in 3 Graphs [City Lab] 
- Assessed value vs. market value [Neighborhood X] 
- Residential scorecard #2 [TRD] 
- Making Sense of Bitcoin and Its Wild Price Ride: QuickTake Q&A [Bloomberg] 
- For the Next Housing Crisis, Lessons From the Last One [WSJ] 
- City cashing in by selling streets, sidewalks to private owners [NY Post] 
- Wall Street lobbies against measure hitting high-tax states [Financial Times] 
- All You Need to Know About Bitcoin’s Rise, From $0.01 to $15,000 [Bloomberg] 
- Cities turn to ‘missing middle’ housing to keep older millennials from leaving [Washington Post] 
My New Content, Research and Mentions
- Analysis: Landlords still offering freebies to lure renters to Brooklyn's emerging neighborhoods [The Real Deal NY] 
- VIDEO: NY1 TV, ‘Mornings On 1’ with Pat Kiernan [NY1] 
- Matrix Blog: How the GOP Tax Bill Might Impact U.S. Residential Real Estate [Miller Samuel] 
- City’s New “Open Door” to Finance Affordable Co-ops and Condos [Habitat Magazine] 
- Brooklyn's Ideal Properties sees opening in Manhattan's cooler market [TRD] 
- Manhattan rents rise, thanks to a luxury market that's softer than it appears [TRD] 
- How the tax bill affects city real estate [NY1] 
- NYC rents rose in November thanks to a surge of luxury apartments [Curbed NY] 
- Manhattan Rents Propped Up by Luxury Apartments in Supply Surge [Bloomberg] 
- Manhattan Luxury Rentals Cooled in November [Mansion Global] 
- What to know about Jackson Heights, where prices are skyrocketing but there are still deals to be had [Brick Underground] 
- The broker confidence crisis [TRD] 
- Concessions in BK, Queens still sky-high [TRD] 
- Manhattan’s Luxury Apartments Are Propping Up Rents – [The Money Street] 
- Donald Trump condos dip below Manhattan average for first time [AMNY] 
- Vince Viola Settles For $60 Million Profit With Clenched Fists [DealBreaker] 
- Hot housing markets in Westchester, Rockland; U.S. [Lohud] 
- Brooklyn Today December 12: Times Square Subway Bomber Is a Canarsie Resident | [Brooklyn Daily Eagle] 
- Brooklyn Rental Market | Brooklyn Rent Concession | 363 Bond [TRD] 
- New York resi predictions for 2018 [TRD] 
- Tower Planned for Upper West Side May Be Too Tall and Too Late [NYT] 
- Upper East Side Townhouse in Contract for a Record $80 Million [WSJ] 
- Washington could make 2018 a tough year for the residential market [Crains] 
- NYC townhouse set to sell for record amount of $80million [Daily Mail] 
- Prewar, With a Twist [NYT] 
Appraisal Related Reads
- Request for Appraisal Waivers If Granted Will Erode Public Trust [Appraisersblogs} 
- Influencing Appraisers & Controlling AMCs to Commit Fraud [Appraisersblogs} 
- 6 Factors That Influence Your Home's Value [Birmingham Appraisal Blog] 
- My last blog post in 2017, Bitcoin, & a big market update [Sacramento Appraisal Blog] 
Extra Curricular Reads
- Treasury alleges that states misspent funds intended to help homeowners fight foreclosure [Washington Post] 
- You Aren’t In the Crowd, You Are the Crowd [Raptitude] 
- Former Facebook VP says social media is destroying society with ‘dopamine-driven feedback loops’ [Washington Post] 
- The Star Power of Johnny Hallyday (Jimi Hendrix Was His Opening Act) [NYT] 
- How to find a wonderful idea [TED] 
- OK Go – Obsession – Official Video – [YouTube]