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July 14, 2017

Correlating The Housing Trackfires

As I sit and write these Housing Notes, I wonder why I enjoy writing so much but remain challenged by the grammar of it all. It’s not like I haven’t tried to up my game grammar over the years. In my world, life is one big run-on sentence connected by conjunctions. I thought I learned a lot a lot from watching ABC’s Schoolhouse Rock as a kid.


But I think I was too enamored with the trains – I’ve always loved trains – so I correlated those videos with real life and forgot the grammar part.

but I digress…

Additional Market Reports Released This Week For Brooklyn, Queens, and More…

This week Douglas Elliman [1] published our research on a number of housing markets as part of an ongoing series I’ve been authoring since 1994:

Wall Streeters, as we often illustrate here, love their real estate. Bloomberg coverage of the Brooklyn sale and rental market using our research was the 5th most read story on the Bloomberg terminals world wide.

[9]

And a cool chart on the compression of inventory that caused a median sales price record to be set for the 4th consecutive quarter.

[9]

Here are a sampling of charts from Brooklyn and other markets published this week.

[10]

Will Amazon Be The Next to Disrupt Housing?

This is beginning to fuel rampant speculation [11] (via Curbed)…

Real estate news website Inman reported that on Tuesday, while Amazon Prime Day was in full swing, the e-commerce behemoth quietly debuted a new “Hire a Realtor” page under the Home and Business Services section that featured a field in which to enter a ZIP code followed by a “Coming soon” message.

The moment might be right given the anger and focus on Zillow these days..especially their modified Premier Agent product and $3 per day per rental program policy offered through their Streeteasy property.

$999,999,999+

I’m dating myself, but as a teenager, I remember when gas pumps couldn’t go beyond 99¢ so most had a written “1” or taped a “1” on a piece of paper. This may have happened with a listing, or I might simply be over interpreting this.

I came across as a Trulia listing [12] on July 11, 2017, on Long Island for $999,999,999+. That “+” struck me as odd because it inferred that Trulia couldn’t hold another digit. Earlier in the day, I received a notice of a $100,000 listing of a large home that turned out to be the same picture as the $999,999,999+ home. It inferred to me that the data entry could not process a price of $100,000,000 so it kicked back to $100,000. Then one assumes (I know, I know) that the price was modified to $999,999,999+. This article in Newsday [13] came through my feed on Wednesday using the modifier “near” in the headline. But this morning, the Trulia listing for $999,999,999+ was gone.

[13]

Welcome to real estate. And remember to take screenshots of strange things.

SF/Oakland Real Estate Is Literally on Fire

San Francisco

If that sinking (16″) and leaning (2″) San Francisco Millennium luxury condo tower [14] couldn’t have worse luck, how about increased fire risk? Aside from being projected to continue to sink 2″ per year?

An outside architecture engineering firm found gaps in the walls of one unit that could present risks in the event of a fire, NBC Bay Area’s Investigative Unit reported.

Oakland

Four new development projects were subject to arson [15] this week.

[15]

Where The Cranes Are

I thought this construction crane infographic from the Seattle Times [16] was pretty cool except for the lack of Miami and low count for Manhattan part. The key point being made is that Seattle is booming but LA is catching up. In my LA research for Douglas Elliman, it has become apparent that LA is discovering vertical living and condo tower construction is booming.

[17]

Devotion To Parking Is Bad For Your City

In the new urbanism movement, it has become evident that too much parking chokes off pedestrian activity by pushing retail spaces farther apart. This STREETFILMS video [18] has a conjunction-junction feel to it but it is well worth watching…

PARKING: Searching for the Good Life in the City [18] from STREETFILMS [19] on Vimeo [20].


Spurious Correlations About Bikelanes and Housing Prices

Quite a while back I wrote about an awesomely funny book called “Spurious Correlations [21]” that I bought and very much enjoyed. It explored the world of junk stats – a topic I’ve discussed quite a bit here on Housing Notes – most recently covering blue bathrooms. The data analytics behind the correlations can be high level and accurate (or not) but the interpretation confuses causation and correlation. This morning I’ve had several people send me this article: Property Sales Jump 16 Percent Along Bike Lanes in Bushwick, Study Says [22] with a lot of head scratching.

While the data and methodology were disclosed who is to say one causes the other? I call that a “hop, skip and a jump” story telling. The inference made here seems more like this to me:

[21]

There are a lot of junk stats in real estate – well meaning but not useful.

Appraiserville

The real estate appraiser industry needs a public relations firm. We have no advocates or if we do, they aren’t getting the job done. There was a very one-sided Bloomberg Businessweek article [23] that predicted the real estate industry would be gone in 5 years. I like the author and have followed his writings since he was at WSJ. But like the Housingwire piece discussed here a few weeks ago [24], the story is being told in a one-sided way and the author needs an to understand the nuance. Interview a slew of companies that have everything to gain from removing appraisers from the mortgage process and through in a token appraiser interview.

The introduction raised flags that meant there was trouble coming (in the article).

Twenty-five years ago, Brian Weaver was told at a seminar that the real estate appraisal profession would be killed off by technology in five years. It didn’t happen. But he now thinks the forecast wasn’t exactly wrong—just early.

I immediately thought – why wouldn’t trouble brew in 25 years rather than 5 this time just like before? Doesn’t history repeat itself?

And the article was out of context – which appraisers are we talking about? In this case, he meant residential mortgage appraisers based on who was interviewed, not the appraisal industry.

As far as the token appraiser quote as an offset to the slew of appraisal industry adversaries quoted – this time it was with Jim Amorin, president of AI National – who has consistently acted as anything but an advocate for residential mortgage appraisers with this (aside from his residential committee):

At the industry’s peak in 2007, states had granted 121,407 credentials to perform residential appraisals. Last year there were 96,856, some of which were held by people working in multiple states. The pipeline of young people entering the profession is almost empty, says Jim Amorin, president of the Appraisal Institute, a national trade group.

Here is the data he is referring to that is cited wildly out of context. Thanks to appraiser Matt Simmons for keeping us all sane.

[25]

This is like looking at supply, without demand. So let’s look at mortgage demand. This trend clearly shows that there are MORE APPRAISERS now relative to the demand for our services.

[26]

The Next Job Humans Lose to Robots: Real Estate Appraiser [23] [Bloomberg]

It was also referring to Freddie (and Fannie)’s willingness to do appraiser-less appraisals. This is true and clearly overstated. Consider the issue with trainees for the past 9 years. The vast majority of banks will not accept the use of trainees for appraisals yet Fannie is perfectly fine with it. If they won’t allow trainees, why would they suddenly (5 years) happily accept using no appraisers at all and opt to use AVMs for everything?

There is a lot more to this article to take apart, but the takeaway here is that the appraisal industry – the mortgage residential part – has no one working to convey the accurate context to what is actually happening. We went through this with the AMC false narrative of an “appraisal shortage. [24]

Housingwire Webinar Redux

If you’re not busy, join us on July 26th [27].

[27]

Appraisal Institute Is Hiring An Outside Firm To Tell Them Whats Wrong

Their consulting firm doesn’t seem to be reaching out to the most outspoken critics of AI like myself. Darn, I am being punished. Oh well.

So many questions:

This was sent to someone who is not in AI.

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 [28]. And be sure to share with a friend or colleague if you enjoy them. They’ll get new railroad ties, you’ll discover “an, but & or” and I’ll respond to a survey.

See you next week.

Jonathan Miller, CRP, CRE
President/CEO
Miller Samuel Inc. [29]
Real Estate Appraisers & Consultants

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