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Housing Notes

Friday March 19, 2021

Watching Housing Market Jargon As Housing Notes Hits The 6 Year Mark

On March 6, 2015, I began writing these weekly Housing Notes and had not missed a week since then. Today’s edition is the 315th installment of Housing Notes. The weekly format took about a year to evolve before it became a routine, and I became more comfortable in my voice. The notes have become a cathartic exercise. I exhale (now, with a mask on) much of the housing information that accumulates in my brain during a week tempered by available time. I will continue to do this whether I have seven rabid readers or 7,000 – I simply need to do it.

While I occasionally (lol) drift into the weeds, it is always a good idea to keep in mind who the audience is when presenting information. Please watch this clip from a decade ago to understand what consumers hear when many housing professionals, including me, speak. Listen to the whole thing, please.


But I digress…

The General Phrase ‘The Market Is Down’ Varies Greatly By Property Type

In the current environment, there appear to be haves and have nots with wildly different takes on market conditions before the COVID lockdown in New York and after the COVID lockdown in New York. Different property types are often conflated into one incorrect narrative. Incidentally, many of us tend to see conditions in a linear way:

When prices are falling, they will fall forever.
When prices are rising, they will rise forever.


Even though market conditions ebb and flow…

Manhattan Residential Sales The plunge in mortgage rates brought on a “late to the party” boom for Manhattan at the end of the year, even with the optics of boarded up street retail and 85% empty office buildings in the Midtown central business district. But discounts from aspirational asking prices do not represent the decline in market conditions. The Market Is Down: lower initial sales, surge in initial inventory, slip in pricing.

Manhattan Residential Leasing The rental market fueled the suburban home sale boom, poaching a huge segment of demand, resulting in a massive drop in rental prices and heavy inventory. The Market Is Down: plunge in new leasing initially pivoting to record activity in the fall and faint signs emerging of price stabilization after initial plunge but with high vacancy and inventory.

Manhattan Condo Development The condo development space is perhaps the most polarized given its multi-year oversupply challenge of the prior five years. We are seeing some developers having financial problems, but it is important not to brush-stroke all developments into the same bucket. The Market Is Down: Based on closing data for co-ops and condos, Q4-2020 new development sales fell 5.8% YOY while resales fell 22.8%. New signed contracts for February for all property types jumped 73% YOY.

Manhattan Commercial Buildings new leases being signed are seeing significant price cuts. The Market Is Down: declining office rents and rising vacancy will crush property values which has ramifications for lenders who used the property as collateral.

Manhattan Bidding Wars Remain Near Record Lows But Saw A Slight YOY Uptick In Q4-2020

The 41.6% market share of first time buyers, a seven year record, reflects the power of the mortgage rate drop in pulling renters into the purchase market.

On Our Matrix Blog: I Discuss The Florida-New York Housing SMACKDOWN On Bloomberg TV’s Surveillance March 12, 2021

Last Friday I had a fun discussion with Lisa Abramowicz on Bloomberg Surveillance. It’s been bedlam in Appraiserville so I’ve been slow to post it. The New York to Florida housing migration story has been a bit one sided with optics that suggest 9 people will be left in Manhattan by the summer time despite that Manhattan contract activity beginning to surge. On the other hand Florida sales activity continues to be frenzied.

I don’t have the short clip so you have to go to the end of the full show at the 2:10:50 minute mark to pick up my interview with Lisa (but I think its worth it):


Affordability by State Only Shows Half The Typical Owner Vs. Renter Relationship

Howmuch.net has a pretty cool state by state chart showing affordability to purchase a new home. While clearly median new home prices are typically higher than resales, a new contruction since the financial crisis has skewed to higher-end housing due to high land, labor and materials cost, the fact that only one/third of residents can afford one is eye opening, especially when the U.S. homeownership rate is double that. The moral of the story, record low mortgage rates DO NOT improve affordability. Low rates make asset price higher.


Appraiserville

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

AI National’s Travel Policies Are A Sham Paid Vacation Entitlement Exercise

At the last board meeting on February 25-26, 2021, it became clear to me that the odds are much higher that Jim Amorin’s contract was renewed for another three years since the BOD did not discuss its expiration. I hope I am wrong about that. If true, it is very unfortunate for the organization, but I am encouraged to see growing pushback from the BOD against both his and his FOJs (friend of Jim Amorin) sham policies to load their pockets, as has been discussed many times here before.

Spousal Travel Lap Dog / Emotional Support Spouse

One of the board members, Matt Myers, who works abroad and would be the most impacted, proposed that the travel policy excludes spousal travel because it is not in the best interest of its members. You can bet the FOJs will fight to keep him from serving on the board another term so the good guys need to work hard to protect the backbone he is showing. Very impressive.

One of the most idiotic comments in favor of this policy was made by Trevor Hubbard, who said the board needed to consider all officers’ emotional care. Translation I: My spouse is my emotional support animal, and I need to have them by my side at all times since I am too afraid to travel alone.
Translation II: How can I enjoy my all expense paid trip to Europe blindly covered by the membership without my spouse? It just won’t be as fun and it’s just not fair (to me).

Corporate America DOES NOT PAY SPOUSAL EXPENSES. Good grief.

Previous AI President Jeff Sherman said this was a huge “firecracker” because of the severe business sacrifice he has made. The thing is, as Joe Magz said during the meeting, serving the membership is a “privilege.” Plus, as I’ve shared before in the 990 analysis, Jeff got a chunk of money for his time as president. That should factor in whether a candidate aspires to serve the membership.

And remind me again why AI officers fly to Europe and Asia all the time? What is the proof of benefit to the organization and members? How is this benefit relayed to the members? Answer: There is no tangible benefit that matters, given membership has fallen by about 30% in a little over a decade.

And if the flight is five hours or more, they can fly Business Class! With their spouse!

AI spends $250K per year on travel!!!

The problem with the FOJs is they forgot long ago that they were serving the organization and were not there to serve themselves. Once they got a taste of the insider track, it became addictive in the form of feeling entitled.

Nine people voted against this motion, but 14 people were in favor of it. The “against” largely represents FOJs: Sherman, Hubbard, Konikoff, Molinari, Schulze, AuFrance, Placer, Powers, Ramirez.

Amorin Control-Freaking Discussed

Jody Bishop brought up that the board wanted Jim Amorin to stop interfering with the information that BOD asks of staffers. There needs to be an established process. Jim Amorin freaked out at this, stating he has never (except once) denied BOD information. Amorin essentially expressed that “members might think” he was doing something he wasn’t. LOL.

Name-calling

Also, I appreciate Rodman’s shoutout to “our blogger” – it certainly beats being called ‘that Joe Miller’ – AI’s new president is on the right side of history and board members that are showing backbone against the FOJ mob is appreciated by myself and the membership.

Ichthyologist Alert: The Cosmic Cobra Guy Explains The Subprime Crisis

. https://en.wikipedia.org/wiki/Ichthyology

Here’s Jeremy Bagott’s latest effort (Ichthyology): The Ichthyologist’s Guide to the Subprime Meltdown. Giving his easy to understand writing style provided in his Dispatches from the Cosmic Cobra Breeding Farm tome I read in early January 2020, I bought his latest effort. I am recommending the book before I read it based on the prior book and his press release which sounds really interesting:


(LOS ANGELES, MARCH 12, 2021) – From Seattle’s CHOP zone to the Rajneesh compound in rural Oregon to the so-called Republic of West Florida, self-styled autonomous zones have never prospered in America. Too often, they’ve descended into lawlessness, orgiastic behavior and chaos, requiring costly taxpayer-funded clean-ups. Such was the case in 2008 with the ungovernable mash-ups Fannie Mae and Freddie Mac.

A first of its kind, “The Ichthyologist’s Guide to the Subprime Meltdown” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

But back to Freddie and Fannie: The trajectory of the two can be best understood through their almost comically incoherent timeline during the crisis – It reads like a rap sheet. They assured investors in early 2007 they had little exposure to toxic subprime loans. Reports would later surface that by 2008 the two had backed or purchased as many as 70 percent of the nation’s junk mortgages. In September of that year, the undercapitalized mortgage guarantors – amped up on sugar water and with no real accountability – simply collapsed. Their lack of an adequate capital cushion all but preordained it.

Consider:

February 27, 2007 – Fannie Mae and Freddie Mac tell investors they have little exposure to the subprime mortgage market.

March 6, 2007 – Fed Chairman Ben Bernanke, quoting Alan Greenspan, warns that Fannie and Freddie are a continual source of “systemic risk.” He suggests legislation to rein them in.

April 18, 2007 – Freddie Mac is fined $3.8 million by the Federal Election Commission for making illegal campaign contributions to members of the U.S. House Committee on Financial Services, which is tasked with monitoring the mortgage giant.

December 4, 2007 – Fannie Mae issues a cash call, seeking $7 billion to cover losses linked to the housing market. Investors get a haircut when the dividend is trimmed by 30 percent.

January 1, 2008 – More than 70 percent of the nation’s 27 million weak mortgages are on the books of a government-related entity, primarily Fannie and Freddie, it is later reported. These include radioactive products such as so-called option ARMs, 2/28 ARMs, negatively amortizing mortgages and “no doc” mortgages.

April 2008 – Former Fannie Mae CEO Frank Raines, who left office in the midst of an accounting scandal, settles with the U.S. government. His total compensation from 1998 through 2004 is reported at $91.1 million, including some $52.6 million in bonuses. He ushered in an era in which Fannie was making big bets on subprime mortgage securities. A federal lawsuit accused him and two other Fannie Mae executives of manipulating earnings over 6 years.

July 14, 2008 – U.S. Representative Barney Frank of Massachusetts characterizes Fannie Mae and Freddie Mac as financially sound. Later, the Boston Globe will report that Frank received tens of thousands of dollars in donations from Fannie and Freddie between 2000 and 2008.

September 7, 2008 – Regulators seize Fannie Mae and Freddie Mac, pumping about $200 billion of U.S. taxpayer money into the two. Riddled with bad mortgages, they are placed into conservatorship. At the time, Fannie and Freddie were the most highly leveraged financial institutions on the planet, wrote Jason Thomas in National Affairs in a fall 2013 retrospective.

September 23, 2008 – The FBI reveals it has been investigating Fannie and Freddie, along with their executives, as part of a far-reaching probe into potential mortgage fraud.

November 25, 2008 – Fannie and Freddie offload as much as $500 billion in toxic mortgage-backed securities and $100 billion in bad housing agency debt to the U.S. Federal Reserve.

July 21, 2010 – A former Countrywide Financial loan officer tells the Wall Street Journal that Senator Chris Dodd knowingly saved tens of thousands of dollars on the refinancing of his two personal properties in 2003 as part of a special VIP program Countrywide Financial had for anyone with the ability to influence Fannie and Freddie.

When the two amalgams were finally seized by federal regulators and placed into conservatorship, they were neither government agencies nor private enterprises. They defy description to this day. Their business model is simple: Collectivize the risks and privatize the profits. But even this plum arrangement was not enough. The two have always been about boundary-pushing and excess, with the implicit – now demonstrated – guarantee that the U.S. taxpayer would be there to clean up any mess.

Like sasquatches, they lurk in the thickets, unreformed, unrepentant. They remain a source of future taxpayer liability, ready to one day unleash a new crisis on a new generation.

The book’s author, a real property appraiser and former newspaper editor, guides the reader through the smoldering wreckage of a crisis that took the global financial system to the edge of the abyss in the first decade of a new millennium.

#

AUTHOR CONTACT: jbagott@gmail.com

Exec At The Appraisal Foundation ‘Likes’ The Appraisal Institute

Even after the excellent and solid thrashing AI National gave TAF in their comments discussed last week in Appraiserville regarding USPAP, causing TAF to extend USPAP for another year without notifying or doing any research for the stakeholders, yet lamely and falsely blaming COVID, TAF exec still “likes’ them. What a leadership void we are seeing in The Appraisal Foundation at this critical moment in history.


OFT (One Final Thought)

Appraiser Dave Towne shares this Big Bear Bald Eagle Cam and we never knew we needed to see 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 have more jargon;
  • You’ll be more jargon wary;
  • And I’ll just keep talking.

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


March 5, 2021

Housing Construction Port-A-Potties Have Reached Their Max Headroom

Not all data is presented as numbers. For years, I have collected names of construction port-a-potties and this week, I tripped over a new one, while waiting in line for my first COVID vaccine.

Here is the go list:

Royal Flush
Johnny on the Spot
Jiffy John
Scottie’s Potties – we’re no 1 in the no 2 business
Gotta Go
Call a Head
Mr. John
Don’s Johns
GI John’s: it’s go time


But I digress…

New Signed Contract Activity Shows Rabid Demand Across All Markets Covered; Manhattan Finally Arrived, But Was Late To The Party

Douglas Elliman just published our new signed contract research for the month of February, and it was blistering in the New York, Florida, Colorado and California markets we cover.

CNBC reported using our data that the Manhattan housing market was the standout.Here’s a screenshot from my internal spreadsheet – it represents the YOY% trend of all three property types combined. In journalism, we know that three data points make a trend…



California
Los Angeles County
The new year has seen two straight months with year over year gains in the combination of single family and condo new signed contracts. The month of February saw the largest annual increase in new signed contracts since this report series began last April. New inventory has fallen year over year by half over the last four months, keeping the pressure up on the market.

Orange County
New inventory for single family and condos combined fell year over year by the largest amount since April when tracking began. The new year has seen two straight months with year over year gains in the combination of single family and condo new signed contracts. The month of February saw the second-largest annual increase in new signed contracts since this report series began last April, with January seeing a slightly larger gain.

San Diego County
The new year has seen two straight months with year over year gains in the combination of single family and condo new signed contracts. New inventory for single family and condos combined fell year over year by the largest amount since May when tracking began, keeping the pressure up on the market.


Colorado
Aspen
February was the eighth straight month with significant year over year gains in the combination of single family and condo new signed contracts. The month of February saw the largest annual increase in new signed contracts since this report series began last April. The continuation of heavy sales levels has begun to pull new inventory into the market, as evidenced by the second straight month of year over year gains after two months of annual declines.

Snowmass Village
The combination of single family and condo new signed contracts rose sharply year over year for the sixth time in seven months. High sales volume has pulled in significant new inventory for both months in the new year.


Florida
Palm Beach County
Single family and condo new signed contracts combined have risen significantly year over year for the twelfth consecutive month. New inventory has seen modest annual declines for the third time in four months, unable to keep up with the robust sales activity.

Broward County
The combination of single family and condo new signed contracts rose sharply year over year for the twelfth consecutive month. New inventory has seen expanding declines since October, unable to keep up with sales.

Miami-Dade County
New signed contracts for condos surged year over year by the highest amount since tracking began in May. New condo listing inventory fell significantly year over year since June. Single family new signed contracts surged annually at their highest rate since July as supply fell annually for the fourth time in five months.

Pinellas County Since July, the combination of single family and condo new signed contracts rose sharply year over year at its highest rate. New inventory has declined year over year for four consecutive months, unable to keep up with sales.

Hillsborough County
Single family and condo new signed contracts combined have risen significantly year over year for the twelfth straight month. New inventory has seen modest annual declines for the third time in four months, unable to keep up with the heavy sales levels.


New York
Manhattan
For the third straight month, new signed contracts for co-ops, condos, and 1-3 families combined have risen annually. Manhattan has lagged the region in activity since the summer but appears to be catching up in the new year. The new listings coming to market have declined year over year for five consecutive months, overpowered by rising sales levels.

Brooklyn
New signed contracts for co-ops, condos, and 1-3 families combined have risen significantly year over year for eight consecutive months. Despite the heavy new signed contract gains since July, new listing inventory has increased annually since June as robust conditions have encouraged more property owners to list.

Long Island (excluding H/NF)
For the first time since June, new signed contracts for condos and single families combined did not rise year over year. The sharp annual drop in listing inventory over the past two months has restrained new signed contract levels.

Hamptons
New signed contracts for condos and single families combined had risen significantly year over year since May when tracking began. The sustained year over year sales surge since the spring finally began to overpower new listing inventory in the new year, which fell sharply.

North Fork
New signed contracts for condos and single families combined saw a modest year over year gain after slipping in January. New listing inventory has fallen sharply year over year for three straight months.

Westchester
New signed contracts for condos and single families combined have risen significantly year over year since July. The extended sales surge finally began to overpower new listing inventory in the new year, which fell sharply in January and February.

Fairfield
New inventory for condos and single families combined has shown significant year over year declines since October, restraining new signed contract activity in January and February of this year.

Greenwich
New signed contracts for condos and single families combined had risen significantly year over year since July when tracking began. The sustained year over year sales surge since the summer finally began to overpower new listing inventory by this month.

The Suburban Plunge In Listing Inventory Continues While Expanded Vaccine Distribution May Help Resolve The Shortage

The New York Times and Bloomberg News looked at the collapse of listing inventory in the suburban markets that surround New York City.

The plunge in mortgage rates have stimulated sales demand nationwide to the extent that listing inventory has collapsed. This is the current plight of suburban housing markets.

The Manhattan Decade Report Results Included A Global Financial Crisis And A Global Pandemic

Elliman Report: 2011-2020 Manhattan Decade

I haven’t given the The Elliman Report: 2011-2020 Decade Manhattan Report a proper shout out since Douglas Elliman published it last month. The report is nearly 60 pages of co-op and condo market results by region, neighborhood, property type and other views during a ten year moving window. The first iteration for Douglas Elliman was way back in 1996 when it covered the market from 1989-1996, not quite a decade but hey, it was a start.


Manhattan Townhouse Buyers Got More For Their Money, But Weren’t The COVID-Safe Haven That Was Anticipated

This month in my monthly data contribution to the New York Times Real Estate Section’s Calculator Columm, it’s all about townhouses: Townhouse Buyers Are Getting More for Their Money.

The Elliman Report: 2011-2020 Decade Manhattan Townhouse Report

But while the shift to buying bigger has been part of the pandemic story — particularly suburban buyers seeking single-family homes for working, schooling and everything else — in Manhattan, it was a dearth of sales that helped drive up the median price.

There was an initial narrative that with Covid there’s going to be this flight to townhouses, from multifamily, from condos, when actually the number of sales for townhouses was the lowest in 24 years

Here’s the table illustrating average square footage trends…

Greenwich Connecticut, The Luxury Suburb, Continues To Boom

Bloomberg did a story relying on our new signed contract research for the Greenwich housing market – sales conditions continue to out perform the regional housing market.

The large estate portion known as “Backcountry” has switched back on, after being dormant since 2007.

Those with a taste for the ultra-luxury have turned their attention to Greenwich’s older estates outside the town center, which had fallen out of favor in recent years. Two homes listed at $20 million or more found buyers last month, compared with none in February 2020.

[Podcast] Barron’s Live – Feb. 26: Understanding Home Values in a Shifting Market

I joined Barron’s Live again for a fun discussion with Beckie Strum on appraising and how the housing market recovery is taking shape in the new year. This event was supposed to be a video chat but my new gigabit fiber optic internet service dropped about 5 minutes in (I think the culprit was my VPN) and I had to scramble and call in to do the interview on a backup number. That disaster has been edited out and the audio interview is available in their podcast feed:

Understanding Home Values in a Shifting Marke‪t‬ [Barron’s Live]

[VIDEO] The Pandemic Renter Wish List Is Likely Short Term

I did a quick interview for Fox5 NY this week. The laundry list of amenities tenants ask for in return for moving out of the city seems temporary to me. As the vaccine distribution expands and the infection rate drops, those amenities on the wish list will be much less important. Remember, those items are an offset for being cooped up in the city. I believe much of the amenity hype dissolves when companies call their employees back and the city is more widely perceived as safe.


The Compass IPO Chronicles: They Might SPAC

Why do I continue to write about the brokerage firm Compass? Partly because it is the business model grift gift that keeps on giving.

There has been so much to write about because so much they have said seems disconnected with an understanding of real estate or is representative of the prior bubble era. To be clear, I have good friends that are agents that moved there, like it there, and I wish them well. They’ll be fine in whatever the company’s outcome and their intentions are not in question. The “emperor wears no clothes” sense I get after reading what Compass constantly puts out truly galls my “right versus wrong” sensibilities as they appear to be nothing more than a “disruptor by capital.” I’ve been watching this firm since they were known as Urban Compass, and I seem to recall a press release or quote after their first year in business that indicated they were returning to a “traditional business model” because their initial efforts only attracted a few dozen rental agents. Unfortunately, that press release or quote appears to have been scrubbed from the internet, or I am showing my age.

With the massive implosion of WeWork a while back (and the recent $500 billion reward to the founder for blowing it up), Compass stopped touting them as a believer in their approach since it was clear that little due diligence was applied to Softbank’s WeWork investment. Compass had to delay their IPO plans and worked hard to dissociate with Softbank, including sending emails out to their agents explaining how to say it.

With the traditional IPO route now in question for them post-WeWork, their recently filed S-1 raises a lot of questions. Both Housingwire and The Real Deal have been all over this filing.

In the Housingwire piece I said…

“They showed a $270 million loss in an insanely booming housing market,” noted Jonathan Miller, a real estate appraiser at Miller Samuel. The S-1’s main sales points, especially an introductory section where Compass walks through its agent-friendly technology, “seems to show how little they understand the brokerage space or are just ignoring it,” Miller said.

And this is the key point made by many over the past several years:

“I do not see any identifiable technology advantages from Compass over other brokerage firms,” said Ken Johnson, a real estate economist at Florida Atlantic University. “Compass appears to be another real estate franchise with a bit more integrated use of technology and aggressive marketing.”

In other words, how does reducing agent clerical efforts slightly, result in billions in valuation premium?

Mike DePrete is offering a webinar on it today. Here’s his chart-heavy analysis from 2019. Here’s a couple of examples:


SPAC talk, of course

There have been rumors of Compass using a SPAC as a workaround vehicle instead of a traditional IPO.

For those of you not familiar with SPACS, and the fact that celebrities are often associated with them, gave me pause – especially when former NY Yankee A-Rod had one. There is a good New York Times piece on SPACS that explains them and my friend Barry Ritholtz has some spectacular quotes:

Anyone Who’s Anyone Has a SPAC Right Now [NY Times]

What is a SPAC (special purpose acquisition company)?

SPACs are shell corporations that list on a stock exchange, with the goal of buying a private business and taking it public. In essence, a SPAC is a way to do an I.P.O. without all the time, expense and regulatory oversight traditionally required. The sponsors of a SPAC typically have two years to identify acquisitions or must return their investors’ money.


And Barry Ritholtz‘s Quotes:

‘Hey, listen, there’s this hot new financial offering. Let’s put your name and celebrity on it,’” Mr. Ritholtz said. “‘You’re going to bring some fairy dust to a SPAC and the potential upside is tens if not hundreds of millions of dollars.’”

“but if it works out, it’s $100 million,” Mr. Ritholtz said. “Humans love asymmetrical risk-reward situations.”

“I can’t believe we haven’t seen a Kim Kardashian SPAC yet.”

Barry also cited Sturgeon’s Law


[click on chart for Barry’s post]

Seems about right.

Appraiserville

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

Risk Management Association’s Chief Appraisers Virtual Round Table

This week I spoke to a group of chief appraisers that run the valuation groups for many of largest banks in the world. It’s an invitation only event run by the Risk Management Association – I was very appreciative of opportunity to present and extremely appreciative of the valuation knowledge of the audience. I spoke about the forms the COVID housing recovery is taking, focusing on the urban/suburban housing tension.

NAR’s EXCELLENT Response To FHFA’s ‘Request for Information on Appraisal-Related Policies, Practices, and Processes’

I can only assume that this NAR Letter to FHFA was crafted by the NAR Appraisal Section of appraisal industry leaders that has been behind other recent excellent thought pieces. This was a spectacular starting point summary on the appraisal industry’s situation today and the overpromise of technology:

Discriminatory bias could be factor with whomever is conducting the inspection of a home, whether it is an appraiser or a third-party inspector. There is evidence that algorithm-based decision-making tools can be designed in ways that create discriminatory outcomes. 4 Likewise, switching out one form of valuation for another sidesteps the necessary work of actively dismantling biased and discriminatory behavior. NAR urges FHFA to work with partner organizations, such as NAR and the Appraisal Foundation, to develop education and materials on bias, discrimination, and other fair housing related issues that speaks directly to the experience of the appraiser to truly address the issue with discrimination in the appraisal process.


Two quick observations on “partner organizations” mentioned in the piece:

Lack of leadership is one of the biggest issues facing the industry today – none of the big appraisal organizations are recognized by the real estate appraisal masses as leaders since they are mired in their problems or are focused on everything but appraisers themselves. I thought it was interesting that NAR didn’t mention the Appraisal Institute. And I found it even more interesting that The Appraisal Foundation was cited. Yet, TAF is the poster child for little to no representation of minorities and women through their three-decade existence. In fact, the TAF head of their diversity initiative is not a minority. The ASA seems like it would have been more worthy of a mention, not to take anything away from this excellent NAR thought piece.

OFT (One Final Thought)

I almost forgot about the Max Headroom phenomenon on the mid-80s. It hasn’t aged well but it was a thing.


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 like MAX;
  • You’ll be have more Headroom;
  • And I’ll remeber its go time.

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


January 15, 2021

The Shapes of Words In The Language of Housing


But I digress…

Manhattan Apartment Nearly Double YOY

I’ve been the author of the expanding Douglas Elliman market report series since 1994. The December 2020 Elliman Report for Manhattan, Brooklyn & Queens Rentals was published yesterday. The key takeaway pertained to the continued sharp drop in rents creating more affordability, drawing in more demand as well as existing tenants playing musical chairs trying to get better deals.

The Bloomberg piece on the rental report was the fifth most-read article by the 350K Bloomberg Terminal subscribers at one point on Thursday despite the insane volume of non-housing market news.

Most importantly, the article contains the most whacked-out chart of new leasing activity will the plunge in rents (in two colors)!

Elliman Report: December 2020 Manhattan, Brooklyn & Queens Rentals

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“For the third straight month, new lease signings rose to their highest level for the current month since the financial crisis.”

  • New leases rose sharply to the most signed for December in more than a dozen years
  • The vacancy rate slipped from last month’s record to the third-highest on record
  • The monthly concession rental equivalent slipped from last month’s record to the second-highest on record
  • Net effective median rent fell year over year at the second-highest rate in at least nine years
  • Smaller apartments sizes saw a larger percentage decline in median rent than larger apartment sizes
  • The market share of landlord concessions was sharply lower for the luxury market than for the remainder of the market

______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“For the second consecutive month, new lease signings rose to their highest level for the current month since the financial crisis.”

  • New lease signings surged annually to the most signed for December in more than a dozen years
  • The net effective median rent fell year over year at the highest rate in more than eight years and fell to its lowest level in nearly six years
  • The market share of landlord concessions fell short of the prior month record but represented nearly half of all market activity

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region]
“New lease signings showed significant growth as rental price trends continued to tumble.”

  • Net effective median rent fell year over year for the eighth consecutive month
  • New lease signings surged after sixteen months of annual declines
  • The monthly concession rental equivalent rose to a new record

Westchester County Sees Sales Surge From City Demand and Record Low Mortgage Rates

Douglas Elliman published our research this week on the NYC suburban markets of Westchester and Putnam/Dutchess counties of New York.

Of course, there is the ever-important Bloomberg chart on Westchester’s price gains (in two colors)!

______________________________________________________
WESTCHESTER SALES MARKET HIGHLIGHTS

Elliman Report: Q4 2020 Westchester County Sales

“Prices and sales pressed higher as listing inventory continued to fall.”

  • Median sales price surged annually to the second-highest level on record
  • The number of sales in the fourth quarter was the most for a fourth-quarter on record
  • Listing inventory fell year over year for the sixth straight quarter
  • Single family median sales price across all bedroom categories posted large gains, with the highest in the larger sizes
  • More than a third of single family sales that closed in the quarter went to a bidding war
  • The highest number of condo sales of any quarter on record
  • Condo sales surged after three consecutive quarters of significant declines
  • Luxury listing inventory fell year over year at the highest rate in eight years
  • Luxury months of supply showed the fastest market pace in eight years

______________________________________________________
PUTNAM SALES MARKET HIGHLIGHTS

Elliman Report: Q4 2020 Putnam County and Dutchess County Sales

“The market continued to show more strength with rising prices and year over year surge in sales.”

  • The number of sales saw an annual surge at their highest rate in more than four years
  • Largest annual increase in median sales price in twelve quarters
  • Listing inventory fell year over year at the highest rate tracked in thirteen years


DUTCHESS SALES MARKET HIGHLIGHTS

Elliman Report: Q4 2020 Putnam County and Dutchess County Sales

“Price indicators continued to show significant gains as listing inventory fell sharply.”

  • Median sales price jumped annually at the highest rate tracked in thirteen years
  • Listing inventory fell year over year for the fifth consecutive quarter
  • Months of supply fell to the fastest market pace in more than six years of tracking

A Photoshoot On A Terrace Overlooking Central Park

Crain’s New York asked me to do a photoshoot on the terrace of a spectacular apartment overlooking Central Park West to be used with a story on the housing market. I did just that and the photographer was the same person that photographed me for a Crain’s cover about two decades ago.

Here’s what the photoshoot looked while in progress and that amazing terrace:


And this was the photo used in the Crain’s New York piece. This appraisal work is fun!


A Homebuilder CEO Comment From 2007 That Didn’t Suck

This week I learned about this 2007 story about a publicly-traded U.S. homebuilder CEO comment in a public forum:

“Donald Tomnitz, CEO of D.R. Horton (DHI), flipped his lid speaking at a Citigroup investor conference. “I don’t want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year”

And all the business outlet headlines then screamed with glee on the ability to use language typically reserved from conversations among friends.

NBC: D.R. Horton CEO: 2007 will ‘suck’
Fox/AP: CEO of Nation’s Largest Homebuilder: 2007 Is Going to ‘Suck’
CNBC: What’s ‘Tough’ for One CEO ‘Sucks’ for Another

While some outlets couldn’t handle it:

LA Times: Frankly, builder sees slump in ’07
BBC Bleak housing outlook for US firm
Orange County Register Housing slump will linger, D.R. Horton exec says

But this sarcastic WSJ headline response was the best:

WSJ: An Eloquent Oration on the Condition of the Manufacture of Domiciles

Inspired, I did the same thing today and it was fun and efficient but not something I plan to incorporate into all my presentations.


The Best Manhattan Real Estate Dad Joke Ever

Based on the Bloomberg story regarding a 51% discounted resale at supertall One57 that I shared here last week on housing notes, economist/writer Daniel Gross lays this Manhattan-specific humor on us.


Getting Graphic


Our favorite charts of the week of our own making

Our favorite charts of the week


[NYT – click on image for supporting article]


[NYT – click on image for supporting article]

Appraiserville

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

In The Aftermath of the AI Board Meeting, FOJs Double Down On Their Corruption With Another 45-Day Notice

Lots of stuff to discuss here but not enough time to make a living – so I will be posting extensively about the BOD meeting and this new 45-Notice on my Matrix Blog this weekend. I will link back here as well as provide the link in next week’s Housing Notes.

NREP’s Take On FHFA Modernization Efforts And The Public Comment Period

I’ve often said that Appraisal “Modernization” is a codeword for “AVM.”

Some of the coalitions are drafting a response:

Dale Bailey of the South Carolina Professional Appraisers Coalition [SCPAC] said this:

Several Coalitions are drafting a response, for the record, about the change in the process and how we feel about some of those changes. We are hoping to have each Coalition be represented in the final paper. Please send any contributions of issues you may have with these changes to us for incorporating into the paper. It would help a great deal to have input from as many of you as possible.


USPAP Doesn’t Require An Inspection So Why Is It Trying To Determine What An Inspection Is 30 Years Later?

The ASB is struggling with the 4th Exposure Draft and issues of clarifying significant professional assistance and what an inspection means? Why? USPAP doesn’t require an inspection – never has. And good grief…a FOURTH exposure draft in an already over-analyzed two-year USPAP cycle?

The reason why Dave Bunton & Co. (TAF) has been emphasizing the Supervisor position is they are trying to retrofit USPAP back into the position. This is the same institution that felt it was appropriate to send this bat-shit crazy letter to their regulator.

Think about what has been said at every AQB meeting since Plymouth Rock – “trainees” are unable to find supervisors to mentor them to get their experience credits or banks won’t accept their reports and therefore they can’t get work to make a living. This is one of the biggest problems with the lack of diversity in the appraisal profession and it starts with the lack of diversity at TAF. This non-diversified institution, despite perhaps, the best intentions of those that are active are trying to solve the problem of getting more diversity into the profession. Yet the industry is aging and not diverse because the bureaucratic largess that TAF has created in the merry-go-round USPAP cycle gradually made it nearly impossible to join.

Incidentally, Title XI doesn’t require experience! Take a step back and look at other professionals like lawyers and accountants – they are required to take a comprehensive (hard) exam and do not have to have thousands of hours of experience. The public trust of these professions is not damaged by this practice. As a good friend of mine in Oklahoma has told me many times “appraising isn’t rocket science.”

Why is experience a unique requirement by the appraisal industry? TAF has constructed a gatekeeper mentality to the profession, that is manned by appraisers who are not largely diversified either. This is an epic fail and largely has resulted in a lack of diversity and an aging appraisal population.

And by the way, “experience” is always ongoing and appraisers must always continue to learn. The market will decide the value of your experience as an appraiser. Tagging an appraiser as a “trainee” is essentially tagging them as a liability and then artificially derived a number of required hours magically makes them a non-liability. I’ve known residential trainees in my market who were far more competent than experienced MAIs.

Incomes of supervisory appraisers have been squeezed by the AMC mentality of the mortgage industry and therefore most don’t want to take on a “trainee” and dedicate two years of training to someone who can’t sign a report for most clients, provides additional liability, and may leave to go on their own after certification.

Let’s try to focus on the bigger issues that impact the everyday lives of appraisers than on this insane &^&^%$#%^** busywork minutia that does nothing but reduce the wide-scale entry to all into the profession.

Let’s up the industry’s game to be at least as competent as other professional services. After all, the current gatekeeper mentality pushed by TAF on the backs of the supervisors is damaging the public trust. My goodness.

TAF Still Focuses On Money Over Diversity, For BOT Positions

From Dave Bunton’s recent TAF announcement:


TAF’s own press release is seeking candidates that will be FODs (Friends of Dave), they show that financial prowess takes precedence over the appraisal profession. It’s just baked into a non-profit institution with $8 million in reserve.

Our annual call for applicants is a real opportunity to cast a wide net for candidates that bring leadership and non-profit management experience who also have a deep interest in advancing the appraisal profession

Diversity would be great to emphasize given the total lack of it, of course. But considering that their announcement lists serving the profession AFTER non-profit management experience shows their priority remains finances over the profession. The fact that the announcement doesn’t even talk about some of the things facing the profession (e.g., bias, waivers) shows how detached they are from actual appraisers.

OFT (One Final Thought)

Thinking about that Steve Miller song and where that word Pompatus came from…


Then stroll through this list.


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 cruder;
  • You’ll be cruder;
  • And I’ll use crudeness to improve the narrative.

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


January 8, 2021

Housing Has A Runway In Front Of It

2021 so far…wait for it…and think about taking some Dramamine.


But I digress…

The Manhattan Sales Market Continues To Claw Out Of The Hole COVID Dug

I’ve been writing the expanding Elliman Report series for Douglas Elliman since 1994. One of the first reports we undertook covered the Manhattan sales market. This week we published the Elliman Report: Manhattan Sales Q4-2020 that showed market activity surging after the lockdown ended but still falling short of the prior-year quarter. Sellers are pricing better to drive more deal flow and based on the results of the New Signed Contract Report covered later down the page, there is a possibility that year-ago parity will be reached by the spring.

Coverage of note (in no particular order):

Bloomberg: Manhattan Home-Shoppers Aren’t Finding Huge Covid Discounts Yet
New York Times: New York real estate begins to recover after a grim year.
The Real Deal New York: Manhattan’s condos get year-end sales boost as inventory balloons
Crain’s New York Business: Manhattan ends 2020 with stronger residential sales

Here’s the same Bloomberg chart two different ways.

______________________________________________________
MANHATTAN SALES MARKET HIGHLIGHTS

Co-ops & Condos
After lagging the region’s sales trends during the COVID era, Manhattan sales levels surged from the prior quarter but remained short of the level reached in the same period a year ago.

Elliman Report: Manhattan Sales Q4-2020

  • The number of sales surged from the prior quarter but fell short of year-ago levels
  • The market share of cash buyers fell to a new record low as mortgage rates plummeted
  • The price trend indicators showed mixed results from prior-year levels as sales activity improved at the upper end
  • Median resales price slipped for the fifth time in six quarters
  • The number of co-op sales jumped from the prior quarter but fell short of year-ago levels
  • There was a significant year over year uptick in condo sales above the $5 million threshold, particularly new development
  • Luxury median sales price rose annually for the second straight quarter skewed by the rise in sales size
  • The market share of new development closings exceeded the quarterly average for the decade

A screenshot from my internal spreadsheet shows the jump in high end sales as seller’s dropped prices to the new market level:

______________________________________________________
NORTHERN MANHATTAN SALES MARKET HIGHLIGHTS

Elliman Report: Northern Manhattan Sales Q4-2020

“Apartment sales surged from the prior quarter while townhouses shifted to larger sized sales.”

Co-ops & Condos
– The number of sales surged from the prior quarter but remained short of year-ago levels.
– Listing inventory fell from the prior quarter record but remained sharply higher than the same period last year.

Townhouses
– Overall price trend indicators rose above year-ago levels, skewed by the shift to larger sized sales.
– Listing inventory continued to fall sharply along with the number of sales.


New Signed Contracts Are Up Everywhere

The New “New Signed Contracts Report” series we launched for Douglas Elliman in the early days of the lockdown has been showing growth across the four regions we cover:

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

Most notably, Manhattan exceeded year-ago levels for the first time since the COVID lockdown.

______________________________________________________
New York New Signed Contracts Report

Elliman Report: New Signed Contracts New York December 2020

Manhattan
New signed contracts for co-ops and condos rose annually for the first time since the lockdown ended while townhouses have continued to exceed year ago levels since September. Co-op and condo new listing inventory have fallen year over year for the third straight month.

Brooklyn
New signed contracts for all three property types were more than triple the levels seen in the year-ago period, continuing the streak since July. New listing inventory saw significant gains but was overshadowed by new signed contract growth by a multiple of three to four times.

Long Island (excluding H/NF)
New signed contract activity for each property type rose year over year for the sixth straight month. Modest new inventory gains were significantly overpowered by robust new signed contract growth.

Hamptons
New signed contract activity for each property type rose year over year for the seventh straight month. The significant gain in new inventory continued to exceed new signed contract growth in recent months.

North Fork
New signed contract activity for each property type rose year over year for the seventh straight month. Overall new inventory declined year over year for the first time since May.

Westchester
New signed contract activity for each property type rose sharply year over year for the sixth straight month. Modest new inventory gains were significantly overpowered by robust new signed contract growth.

Fairfield
Single family new signed contract activity rose year over year for the sixth straight month while new inventory fell year over year for the third straight month, keeping the market pace brisk.

Greenwich
Single family and condo new signed contracts continued to show gains of roughly triple the levels of the same month last year. While new listings for both property types were up over the same period but growth remain significantly below the rate of new signed contracts.

______________________________________________________
Florida New Signed Contracts Report

Elliman Report: New Signed Contracts Florida December 2020

Palm Beach County
New signed contracts for single families and condos nearly doubled from year ago levels with greater growth seen at the upper price tranches. New inventory for both property types continued to slide, keep the market pace brisk.

Broward County
Condo new signed contract annual growth continued to outpace single family growth. larger year over year gains were observed in the higher price tranches. Overall new inventory for both property types showed modest change.

Miami-Dade County
New signed contracts for condos rose at nearly three times the rate of single family new signed contracts with generally more gains at higher price tranches. New listings for condos fell sharply.

Pinellas County
Single family new signed contracts edged up year over year with more significant gains seen in the higher price tranches. Condo new signed contracts fell year over year but growth in most of the upper price tranches remained strong.

Hillsborough County
New signed contracts for single families showed stability while condos showed modest annual gains. The upper price tranches for both property types showed significant year over year gains.

______________________________________________________
California New Signed Contracts Report

Elliman Report: New Signed Contracts California December 2020

Los Angeles County
Year over year gains for condo new signed contracts continued to outperform single family new signed contract growth. New inventory for both property types fell sharply, helping maintain the robust market pace.

Orange County
New signed contracts for single families and condos continued to decline year over year. New inventory for both property types fell sharply, helping maintain the robust market pace.

San Diego County
New signed contracts for single families and condos continued to decline year over year. New inventory for both property types fell sharply, helping maintain the robust market pace.

______________________________________________________
Colorado New Signed Contracts Report

Elliman Report: New Signed Contracts Colorado December 2020

Aspen
New signed contracts for single families showed large annual gains while condo new signed contracts doubled over the same period. Single family new inventory fell sharply for the second straight month, overpowered by new signed contract gains.

Snowmass Village
New signed contracts for single families pressed higher year over year but at the lowest rate since tracking began in July. Single family new inventory fell sharply year over year for the third time in four months.

With a 51% Price Drop, One57 Has New Definition of “Value”

About a month ago, I worked up this chart but never used it – the units are sorted by apartment number with the resale following the original sponsor sale. The blue rows denote resale closings in 2020 At some point, the developer of One57 claimed that the May closing of unit 88 was not an “arm’s length” transaction and its 40.9% discount, therefore, wasn’t real.


However since that May closing, there were four additional closings by August 2020, and three of the four showed discounts in excess of 40% with the outlier only dropping 18.9% in value.

Today Bloomberg reported an additional resale that closed for a 51% discount in December.

The developer who indicated that the 41% discounted resale in May wasn’t “arm’s length” was the same developer who said this in today’s Bloomberg article.

“Clearly, over six years ago the buyer understood the value of this unit,” Gary Barnett, chairman and founder of Extell, said in a statement. “Unfortunately, this was an estate sale and they decided to just dump it.”


Here’s my translation of what was said:

“When prices go down, developers rationalize it by thinking people stop recognizing the value.”

Yet what Extell is really saying is:

“The seller’s definition of value is “what I want it to be or need it to be.”

The reality here is that market value is a moving target and condo development is one of the riskiest property types to speculate. I take my hats off to developer’s in this regard because I don’t have the stomach for it. Just look at what prominent developer HFZ is going through now. This is because a boom like we just went through has a short shelf-life yet the development window is often much longer, taking 2-4 years or perhaps even a decade, like Hudson Yards. Timing and luck are considerable components of development.

It is important to understand that value is not the highest number that can be achieved. That’s really something else. Value is always defined by a moment in time.

The Pied-a-Terre Tax 2 is Blinded By Politics And Devoid Of Critical Thinking

Habit Magazine’s Proposed Pied-a-Terre Tax: Windfall or Boondoggle? provided a good overview

Intentions were good, but the overzealous Housing Stability and Tenant Protection act of 2019 removed any upside for landlords or investors which will lead to a 1960s and 1970s gradual decay in the rental housing stock. It’s already begun. Maintenance has dropped and construction staff had been let go well before the pandemic.

Now the threat of the return of “PAT2” in a multi-edited version of the proposed Pied-a-Terre Tax is more or less personal – based purely on principle without consideration of sustainability. If a tax is proposed that brings in little to no net revenue, then what is it? It’s just a personal attack on the real estate economy that drives more than 50% of New York City’s tax revenue. Cut revenue drastically, on top of the aftermath of the pandemic impact and you cut even more revenue to the city and then see a cut in services. Once you remove yourself from the fog of politics, why would anyone want that?

Getting Graphic


Our favorite charts of the week of our own making


Appraiserville

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

This week’s Appraisal Institute Board meeting was bitterly disappointing because the BOD showed cowardice in hiding how they voted. That cowardice was driven by the FOJs whose corruption is wiping out this institution’s legacy. I’ve got a slew of commentary queued up but will publish it next week because of my heavy market report release schedule and appraisal volume.

OFT (One Final Thought)

I won’t be placing my phone on the table ever again.


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 likely to claw out of a hole;
  • You’ll be value-oriented;
  • And I’ll be overwhelmed with work.

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


October 16, 2020

Housing Forecast Accuracy We All Aspire To

Accuracy is often underappreciated.

 
View this post on Instagram
 

THE ACCURACY. 🔥🔥🔥 (via LovoCristian/TW)

A post shared by House of Highlights (@houseofhighlights) on

But I digress…

The Greenwich, Connecticut Housing Market Regains Its Mojo For Now

I’ve been the author of an expanding series of market reports for Douglas Elliman Real Estate for the last 25 years.

Long forgotten after the financial crisis as buyers skipped over the suburbs to the city, drawn in by the promises of new urbanism (i.e. walkability and being able to buy strawberries at 3 am) the Greenwich market has finally re-awakened.

Apparently Wall Street still loves Greenwich as the Bloomberg story on the housing market that included our Greenwich research was the 4th most emailed article of the day (from late morning until late afternoon) by the 350K Bloomberg Terminal subscribers. The Fairfield County report where Greenwich is located, and Downtown Boston reports were also released.

And a Bloomberg Greenwich chart…

Elliman Report: Q3 2020 Greenwich Sales Elliman Report: Q3 2020 Fairfield County Sales Elliman Report: Q3 2020 Downtown Boston Sales


GREENWICH SALES HIGHLIGHTS

“Sales surged higher year over year, rebounding quickly from the decline in spring market activity at the onset of the COVID crisis.”

  • Single-family sales surged to their highest level in at least a decade
  • Single-family listing inventory fell sharply from the prior quarter
  • Condo price trend indicators and sales surged from the prior-year quarter
  • Luxury listing inventory declined year over year for the sixth straight quarter
  • Back Country showed its fastest-moving pace in at least five years of tracking


FAIRFIELD COUNTY SALES HIGHLIGHTS

“Sales surged higher year over year, rebounding quickly from the decline in spring market activity at the onset of the COVID crisis.”

  • The three overall price trend indicators reached new record highs in more than sixteen years of tracking
  • The number of sales rose to the highest total in sixteen years of recording
  • Listing inventory fell at the highest annual rate in twenty-three years, reaching the lowest level in twenty-four years
  • Luxury listing inventory fell to its lowest level in six years of recording
  • Luxury sales saw the least negotiability in more than thirteen years


DOWNTOWN BOSTON SALES HIGHLIGHTS

CONDO “Sales edged higher year over year, rebounding quickly from the sharp drop in spring market activity at the onset of the COVID crisis.”

  • The number of sales edged higher year over year for the third time in four quarters
  • Listing inventory rose annually to the highest level in more than nine years
  • Median sales price declined annually for the second straight quarter after rising for the previous four

TOWNHOUSE “Sales clawed back most of the previous quarter’s decline in spring market activity at the onset of the COVID crisis.”

  • The number of sales declined year over year for the fourth straight quarter
  • Listing inventory rose sharply year over year over the past two quarters
  • Median sales price fell annually for the second consecutive quarter after rising for the previous seven

VIDEO: 92Y City of Tomorrow: Are People Giving up on New York City?

Short answer, not really. This 92Y panel I was on was brilliantly moderated by Brad Grossman, and included myself, Dr. Ayman El-Mohandes, Mindy Fullilove and Lindsay Greene. It was 30 minutes of insights that I got a lot out of.

[click to open video landing page]

PODCAST: The Comeback With Jonathan Miller

Last month I spoke with transactional attorneys Alan Perlowitz, Esq. and Andrew Luftig, Esq. of Chaves Perlowitz Luftig LLP for their “The Comeback” Podcast that chronicles the housing market recovery out of the COVID lockdown. These guys want to share their experiences and speak to the real estate brokerage industry all the time. In the middle of the lockdown when I was about to speak on a panel with Andrew, I suggested he compile their results (anonymized) as a report and they did so almost immediately!

Florida Housing Markets Feel The Burn (Of More Activity)

Douglas Elliman published a slew of our market research this week and activity remained high. In fact on a quarter-over-quarter basis, most of the markets sales rebounded 50% to 100% from the previous quarter.

The Elliman Reports for Florida released this week can be found here (click on “Florida”)

I ran out of time inserting charts into all of the Florida markets, but you can view them here in our chart gallery.

[alphabetical order]


BOCA RATON / HIGHLAND BEACH HIGHLIGHTS

“Sales rose sharply higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • In a rebound from the prior quarter, condo and single family sales saw their largest annual rise in seven years
  • All single family price trend indicators rose year over year as sales saw its largest jump in nearly nine years
  • All luxury condo price trend indicators showed a substantial year over year increase


CORAL GABLES HIGHLIGHTS

“Total market sales pressed higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • Single family sales surged and listing inventory fell from the prior year quarter as the lockdown ended
  • Condo listing inventory declined annually for the fifth consecutive quarter
  • Luxury single family listing inventory declined sharply year over year for five straight quarters


DELRAY BEACH HIGHLIGHTS

“Total market sales pressed higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • Single family sales increased at their highest year over year rate in five years
  • Condo sales reached their highest third-quarter total in twenty-two years of tracking
  • Both single family and condo luxury listing inventory fell sharply from the prior year total


FORT LAUDERDALE HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • All condo price trend indicators rose year over year as the number of sales jumped
  • Single family sales surged, and listing inventory fell sharply from the prior-year quarter
  • Single family median sales price increased annually for the eighth consecutive quarter


JUPITER / PALM BEACH GARDENS HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

JUPITER – Single family sales jumped year over year as listing inventory dropped sharply – The most third-quarter condo sales in fifteen years

PALM BEACH GARDENS – The most third quarter single family sales in fifteen years – Condo listing inventory declined annually for the sixth straight quarter


MANALAPAN HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

MANALAPAN, HYPOLUXO ISLAND & OCEAN RIDGE – Single family sales surged from the year-ago quarter, rising for the first time five quarters – Listing inventory declined annually for the third time in the four recent quarters – All price trend indicators slipped from year-ago levels as listing discount rose to the highest level in more than a year


MIAMI BEACH/BARRIER ISLANDS HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • Condo price trend indicators increased as sales and listing inventory edged higher
  • Overall single family price trend indicators set new records as sales surged year over year
  • Luxury condo price trend indicators jumped year over year, aided by a shift to larger sized sales

MIAMI COASTAL MAINLAND HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • Condo price trend indicators and sales moved higher as listing inventory slipped to a three-year low
  • Single family price trend indicators set new records as sales rose to their highest level in more than five years
  • Luxury condo price trend indicators increased year over year as listing inventory declined annually for the second time in three quarters

PALM BEACH HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • All three condo price trend indicators increased year over year for the fifth straight quarter
  • Single family sales nearly tripled from the year-ago quarter as listing inventory fell sharply
  • Luxury listing inventory fell significantly year over year for the third consecutive quarter

ST. PETERSBURG HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • Single family price median sales price has risen annually each quarter for nearly nine years
  • Condo listing inventory has declined year over year for the first time in six quarters
  • Markets including Snell Isle, Historic Old Northeast, and Downtown have all seen large year over year gains in sales levels

TAMPA HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

SOUTH TAMPA – Single family sales fell annually for the third time in four quarters as inventory posted a large decline – Condo listing inventory declined for the fifth consecutive quarter as the overall price trend indicators pressed higher

GREATER DOWNTOWN TAMPA – Downtown price trend indicators and the number of sales rose above prior-year quarter levels – Davis Island sales and price trend indicators increased as listing inventory slipped


WELLINGTON HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • Condo sales surged annually at their highest rate in eleven years as listing inventory edged higher for the second straight quarter
  • Single family median sales price rose annually for the twelfth straight quarter as listing inventory dropped sharply
  • Luxury condo median sales price more than doubled year over year as listing inventory saw a significant annual decline

WEST PALM BEACH HIGHLIGHTS

“Sales rose higher year over year, rebounding quickly from the restraint of spring market activity at the onset of the COVID crisis.”

  • Condo median sales price has risen each quarter on a year over year for more than nine years
  • Single family listing inventory has fallen at a rising year over year rate for five consecutive quarters
  • Luxury condo listing inventory has posted large annual gains for three of the past four quarters

Bloomberg TV – Ivy Zelman On How U.S. Homebuilders Can’t Keep Up With Demand

My friend and one of the best housing analysts out there, Ivy Zelman of Zelman & Associates spoke with Bloomberg’s Joe Weisenthal on his show “What’d Ya Miss?. Joe was one of my favorite all time bloggers pre-Bloomberg gig.

The latest data shows that U.S. new home sales advanced to the highest level in almost 14 years as record-low mortgage rates continued to entice buyers into a market with ever-shrinking supply. Ivy Zelman, CEO of Zelman & Associates, speaks with Bloomberg’s Caroline Hyde, Romaine Bostick and Joe Weisenthal on “What’d You Miss?” about the boom in U.S. housing. (Source: Bloomberg)

Getting Graphic

Our favorite charts of the week of our own making

Len Kiefer‘s Chart Handiwork


Appraiserville

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

How Many Days Until TAF Takes Down ASC ‘Oversight’ Mentions?

I’m not a gambling man, but after I point out the following, I want to take bets on how long it takes TAF to remove references to their clear belief in ASC’s right to ‘oversight’ and how it contradicts the statements and actions of their recent “bat-shit crazy” letter that TAF sent to ASC proclaiming ASC has no right to provide oversight – only “monitor and review.”

Something is clearly tainted in the water at TAF that has eliminated their long term memory. After all, there are three clear references as of today that provide an acknowledgment that ASC has ‘oversight’ rights over TAF. As I’ve mentioned before, it is quite bizarre that TAF suddenly believes that Congress created a non-profit that seems focused largely on money reflected by how hard they have fought to renew USPAP every two years but has no “oversight.” I’ll bet Congress is now learning about this change in philosophy, especially with the non-profit having the same leader for more than three decades.

The following pages on the TAF website illustrate TAF’s firm belief that ASC has clear oversight over TAF. The following references have been on the website as long as I can remember – I’m guessing at least a decade, but that’s just a guess. I’ve shared screenshots here to confirm this when the references are removed later on.

Exhibit I

The following graphic describes the “oversight by ASC on TAF” on The Appraiser Regulatory System in the United States page (bold my emphasis):

Provides oversight, funding & services to ensure compliance with Title XI of FIRREA; members are from federal finance-related entities.

Exhibit II

On the same page as Exhibit I, a similar reference to “oversight” by ASC on TAF can be found (bold my emphasis):

The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council has oversight authority over the states and the Foundation to ensure the minimum qualifying criteria to license and certify real estate appraisers are implemented and that appraisers are held to a professional set of ethical standards.

 

Exhibit III

Another similar reference to “oversight” by ASC on TAF can be found (bold my emphasis):

The ASC is responsible for monitoring the individual states in the licensing and certification of real property appraisers. In addition, the ASC acts as an oversight mechanism for activities of The Appraisal Foundation (Foundation) relating to real property appraisal.

 

Kelly Davids at IAC/TAF: TAF Will Do Beautiful Things With Scott Dibiasio of AI

On the last IAC call, Kelly Davids, Senior Vice President of TAF announced TAF plans to do (and I’m paraphrasing) beautiful things together with Scott Dibiasio of the Appraisal Institute. That’s a shocking revelation and illustrates how desperate TAF is to have a friend during this rogue adventure they seem to insist on having. Prediction: This will end badly for current TAF leadership.

For more than a decade, The Appraisal Foundation (TAF) and The Appraisal Institute (AI) were arch enemies – and that’s a clear understatement. The feud has been all about the two leaders of two institutions – Dave Bunton of TAF and Jim Amorin (and his group) of AI (a.k.a. Hatfields & McCoys). The vitriol between these two individuals is legendary and has been all over the public space for years, illustrating a disconnect that does nothing but selling actual residential real property appraisers short. I’ve seen it first hand. I was there when TAFAC voted down AI from re-joining because they wouldn’t agree to the TAF mission statement which was insane for AI to even try that tactic. A bunch of AI appraisers with MAI designations during the contentious vote actually said: “The mission statement is just a sentence!” They were so wrapped up in their bias with AI that they didn’t realize what they were actually saying. How can you be a member of an organization but disagree with its mission statement? It’s been an endless AI v. TAF soap opera that has redirected efforts away from the well-being of residential appraisers.

In fact, TAF has sent many of their former employees to testify around the U.S. to stop the damage and misinformation that Scott Debiasio has perpetuated. AI seemed to have thoughts about being the replacement for TAF to get all that money from the license registry, much like they took all the money from their local AI chapters. Long ago, I shared Scott’s testimony at the Montana real estate appraisal board where he essentially said he didn’t need them and would go straight to the legislature. What he didn’t realize at the time, is that the legislature would simply defer law changes to the real estate board for guidance – that demonstrates the culture of arrogance and incompetence within the operational leadership of AI.

And Scott continues to work against residential appraisers on a state level. The absurdity of TAF reaching out and being best friends with AI after all that is quite bizarre but shows the incredible scale of desperation. I’m certainly not saying the two institutions shouldn’t try to mend fences, but the AI corruption at the top still exists with the recent Quid Pro Quo: The Right Candidate Got Elected And Corrupt Leadership Got To Keep Their Sham Election Maneuver.

Industry-loved 16-year TAF Veteran John Brenan Presented With The ‘Chair’s Public Service Award’ From TAF Board of Trustees

Over the years John Brenan carried the water for The Appraisal Foundation (not to diminish the contribution of the other half dozen or so TAF employees that left in the past several years). He has presented USPAP and all things appraisal seemingly 24/7 during my career. He lived and breathed the actual mission of The Appraisal Foundation. I always found him to be highly knowledgeable, always professional, always accessible, but most importantly, always got my Dad jokes.

When he left, he was recognized for his contribution to the institution with the prestigious ‘Chair’s Public Service Award’ From TAF Board of Trustees.

This was a well-deserved public recognition of John’s contributions to TAF and the appraisal industry. It also speaks to the devasting loss of institutional knowledge at TAF with the exodus of staff with decades of experience in recent years and how TAF’s recent actions reflect a pivot away from focus on the appraisal industry to focus on a non-profit making a lot of money and claiming no one has the right to give them oversight. That “bat-shit crazy” letter serves as an historical marker of the collapse in the integrity and credibility of today’s TAF.

And it’s going to get worse.

Who is going to work to protect the public trust now and protect residential appraisers?

OFT (One Final Thought)

For reasons I don’t understand, I found this ‘homebuilding in a van’ video very inspirational.

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 accurate;
  • You’ll be buying a van;
  • And I’ll write some more market reports.

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


October 9, 2020

With A Post-lockdown Eruption, Housing Rocks On

We lost a music legend, Eddie Van Halen (note that the NYT article subheader was ‘An Appraisal’), this week. An actual “his obituary made the front page of the New York Times” legend. I remember when I was a freshman in college at Michigan State and my roommate and best friend dropped the first Van Halen album on the turntable and played ‘Runnin with the Devil’ and ‘Eruption’ almost blowing out the cheap speakers held together with bright green, yellow, and white daisy-illustrated wallpaper inside…and my mind. Growing up in the DC metro area, we lived on southern rock- Little Feat and Lynyrd Skynyrd dominated my listening time and incredibly, I had never heard of Van Halen. I’ve have continued to love their sound ever since.

This 2017 interview was the first time I’ve ever heard Eddie speak. I had been inundated with lead singer David Lee Roth talking on MTV 24/7 seemingly forever, but not Eddie. And Eddie seems like he’s a regular guy. The entire interview from 3 years ago is really, really fun, but I embedded it below where he starts playing for the audience. Wow. This is why every teenager I knew growing up wanted to be in a rock band.


But I digress…

The Westchester Housing Market Sees Largest Jump in Median Sales Price in Nearly Three Decades

I’ve been the author of the Elliman market report series over the past 25 years and this week they released our quarterly report research for NYC suburban counties of Westchester, Putnam, and Dutchess, plus Brooklyn, Queens, and Riverdale (Bronx) in the city. In addition, Douglas Elliman released the monthly Manhattan, Brooklyn and Queens rental report. All these reports are available here.

Let’s start with the suburbs:

______________________________________________________
WESTCHESTER SALES MARKET HIGHLIGHTS

Elliman Report: Q3 2020 Westchester Sales

“The county saw a quick return to pre-COVID sales levels and a large bump in price trend indicators.”

  • Monthly of supply coming out of the spring lockdown fueled the fastest market pace in twenty-nine years
  • Median sales price increased year over year at the highest rate in more than twenty-eight years
  • The number of sales nearly clawed back their year over year losses after the spring lockdown ended
  • Listing inventory declined annually for the fifth straight quarter
  • Single family average sales size rose to its largest average size in thirty years
  • Single family sales accounted for the highest market share by property share in seventeen years
  • Luxury single family median sales price saw its largest year over year increase in more than six years
  • Luxury listing inventory fell year over year for the sixth straight quarter

Bloomberg presented an amazing chart within its report coverage.


And Wall Street ate it up (the article) with 350K Bloomberg Terminal subscribers making it the third most emailed article of the day.

And some more charts…

______________________________________________________
PUTNAM SALES MARKET HIGHLIGHTS

Elliman Report: Q3 2020 Putnam/Dutchess Sales

“The county saw a quick return to pre-COVID sales levels and a large bump in price trend indicators.”

  • Highest year over year increase in median sales price in ten quarters
  • Listing inventory saw the largest annual decline in nearly four years
  • The number of sales rebounded immediately after the spring lockdown ended

______________________________________________________
DUTCHESS SALES MARKET HIGHLIGHTS

Elliman Report: Q3 2020 Putnam/Dutchess Sales

“The county saw a quick return to pre-COVID sales levels and a large bump in price trend indicators.”

  • Monthly of supply fell to the fastest market pace in six years of tracking
  • Highest year over year increase in median sales price in two years
  • Listing inventory saw its second-largest annual decline in four years


Flood Damage in South France Has Played Havoc With Their Homes

From the BBC: Storm Alex: Floods and landslides hit France and Italy. And this picture – wow – a beautiful home seemingly unharmed but not habitable anymore.

TOPSHOT – This aerial view taken on October 3, 2020 shows the damage in Saint-Martin-Vesubie, southeastern France, after heavy rains and floodings hit the Alpes-Maritimes department. – Heavy rains and brutal floods have left villages cut off from the world in the Alpes Maritimes, where hundreds of fire-fighters have been mobilised on October 3, to find nine missing persons. (Photo by Valery HACHE / AFP) (Photo by VALERY HACHE/AFP via Getty Images)



The Manhattan, Brooklyn and Queens Rental Markets Continue To Weaken

The affordability of NYC apartments has been rapidly surging since COVID crisis began.


MANHATTAN RENTAL MARKET HIGHLIGHTS

Elliman Report: Manhattan, Brooklyn and Queens September 2020

“New leases reached their prior-year level as vacancy rates and listing inventory set new records.”

  • Listing inventory set a fourteen-year record, more than tripling the year-ago total, but the monthly rate of growth slowed significantly
  • The market share of landlord concessions reached a new record for the decade it has been tracked
  • The amount of free rent tied a decade high this month
  • The vacancy rate exceeded five percent for the second month time and was the fifth consecutive month with a new record
  • The year over year net effective median rent for studios and 1-bedrooms saw the largest decline in the four years of tracking
  • Landlord concession market share for luxury rentals was substantially less than the overall market

The Bloomberg piece that covered our report also presented a chart two-fer within its report coverage.


And like the above-mentioned Westchester report (the article), 350K Bloomberg Terminal subscribers made it the fourth most emailed article of the day (yesterday).

______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“New leases rose above year-ago levels as landlord concessions expanded.”

  • Listing inventory increased to a record high for the third straight month
  • The number of new leases rose annually at their highest rate in fourteen months
  • Luxury median rental price showed a large increase while the market-wide median rent slipped from the same period last year

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region] “All rental price trend indicators decreased year over year since May under the COVID lockdown.”

  • Net effective median rent declined year over year for the fifth straight month, at the highest rate in more than two years
  • Listing inventory expanded year over year at the highest rate in nearly five years
  • Highest market share of 2-bedroom apartment rentals for almost four years


Realtor.com Goes Old English On Its Listings

I came across a listing yesterday on Realtor.com. It read “The property was sold thrice in the past twenty years” and I was instantly transported back in time to 1978 in the summer after high school graduation and the Commodores song “Three Times A Lady” playing on the radio every hour.

Imagine if the song went like this: “Once, Twice, Thrice Times a Lady.” It just wouldn’t work and those memories would have never happened. I can only assume some of Realtor.com’s programmers are from the UK and never listened to the Commodores.



Brooklyn, Queens, and Riverdale Post-Lockdown Markets Are Crawling Back

Most of NYC is outperforming Manhattan right now in the context of closed sales.

______________________________________________________
BROOKLYN SALES MARKET HIGHLIGHTS

Elliman Report: Q3 2020 Brooklyn Sales

“This quarterly report largely reflects sales contracts that were signed during and after the COVID lockdown that ended in late June.”

  • The number of sales fell at the largest year over year rate in more than eleven years
  • The largest annual decline in listing inventory in three and a half years
  • Median sales price hasn’t seen an annual decline in five months


______________________________________________________
QUEENS SALES MARKET HIGHLIGHTS

Elliman Report: Q3 2020 Queens Sales

“Sales fell sharply year over year for the second straight quarter as many of the contracts were signed during and shortly after the COVID lockdown.”

  • The number of sales fell at their second highest year over year rate in more than nine years
  • Median sales price slipped nominally on a year over year basis for the first decline in eighteen months
  • Listing inventory increased to its highest level in more than seven years


______________________________________________________
RIVERDALE SALES MARKET HIGHLIGHTS
[includes Fieldston, Hudson Hill, North Riverdale and Spuyten Duyvil in the Bronx]

Elliman Report: Q3 2020 Riverdale Sales

“Sales fell sharply year over year for the second straight quarter as many of the contracts were signed during and shortly after the COVID lockdown.”

  • Largest amount of listing inventory to accumulate in three years
  • Largest year over year decline in median sales price in over three years
  • Highest annual decline in the number of sales in more than nine years

The NYC Housing Trend Narrative is Changing From Hyperbole To Affordability

This Sunday’s NYT Real Estate cover is a barn burner: New York Real Estate Is On the Mend

And its author Stefanos Chen has a related tweet thread that is required reading…and I like his “peeling back the onion” metaphor in the story because its very “tortoise versus hare”-like…

Getting Graphic


Our favorite charts of the week

Here’s a chart I whipped up to give the proper visual context to the spiking vacancy rate in the Manhattan rental market. Click on the image to appreciate the intensity of it.


And here are some other cool charts I saw this week.



Len Kiefer‘s Chart Handiwork



Appraiserville

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

RAC Member and Former RAC President Byron Miller Appointed to the AQB Board

My good friend and appraiser colleague Byron Miller, SRA, AI-RRS, RAA was just appointed to the Appraiser Qualifications Board (AQB) of the appraisal foundation. A former engineer, Byron is one of those people that doesn’t miss the details. Congrats!!!

TAF Adds a Lot of Green to Its Already Huge Reserves

This month, the Board of Trustees of the Appraisal Foundation sent another $1.2 million to their $6.5 million in reserves (the latter per Jeremy ‘Cosmic Cobra’ Bagott). Since that $6.5M figure is a bit old, it looks like TAF has around $8 million in reserves which is enough for two years of operations. I believe that 6-12 months is more the standard so why the stockpile?

At what point does a not for profit become a for-profit? With all this money, shouldn’t they be offering USPAP or classes for free or at a significant discount? So many questions.

Former AI President Scott Robinson Named To The ASB and TAF Gets a Trojan Horse

Recently I was critical of TAF’s Appraisal Standards Board (ASB) for being overrepresented by personal property appraisers who have no business being on ASB since setting standards largely applies to real property appraisers. Real property appraisers have a “bullseye on their back” being subject to state enforcement while personal property appraisers do not.

Thankfully I believe that there are now 5 real property appraisers on the board, plus a business appraiser and two personal property appraisers. It’s a start, although it doesn’t change the fact that personal property appraisers have no business being on a technical board like AQB and ASB. Membership on the BOT makes sense as long as its not the majority.

A new ASB member is real property appraiser Craig Morley, GAA, MNAA who is a member of two state coalitions – Coalition of Appraisers of Nevada (CAN), and Utah Association of Appraisers (UAA).

And then there is Scott Robinson. Scott, who led the way for AI National to take all their chapters’ money (this post went viral) and place it under AI National’s control, helped fuel my initial outrage against the Appraisal Institute’s corrupt behavior, expanding under CEO Jim Amorin’s leadership with their recent sham election process. And hey, I’m not even an AI member but I recognize the damage they have caused to the branding of our industry to outsiders which helps to threaten our future. When AI national operational leadership is cleaned up, I look forward to AI leadership working for their members and returning once again to a position of appraisal industry leadership. That day can’t come soon enough.

The thing is, Scott and the Appraisal Institute do not believe in TAF’s two-year renewal cycle and we’ve all witnessed AI’s decade or more efforts to undermine TAF. Dave Bunton has written about it and it is basically a Hatfield/McCoy type feud. I was at the TAFAC meeting a while back when AI was rejected because they would not agree to TAF’s mission statement yet wanted to return to the organization.

The fact that TAF has brought in a serious internal threat shows just how desperate TAF is now to have another organization to team up with so they aren’t left alone twisting in the wind. As has been discussed here in Appraiserville early and often, TAF has gone on the public offensive against the Appraisal Subcommittee (ASC) who is responsible for reviewing and monitoring TAF. As we learned from what I lovingly call the “bat-shit crazy” letter that TAF sent to ASC, TAF rejects the idea of anyone providing “oversight” (TAF contends Congress didn’t intend ASC provide oversight which means no oversight?), even if that mandate comes from Congress. So from that “letter,” the ASC in their monitor and review responsibility, is now not allowed to be unmuted or be shown by video during TAF Zoom calls. This is unbelievably adversarial and childish, showing pushback to the regulatory process using pettiness, disrespect, and arrogance which ultimately is directed at the appraisal community. Have fun and have at it, Scott.

OFT (One Final Thought)

I found this race in Medellin, Colombia very cathartic to watch – what percentage of the time is the rider actually touching the ground? High speed, high risk, downhill, and most people only see small portions of it. (!!!) A new housing metaphor is born.


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 riff Van Halen;
  • You’ll ride your bike down steps more often;
  • And I’ll listen to my old Van Halen records again while riding my bike down the stairs.

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


September 11, 2020

The Housing Market Did Not Fall Like Dominoes From COVID

One of the benefits of quarantine has been the sheer brilliance of innovation by our youth. I regret not coming up with this innovation when I lived in the dorms. Sign.


But I digress…

The New York City Rental Market is Weak and Getting Weaker

Douglas Elliman Real Estate published our August rental market analysis this week and the news wasn’t great. I’ve been the author of this expanding Elliman Report series since 1994.

Elliman Report: August 2020 Manhattan, Brooklyn & Queens Rentals

This rental report covered the second full month since the lockdown expired on June 22 and interest in the findings was intense. The Bloomberg story was the most emailed article yesterday by the 350K Bloomberg Terminal subscribers.

Now this is a chart…(using Crocodile Dundee’s voice for “now this is a knife.”)

The takeaway from the report is that this was a record month of records and it stems largely from the drop in would-be tenants that moved to other boroughs or out of the city, mostly Manhattan, to rent or buy in the suburbs or second home markets.

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“With a nominal month over month uptick in new lease signings, activity appeared to bottom in last month.”

  • The largest market share of landlord concessions in nearly a decade of tracking
  • Highest total of listing inventory in over fourteen years and third straight monthly record
  • The vacancy rate exceeds five percent for the first time and the fourth consecutive month with a new record
  • Most substantial year over year decline in studio and 1-bedroom median price in eight years of tracking
  • Existing and new development median rent fell annually for the third time in four months
  • While all price segments covered, saw declines, more significant reductions occurred in the lower price strata
  • Concessions market share for non-luxury rentals was above luxury rentals and rose to their highest level since 2015

______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“Listing inventory doubled from its year-ago level despite the moderate decline in the number of new leases.”

  • Listing inventory reached an eleven and a half year high for the second straight month
  • Net effective median rent fell year over year for the second consecutive month after nineteen months of gains
  • Three out of four new development new signed leases had a landlord concession

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS
[Northwest Region]

“Listing inventory rose to its second-highest level recorded as new leasing activity fell for the thirteenth straight month.”

  • Thirteenth consecutive year over year decline in new leases with second-highest inventory total recorded
  • The fourth straight annual decline in net effective rent
  • The most significant yearly surge in listing inventory in four and a half years

NBC News 4 New York Covered The Softening Rental Market Conditions

@Glorioso4NY gets the rental market nuances in his segment on the report:

The New York Times Corrected The Narrative On NYC’s Outbound Migration

In this coming weekend’s New York Times real estate cover story, In New Development, Buyers Favor the Boroughs – Yes, some buyers are leaving Manhattan. But others are doubling down on Brooklyn and Queens.

The article includes a cool research piece on new development contract activity.

And the following thread provides a nice summary of what is actually happening and accurately tags me as the “OG appraiser” so there’s that.


Upcoming Speaking Events

What’s In Store For New York City Real Estate in 2020 and Beyond!

I’m joining my friend and co-data nerd Noah Rosenblatt of Urban Digs for a live 1 on 1 discussion moderated by John Walkup, also of Urban Digs.

Urbandigs is a great resource and I love to connect with these guys. Register and mark your calendar for September 17th at 11 am!

[click on image to register]

Appraiserville

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

The Appraisal Foundation Is Pivoting Its Alliances To Maintain Relevancy

These are my observations from The Appraisal Foundation’s perspective on how the unthinkable simply happens in this progression:

  • For years: “The Appraisal Institute is worse than the devil” and “We have enjoyed a long partnering relationship with The Appraisal Subcommittee.”

  • Recent history: “The Appraisal Subcommittee has no oversight rights and will not be allowed to speak at our meetings” (While the ASC continues to work with the Appraisal Institute.)

  • Latest history: While scrambling…”The Appraisal Institute is an organization we can work with to solve our respective complete lack of diversities.” Given the vitriol exchanged between AI CEO Jim Amorin and TAF President Dave Bunton, this seems absolutely impossible and to most of the people I interact within their circles, the only end to this Hatfields & McCoys type feud is when both of these people exit their organizations. It’s deeply personal.

So that’s why I am scratching my head about this and believe it is happening because TAF is currently all alone and needs to align with another organization to maintain its relevancy.

OFT (One Final Thought)

September 11, 2001.

Never Forget.

Here is some of what I remember on that day when I saw the towers burn in person…

On the street level outside our office buildings on September 11, 2001, all the appliance stores had their TVs in the windows switched to CNN which was zoomed in on the gaping holes in the towers. My office was on West 45th Street in Manhattan’s Midtown central business district. I walked west to the end of my block towards Avenue of the Americas and then walked east towards Fifth Avenue. From both vantage points, I could see that the twin towers were clearly on fire. Numb, I went back to my office to close up and send everyone home. My wife called me crying that now there was only one tower left, the other had just fallen. I was getting emails from colleagues in other parts of the world asking if I was still alive. I often think of the times I went to the Windows on the World restaurant at the top, buying an ice cream cone at Ben & Jerry’s in the ground floor mall after an appraisal in Battery Park City, a visit with colleagues at a law firm or other meetings. All of that was obliterated.

Here are a few photos from that time taken by myself, my staff, and my friends. This was not the Instagram world we have now and taking pictures wasn’t quite the obsession it is now, but you get the picture.

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 never forget;
  • You’ll never forget;
  • And I’ll never forget.

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


September 4, 2020

U.S. Housing Has Been Making A Bad Situation Look Good

This is clearly a good example of making a bad situation look good.

Couldn't be smoother

But I digress…

The Manhattan to Suburban Migration Might Be Peaking

Douglas Elliman Real Estate published our research on new signed contracts and new listings in four U.S. regional reports. They are a new part of our growing Elliman Report Series that I began writing 25 years ago.

These monthly reports break out each market’s performance by eight price tranches on a year over year basis and are a supplement to our quarterly report series.


Elliman Report: New York August 2020 New Signed Contracts Report

Manhattan
The number of new signed contracts by property type continued to trail year-ago levels but are also continuing to rise from April lows.

Brooklyn
New signed contract activity continued to rise sharply from April lows and remained above the same period last year. New listings across all property types remained above year-ago levels.

Long Island (excluding Hamptons/North Fork)
New signed contract activity for single family and condos remained higher than year-ago levels but showed signs of peaking. The larger annual gains in single family new signed contract levels were seen above the $400,000 threshold.

Hamptons
Single family new signed contract totals continued their torrid upward pace, more than twice year-ago levels. Condo new signed contracts also saw a significant increase. New listings across all property types have been rising sharply in response to high demand.

North Fork
Single family new signed contract rose sharply to nearly double the total seen last year. New single family listings increased annually but did not keep up with demand.

Westchester County
New signed contract activity for single family and condos were substantially higher than year-ago levels but showed signs of peaking. Single family new signed contract activity saw greater gains in higher price tranches.

Fairfield County, CT
New signed contract activity for single family and condos were substantially higher than year-ago levels but showed signs of peaking. Single family new signed contract activity saw greater gains in higher price tranches.

Greenwich, CT
Single family new signed contract totals continued their robust upward pace, nearly triple year-ago levels. Condo new signed contracts also saw a significant increase. New listings across all property types have been rising sharply in response to high demand.


Elliman Report: Florida August 2020 New Signed Contracts Report

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

Palm Beach County
New signed contract activity for single family and condos remained significantly above year-ago levels. All single family new signed contract price tranches showed year over year gains.

Broward County
New signed contract activity was more than double year-ago levels across property types. All single family and condo new signed contract price tranches showed significant year over year gains.

Miami-Dade County
New signed contract activity for single families remained higher than year-ago levels but showed signs of peaking. Much of the annual gains in single family new signed contract levels were seen above the $400,000 threshold.

Pinellas County and Hillsborough
New signed contract activity for single family and condos remained higher than year-ago levels but showed signs of peaking. In general, there were larger year over year increases in new signed contracts in higher price tranches.


Elliman Report: Colorado August 2020 New Signed Contracts Report

The Colorado report contains Aspen and Snowmass Village.

Aspen
Overall new signed contracts and new listings essentially doubled over the past year. While month over month activity eased, levels remain unusually elevated.

Snowmass Village
Overall new signed contracts rose more than four-fold from the prior year. While month over month activity eased slightly for condos, single family activity continued to climb.


Elliman Report: Colorado August 2020 New Signed Contracts Report

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

Los Angeles County
New signed contract activity for single family and condos remained higher than year-ago levels but showed signs of peaking. Much of the gains in single family new signed contract levels were seen above the $600,000 threshold.

Orange County
New signed contract activity for single family and condos remained higher than year-ago levels but showed signs of peaking. Much of the gains in single family new signed contract levels were seen above the $800,000 threshold.

San Diego County
New signed contract activity for single family and condos remained higher than year-ago levels but showed signs of peaking. Much of the gains in single family new signed contract levels were seen above the $500,000 threshold.

CNBC TV: Executive Chairman of Douglas Elliman gives an overview of contract activity

Howard Lorber, Executive Chairman of Douglas Elliman, talks to CNBC about the results of our four August 2020 Elliman New Signed Contract Reports. Most importantly, he gives me a shoutout!


Manhattan apartment deals fall 31% while sales boom in the suburbs [CNBC]

New York Homebuyers Are Searching Everywhere But Manhattan [Bloomberg]

CNBC TV: Florida pending home sales jump as housing market heats up

Diana Olick talks about the results of our August 2020 Elliman New Signed Contract Report for Florida. Most importantly, gives me a shoutout. 😉

Florida Attracts More Northerners [NY Times]

Forget Miami? Another South Florida community sees home sales double [Miami Herald]

A Bloomberg Opinion Piece That Mirrors My Take On The ‘Exodus’

A decade or so ago I interviewed Justin Fox on my old podcast The Housing Helix that I keep threatening to restart. Justin now writes for Bloomberg Opinion and I appreciate his “fuzzy logic” writing style when there are a lot of holes in the available data.

His op-ed piece The Big-City Exodus Isn’t Very Big (Yet) mirrors the way I think about the ‘urban to suburban’ outbound migration in NYC metro. I actually see it as ‘Manhattan to suburban’ migration because markets like Brooklyn are booming.

The key point of the article is that it only takes a small outflow from the city to cause havoc in the suburban markets that surround the city. Many read a headline that says something like sales in the suburbs are up 100% and think that must mean that sales in the city fell by 100% to zero and by October there will be 5 people left.

Please check it out for a dose of sanity.

In The Neverending Pursuit of Shallowness, I Got My 16th Mention On The Front Page of the New York Times

In the frenzy of news coverage of the COVID-19 impact on the New York City housing market that has dominated my professional life since mid-March, it felt good to stop and feel satisfied when something special happened. Special to me only. Something that makes that moment stand out in the daily ritual of an endless groundhog day.

When I was contacted for a recent housing market story by the NYT, I had no idea it would end up on the front page (A1) of the Gray Lady. I later saw the story online and thought nothing further of it. A few days later I was reading the print version and happened to notice the same article was sitting on the bottom left corner of A1 and my company’s name was right there in front of me. Boom. 16th.

Ok, now that’s the past. It was fun while it lasted. Now back to work.

A Rent vs Buy Index That Beats The Big Mac Index

While I’ve always “enjoyed” Big Macs and following the Big Mac Index created by The Economist Magazine back in 1986. It is even more interesting (but not technically “fulfilling” to run into a housing index I wasn’t familiar with.

I was reading an article in Bankrate: This index shows where you should buy a home, and where you’re better off renting (admittedly the stock photo of the West Village of Manhattan at the top caught my attention too).

The College of Business at Florida Atlantic University developed a rent versus buy index with an easy to remember name: “Beracha, Hardin & Johnson Buy vs. Rent Index” or “BH&J” for short. It looks well researched and transparent, with a methodology and the raw data to download. The series goes back to 1982 which is quite unusual since it is rare to see a housing index that precedes 2000, or even 1990.

Despite the surge in home prices, the U.S. index has remained at about the same threshold for the past three years. The NYC index (5 boroughs) hasn’t entered the rental threshold since the financial crisis.


Getting Graphic


Len Kiefer‘s Chart Handiwork

Shark attack!


Upcoming Speaking Event

What’s In Store For New York City Real Estate in 2020 and Beyond!

I’m joining my friend and co-data nerd Noah Rosenblatt of Urban Digs for a live 1 on 1 discussion moderated by John Walkup, also of Urban Digs.

Urbandigs is a great resource and I love to connect with these guys. Register and mark your calendar for September 17th at 11 am!

[click on image to register]

The Counselors of Real Estate® Presents: What’s Next for Real Estate and the Life Experience

Here’s an interesting free and open to all webinar I highly recommend:


[click on image to register]

Appraiserville

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

Petition Clears First Hurdle to Put USPAP through California Rulemaking

From the Cosmic Cobra appraiser guy newsletter:

Big news. The California Office of Administrative Law has accepted my petition to compel a required rulemaking for the 2020-2021 Uniform Standards of Professional Appraisal Practice. Without a rulemaking, USPAP is a so-called “underground regulation” in the State of California. The petition was accepted on September 1, 2020, and is now under review. You can find the case here. I now need your help.

Jeremy Bagott, MAI, AI-GRS
jbagott@gmail.com

P.S. If you’re interested, email me and I’ll send you a copy of the petition.

Here’s the press release:

*** FOR IMMEDIATE RELEASE ***

PETITION CLEARS FIRST HURDLE TO PUT USPAP THROUGH CALIFORNIA RULEMAKING

(LOS ANGELES, September 1, 2020) – A petition to the State of California to submit the 2020-2021 version of the Uniform Standards of Professional Appraisal Practice to a required notice-and-comment rulemaking cleared its first hurdle today. The matter is now under review by the California Office of Administrative Law. You can locate the case here under OAL File Number: CTU2020-0817-01.

The petition calls for a rulemaking, which includes a state-mandated promulgation in the California Regulatory Notice Register, a cost-benefit analysis and compulsory sign-offs by the Department of Finance and filings with the Secretary of State’s Office. In short, it requires a state agency, the Bureau of Real Estate Appraisers, to comply with California law. The Uniform Standards of Professional Appraisal Practice is what the California Office of Administrative Law calls an “underground regulation,” due to deficient rulemaking.

A side benefit: A rulemaking will give a voice to the mortgagors, employees, depositors and investors in the 200 banks doing business in the state; members and employees of the 300 credit unions headquartered here; the state’s 10,000 licensed real estate appraisers who must contend with continual regulatory changes; state and local agencies that rely on eminent domain; property owners who have been (or will be) subject to eminent domain; and personnel in the offices of the state’s 58 county assessors. Also given a voice will be the investors in so-called community facilities district bonds. USPAP appraisals are often the centerpiece of the bonds’ official statements.

Moreover, it is an opportunity for appraisers to go on record about definitions in the new version of the standards. One new definition has rankled many.

The paid panelists of the nonprofit Washington, D.C.-based Appraisal Foundation do yeoman’s work but the California Administrative Procedure Act and the California Code of Regulations, Title 1, § 20, “Incorporation by Reference,” do not allow an open-ended delegation of the people’s business of California to private persons. A state rulemaking is required for each revision of any outside standard incorporated into a state regulation. This is a key safeguard for this very reason.

If you’d like to help, here’s something you can do:

Please email the California Office of Administrative Law at staff@oal.ca.gov and express your interest in seeing a notice-and-comment rulemaking pursuant to the California Administrative Procedure Act and the California Code of Regulations, Title 1, § 20, “Incorporation by Reference.” Please refer to “underground regulation” OAL File Number: CTU2020-0817-01. By doing this, you are not necessarily rejecting the current version of USPAP. You are simply insisting California follow its own administrative laws. You are also supporting Californians in exercising their rights, guaranteed by state law, to go on record in the state register about the 2020-2021 version of the copyrighted standards and each future version of them. Californians deserve state agencies that adhere to state law.


The culmination of two years of research, a new book, Dispatches from the Cosmic Cobra Breeding Farm by Jeremy Bagott illuminates over-the-top spending and questionable dealings at the Appraisal Foundation. Published just before the pandemic, it chronicles international jet-setting by officers and trustees, conflicts of interest, lobbyist tie-ins, outsized cash reserves and swollen pay at the tiny nonprofit. The book is available at Amazon in paperback and Kindle versions.


TAF Newsletter: Still Saying They Were Justified Applying For PPP

From Monday’s Appraisal Foundation Newsletter – a letter from president Dave Bunton who can’t stop talking about returning PPP after it came to light.

Like all organizations across the United States, the early months of the pandemic were full of economic uncertainty. Out of an abundance of caution, The Appraisal Foundation applied for and received a Paycheck Protection Program (PPP) loan. As the economy stabilized, it became clear that we would not need the PPP funds, so we have paid off the money we received.

It’s not transparency when someone has to keep justifying their actions.

TAF Newsletter: Created a Diversity and Inclusion Subcommittee

TAF president Dave Bunton has made it a point in the last two monthly newsletters to mention TAF created a “Diversity and Inclusion Subcommittee” which is great if it actually accomplishes something.

The Appraisal Foundation Board of Trustees added a Diversity and Inclusion Subcommittee in April of this year, one month before the death of George Floyd, which highlighted some of the inequities experienced by Black Americans.

The thing is, the Appraiser Qualifications Board (AQB) hasn’t had a minority member and only 3 women in decades of existence.

I really hope that this subcommittee is more than just window-dressing. Adding diversity to the AQB that is short 2 members, could be accomplished in weeks, not annual board cycles.

Abraham Lincoln was the first to say “actions speak louder than words.”

Fannie Mae Updates Their Policy on Accessory Dwelling Unit

Because Dave Towne is always looking out for appraisers’ best interests faster than anyone around, he sent this before I actually got my email notice from Fannie Mae.

From Dave:

On Wed, 9/2/2020, FNMA has updated their policy allowing for ADU’s on SFR properties to be a Manufactured Home.

This is in their Selling Guide Announcement SEL-2020-05, linked below.

Key points:

An accessory dwelling unit (ADU) is an additional living area that is independent of the primary property and has basic bathroom, cooking, and sleeping facilities. With this update, we clarified ADU property eligibility and comparable sales requirements in the appraisal as follows:
▪ expanded the current definition of an ADU to improve proper classification of ADUs;
▪ expanded property eligibility by allowing multi-width manufactured homes titled as real property to be eligible as an ADU; and
▪ allow appraisal flexibilities that now include the use of
• an aged settled sale to demonstrate market acceptability, and
• an active listing, or a pending sale as a supplemental exhibit to show marketability.

Effective: Lenders may take advantage of these updates immediately.

Here’s the Fannie Mae link.

OFT (One Final Thought)

10…years…old


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 look good;
  • You’ll look good;
  • And I’ll fall on my face.

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


August 21, 2020

Sitting In The Housing Waiting Room

Right now we are all sitting in a waiting room, patiently hoping the COVID crisis will somehow be resolved in the not too distant future. So there’s this.

The fact that today’s Gen Z know Fugazi’s ‘Waiting Room’ is mindblowing to me. Of course, Cleveland.


It compares well with the original by Fugazi:


But I digress…

ABC World News Tonight Segment On Looming Mortgage Defaults And Evictions

I was interviewed for Deirdre Bolton’s national ABC piece with a conservative pink plaid shirt and hopefully some helpful insights.


And ended up with a 7/10 score on @roomrater. I’ll take it.


Portland Keeps It Weird With Low-Density Zoning Reform

We saw this first in Minneapolis with a ban on single-family housing in their urban core. Now Portland – they do something very creative with zoning. h/t @ritholtz

The reform sets a new standard: up to four homes on almost any lot, or up to six homes for price-regulated projects.


Comparing Closed Sales Trends After A Catastrophe

The Wall Street Journal’s Covid-19 Pounds New York Real Estate Worse Than 9/11, Financial Crash does a big story on the state of the high-end real estate market and its not pretty but my charts are:


[WSJ]

New Ways To Look At Market Conditions: Deals In Progress

Chaves Perlowitz Luftig LLP came up with a creative way to share market performance during the COVID lockdown. This law firm is one of the more social media savvy firms I’ve come across. Their residential reports are a cross between data and anecdotal and useful in a world devoid of data right after lockdown.

Scrolling through their deals, you can see anonymized transactions and whether they had contingencies (most do) and what the discounts are like (not that much).


[click to see report gallery]

Housing Starts Show Recovery, Also Shows Release of Pent-up Demand

Infographic: Housing Construction Begins to Recover | Statista You will find more infographics at Statista

Appraiserville

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

ASC Is Not Invited To SRAG By TAF

Let me jump out of the DC acronym hellscape for a minute. The following tweet describes the State Regulatory Advisory Group (SRAG) that has been revived by The Appraisal Foundation (TAF) that includes representatives of the Appraiser Qualifications Board (AQB), the Appraisal Standards Board (ASB) and the Association of Appraiser Regulatory Officials (AARO). SRAG was originally created so that representatives could have informal discussions on matters of the day. Later on, when AARO changed its periodic Saturday meetings to Fridays to coincide with TAF board meetings, SRAG was seen as duplicative and disbanded. In the original incarnation of SRAG, The Appraisal Subcommittee (ASC) was a part of this informal discussion process. Yet, in today’s resurrected version of SRAG, they are not part of it.


The restriction of SRAG is actually a good thing because the experience level at TAF has been hurt by the large staff turnover in recent years, especially with the exit of a long time stalwart of all things USPAP, John Brenan. So getting TAF together with regulators is good. The omission of ASC from SRAG when they were part of the original version is bad but consistent with TAF actions against ASC over the past few months.

The exclusion of ASC appears intentional due to the feud that boiled up in recent months culminating with that bat-shit crazy letter (sorry) to the ASC board.

Here’s why. The ASC enforces compliance with USPAP by the states. They are not in the room with these informal discussions so the states are going to take TAF’s views as the default, yet they are not getting any input from the entity that enforces them.

The long time relationship between TAF and ASC has been participatory and now, in recent years, that has clearly changed. Why?

When A TAF Board Member Has A Conflict, That Doesn’t Mean A Recusal In Attendance

Back when Practical Applications of Real Estate Appraisal (PAREA) was being planned and discussed, a board member representing a national company (one seen by most of my appraiser peers as a data monopoly), recused themselves from voting on the board in that matter due to conflict, but sat in and actively participated in the development discussion.

This tells me that there is not a full awareness in leadership that TAF’s reason for being is to ensure the public trust. You can’t do that when large companies have the potential for “inside baseball” early knowledge of new programs or have the ability to shape the outcome to their company’s advantage.

We Already Know Who Will Be The Next President of TAF

One of the worst kept secrets in Washington is who will be Dave Bunton’s replacement. Dave has two more years to go on his contract before retirement. He has been the only president that TAF has ever had. To give him his due, he has done a lot of good during his tenure and I have found him to be a very nice person. But a replacement for his position is too important to the appraisal industry to be hidden from view. His replacement is critical to the future of the appraisal industry. There are many changes on the horizon and TAF needs someone that works well with other agencies and is able to keep talented staff in place. The replacement should be obtained through a national and fully transparent search process and compensation should be analyzed to be at the market rate.

That is something we did not see over at the Appraisal Institute in the search for the replacement for the former CEO that left essentially in the middle of the night. It was a predetermined pick with a decorative executive search.

I hope for the industry’s sake, the executive search for TAF’s next president is completed with full transparency.

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 patient in the waiting room;
  • You’ll read more magazines in the waiting room;
  • And I’ll not avoid my next visit to the waiting room.

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 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

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


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

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

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