After the Black Friday Freight Train, It’s All Housing Tryptophan
Eventually, you just get used to it…
But I digress…
Retail Apocolypse, Fact or Fiction
I’ve touched on this topic quite a bit over the past year. When I’ve walked around a number of different cities and towns this year, it is clear to me there are a lot more vacant storefronts.
Here is the old bodega version of that narrative that was told on APM Marketplace across public radio stations in the U.S. My voice sounded weird to me.
And here is a misinformed piece in New York Magazine that goes counter to the visceral reality. The debunking a bogus 20% number attributed to a retail broker  was the basis of saying the retail apocalypse wasn’t real. Ugh.
Yet there is so much more  to the story.
By Now We Should Be Sick of All Amazon’s HQ2 Coverage
But here’s more:
WATCH: Everything you always wanted to know about Opportunity Zones 
Amazon HQ2 poised to propel housing market in Long Island City – for now  [AM New York]
Attract businesses like Amazon with lean government, not pork  [Crains New York]
Insider Home Trading?
Amazon employees snapped up NYC real estate before headquarters announcement  [WSJ/Boing Boing]
Amazon Employees Join the Rush to Buy Long Island City Condos  [Wall Street Journal]
Here’s a chart I whipped up to show how the fourth quarter Hamptons market sees more than its fair share of big sales in what is typically the weakest quarter of most housing markets. The reason? Tax planning.
Goosing for More Appraisal Talk
Dear Readers: I hope everyone enjoyed their Thanksgiving festivities. Housing market activity typically takes a break this week so the vast majority of these Housing Notes covers what’s going on in Appraiserville:
(For earlier appraisal industry commentary, visit my old clunky REIC  site.)
Rumormill: AI National Is Going To Try And Take All Chapter Funds AGAIN
It’s been two years since senior executives at The Appraisal Institute headquarters in Chicago, referred to as AI National, attempted to seize local chapter funds. I was just told by a trusted source that AI National will move forward on the “taking” plan.
From AI National’s perspective, another attempt to steal chapter funds makes perfect sense because:
- They only “suspended” the first attempt and subsequently referred to chapter funds as “their” money in discourse with chapter leaders.
- They have not publicly addressed membership outrage of this attempt (no plausible reason has ever been given).
- They have done NOTHING with their residential appraisal panel – it was just a PR stunt.
- They have continued to drift into irrelevancy in Washington, DC regulatory circles.
- They named a 2x president their new CEO who was a key part of their decade-long drift into irrelevancy after sitting exactly a year on a sham election process but to be paid $400K. They bumped up his pay from the toxic former CEO who left in the middle of the night.
Coester Chronicles: I Hope CoesterVMS Doesn’t Owe You Any Money!
There has been a lot of discussions circulating this week after VACAP broke the news  that the Coester VMS has run out of funds to pay for the appraisals they ordered. A law firm acting on the behalf of FVCBank, a CoesterVMS client, has sent a letter by email to appraisers providing the point of contact for those looking to collect their fees. I would assume that this bank seized their assets. I don’t know whether they represent any other banks in this situation.
From AppraisersForum, Andy Arledge of Freedom Appraise , one of a number of new A La Mode competitors, commented:
Here in Appraiserville’s ‘Coester Chronicles’, Appraisalblogs , Appraisersforum , and other sites have been warning appraisers for more than a year that this day may come. The word around the industry back then was that Coester owed millions in appraisal fees. If true, I can only assume appraisers are owed millions more now.
Hopefully, this will all come out in the wash but sadly, appraisers shouldn’t count on obtaining their long-owed Coester fees.
The intense lessons to be learned are:
1) AMC’s often demand proof of an appraisal firm’s business viability to receive work, yet it is clear that this demand should cut both ways. Recent news about Coester and Clarocity make that clear.
2) Unlike in the past, residential appraisers now have resources including on the ground blogs, Facebook groups and individual appraisers providing transparency and advocacy that are both readily available and free. Start reading all these sources regularly – get involved – these resources are motivated by a sense of right and wrong (because there isn’t any income to be found in their efforts).
AMC Clarocity Cash Flow Shortages Funded by iLOOKABOUT
And this press release:
Here’s one take. 
Appraisers should be very concerned about getting paid for their services until more is understood about this financial jiu-jitsu.
16%: Hybrid Fees Show Perceived Value of Valuation Expertise By Mortgage Lenders and AMCs
Here’s the math:
An appraiser shared an email survey concerning hybrid appraisals. The survey reveals the fees they are thinking of charging. These fees aren’t that different from what I’ve heard elsewhere.
It’s actually quite telling on how the AMC/Mortgage Lending industry sees the appraiser’s role in providing a reasonable benchmark on their collateral to make more informed lending decisions.
Here’s the scenario – take the $78 national desktop report fee and divide it by the $500 average appraisal fee as quoted by Realtor Magazine . Now think in terms of the inspection versus valuation.
$78 Valuation / $500 full appraisal = 16%. Don’t get me wrong. Appraisers are willing to work for $78 on desktop valuations but many have little choice in the submarkets they cover. It also shows how the valuation expertise is viewed as a commodity and not a skill that takes years to obtain.
The fact the mortgage industry thinks a $78 expense is a reliable expenditure for a reliable valuation suggests we will be looking at a significant mortgage bubble in the future.
To all you 16-percenters out there – start taking stock of what you are really worth.
Regulators Are Pushing Hard for Requiring No Appraisals For Most U.S. Mortgages Part I
Next week I dive deeper into the anti-quality valuation sentiment outlined in the Treasury outline .
The federal government is pushing to eliminate the need for appraisals under $400,000. I threw together a quick analysis of how they are effectively saying that no appraisal is needed for nearly all mortgage applications nationwide. It’s kind of amazing. I’ll devote more time to this issue next week after the tryptophan wears off (ok, ok that’s a myth ).
A deeper dive is coming next week.
OFT (One Final Thought)
I hope you cooked your Thanksgiving turkey the old-fashioned way…
November 21, 2018 
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 drowsy;
- You’ll be more drowsy;
- And I’ll take multiple naps.
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.
Reads, Listens and Visuals I Enjoyed
- The Changing Defintion of Manhattan Luxury Real Estate [StreetEasy] 
- WATCH: Everything you always wanted to know about Opportunity Zones [The Real Deal] 
- Wells Fargo deems Fairfield County ‘distressed,’ raises down payment requirement [The Real Deal] 
- Podcast: Is New York’s Deal With Amazon Worth the Money? [Money Talking] 
- Attract businesses like Amazon with lean government, not pork [Crains New York] 
- This $12.8 Million Canadian Mansion Is a Waterfall of Steel and Chrome [Bloomberg] 
- There Is No Crisis of Retail Vacancy in Manhattan [NY Mag] 
- Amazon employees snapped up NYC real estate before headquarters announcement [Boing Boing] 
- Amazon Employees Join the Rush to Buy Long Island City Condos [Wall Street Journal] 
- Desperate Homebuilders Offer Free Vacations and $100,000 Discounts to Lure Buyers [Bloomberg] 
- In tight housing market, lenders get creative to finance garage apartments [National Mortgage News] 
- Feds significantly expand investigation into all-cash real estate deals [Ben Lane] 
- Housing Can’t Be Both Affordable and a Good Investment [Citylab] 
- To reduce Manhattan storefront vacancies, fix commercial rent tax [City and State] 
- Real Estate Technology: Try, Try Again [New York Times] 
- In an Uncertain Real Estate Market, Try Before You Buy [New York Times] 
- Housing Market Is Raising Serious Red Flags [Bloomberg] 
My New Content, Research and Mentions
- How Amazon's arrival in LIC will affect real estate [AM New York] 
- Radio: How two New York bodegas explain a glut of shopfronts for rent [APM Marketplace] 
- Is the Luxury Property Market on a Downward Spiral? [Robb Report] 
Appraisal Related Reads
- Coester VMS Bank Accounts Seized! [Appraisers Blogs] 
- Inflated Appraisals May Force FHA to Raise Borrowing Costs [REALTOR Magazine] 
- A Home is a Home – Owning vs. Renting [Rachel Massey/APPRAISALUSA] 
- Fewer Homes May Require Human Appraisals, but That May Not Be a Good Thing [Realtor.com] 
- When it is slow… [Ann Arbor Appraisal Blog] 
- Regulators propose ending appraisal requirement on some home sales of $400,000 and below [Housingwire] 
- Non-Lender Valuation: Consumers Should Tread Carefully [Rachel Massey/APPRAISALUSA] 
- Appraiser feedback to WSJ "FHA Inflated Appraisal" narrative [Twitter] 
- Real Estate Appraisals: Notice of proposed rulemaking and request for comment [FDIC] 
- Is It Possible to “Prove” an Adjustment? [George Dell/Appraisersblogs] 
- Talking real estate cycles at the dinner table [Sacramento Appraisal Blog] 
- Tips when Talking to a Real Estate Appraiser [Advantage Appraisals] 
- Is it just me or is the market slowing? [Sacramento Appraisal Blog] 
Extra Curricular Reads
- Keep the Things You Forgot: An Elliott Smith Oral History [Pitchfork] 
- Podcast: Better Call Butterball [Household Name] 
- A bit of history on the German-born Baltimore man who invented Old Bay seasoning [Baltimore Sun] 
- How 6 people were rescued from an elevator at the Hancock: 'We don't come down like Batman' [Chicago Tribune] 
- “The space bar trick” is the most amazing feature in iOS 12, and the internet just realized it [Fast Company] 
- How to Speak in Public [New York Times]